Staffing for the Future

Compared to many of our colleagues around the state, Hudson is in somewhat of a unique situation. Where many of our neighbors are experiencing drops in enrollment, that does not appear to be the case here. Granted, while our residential or certified enrollment count is down a smidge, the overall headcount is up just enough to overcome the residential decrease. Admittedly, we had anticipated a larger increase in our enrollment this year. Even so, the trend continues to point in an upward direction and our projections suggest increases for the 2026-2027 school year. 

Enrollment is mostly growing from the 'bottom up', starting with the kindergarten class in the 2022-2023 school year when we added a fourth section to that grade level. Tactically, each succeeding year we have simply added a section as that grade level has matriculated, while the grade levels below them have continued to be sustained and staffed with four sections. We are now preparing for that grade level to move to the fourth grade next year, and again planning to add the accompanying section. A lot of what we have done to this point have been tactical decisions, in other words short term specific actions that provide the most flexibility.

At the same time, we are considering long term strategic planning. Think about this. Adding a section a year based on enrollment numbers at a particular grade level is a pretty straightforward decision. If you have 70+ students in an elementary grade level, it can either be staffed with three sections in low to mid twenties, or four sections of 17/18. Tactically, we have elected to go with 4 sections with the understanding that if the numbers are 'on the bubble' and the budget doesn't support those sections, we can simply forego making that hiring decision. If that happens over the course of a couple of years, perhaps it may become necessary to scale the faculty back by a position. Tactical. The trouble with tactical decision making is that unforeseen issues can kind of sneak up on you. For example, were you aware that our enrollment has increased over 120 students since 2021? That's an almost 14% increase! And, as I mentioned that trend appears to continue rising. Sure, it may slow but up is still up. 

That's why we have been engaged in strategic planning for well over a year now. Thinking about staffing needs long term and what positions, both for direct instruction and support may be needed down the road. Or, what structures need to be in place now to support this growth in enrollment? When we hire teachers for our classrooms, there needs to be a solid foundational system that supports them now, and is nimble and flexible enough to support future growth. Case in point: we hired a middle school principal this year. It was evident the number of students and teachers being served by current building administrators was not manageable. Furthermore, as staff continue to be added and those students matriculate to middle school they need a champion in their corner.

But that is not the only strategic decision that we will make, or even need to contemplate in the coming months and years. You see, as our enrollment growth continues it will require much more than a section at a grade level. Those are needs that you can see with your own eyes. It is also about the number of staff we have in the music department. The special education program. Art department. Counseling. Whenever I am blessed with the opportunity to visit with employees one on one, I ask the question: what do you need? Their answer in one form or another is usually: help. 

Therein lies the challenge. Hiring an additional teacher can be accomplished without too much pain fiscally. Particularly when you have 80 students and are trying to determine whether or not you want class sizes of 20 or 27. This task becomes much more complicated when the math isn't quite so quantifiable. Compound it further when you must determine whether or not space limitations are part of the calculus (they are in our case).

Then, there is the reality of funding for Iowa Schools. Now, that really isn't the point of today's column, but when the rate in which per pupil funding grows in Iowa doesn't even keep up with the cost of inflation it only exacerbates the underlying issues. Even with static enrollment, costs are going to continue to rise. If employees aren't going to see wage increases that are competitive they will leave. A hard to fill position like some of the supporting roles mentioned above will practically guarantee turnover at a rate that makes the ability to sustain and grow some of these programs all but impossible. 

With that, we'll stop for today. Next week we'll dive a bit deeper into the strategy. Answers may be elusive, but the first step is identifying the problem and the barriers while considering the strategic decisions that are being contemplated. 

Newton's Law of Motion

Schools and other local governments all around the state are fully engaged in budget season at this point in the fiscal year. For most of us, we are steadily marching toward April 30 when those budgets are required by Code to be certified with the state and county. Along the way we'll navigate mandated benchmarks, with the most important coming up in just a couple of weeks when taxing authorities set their maximum tax rates. What tends to be quite maddening about the process is that we do so in the midst of the legislative session when many variables are unknown. Now, I won't drone on about the SSA rate this year. I've come to accept the fact that the rate won't be adequate or set on time. In all the years I've been doing this (and it has been a lot of years), it would be considered far outside the norm if this were a known variable at this point in the legislative session.

Much like last legislative session, there is a renewed focus on property tax relief. You'll recall this topic was brought up last session and lawmakers spent weeks in public hearings receiving feedback and input from constituents. The good news was that there was a genuine desire to consider numerous ideas and receive input from citizens. Some of those ideas were incorporated into legislative proposals and the process started anew. The challenge was obtaining enough support to get any proposal across the finish line. Why is that? Well, if you are familiar with Newton's Law of Motion, you know that for every action, there is an opposite and equal reaction. In other words, if you are going to reduce property tax for one class of property it will raise property tax for another class an equal amount. Unless of course you are willing to reduce the expenditure side of the ledger. Which again, Newton's Law of Motion. The fact is that we want to have our cake and eat it too. Therein lies the other part of the problem. This is very hard work and proving to be a difficult needle to thread. We have to figure out if we are willing to trade one set of problems for another. Or, if we are supportive of the concept of winner and losers when it comes to property tax reform. 

Currently there are three bills that have been introduced this legislative session to address property tax reform. One from the governor's office, another originating in the Senate, and the final in the House. Now, these bills are large cumbersome bills and to go through each one side by side isn't practical at this point. So, I'll just point out a few features of each that relate to schools and illustrate the 'opposite and equal reaction'. Again, this is just the portion that is related to schools. I can't speak to impacts to other taxing authorities since they are outside my wheelhouse. Let's start with the governor's bill. 

First, the governor proposes TIF reform. As one of the highest districts in the state impacted by TIF, this is something that we can get behind. In a nutshell, TIF is an economic development tool that is used to lower property taxes in certain taxing districts to encourage development. The trouble being that by lowering the tax burden in the TIF district, it shifts that burden to other classes of property; all while the TIF property grows in value-sometimes significantly so. In Hudson, our total property valuation is $311,993,952. Of that, $72,561,934 is in TIF districts. If the district were able to capture that total value, it would lower our tax rate by $1.48. The fear in making a change would be to stifle growth, which could cause a recession and layoffs.

One of the components of this bill that I'm not excited about is a redistribution of school SAVE revenue to property tax relief. The bill proposes shifting 30% of this revenue to property tax relief over a four year period. Couple of problems with that. First, many districts (Hudson included) have bonded against future sales tax revenue to complete construction projects. This shift would put school districts in jeopardy of default. At a minimum, it would force school districts to make tough calls when it comes to the frequency with which school bus fleets are cycled or how often other equipment is purchased or replaced. As our school district continues to grow, we are once again considering the next construction project. The strategy to fund the next construction project would be to use SAVE. However, this shift would most definitely shelve those plans.

The bill proposed in the Senate has a lot of moving parts. First, it lowers what is known as the uniform levy for school districts from $5.40 to $4.49 and increases the foundation level to 100%, essentially eliminating the additional levy in the process. They pay for this provision by shifting everything to state funding and SAVE. While this would definitely lower property taxes, it would do so at a cost. We've already discussed the implications of using SAVE for property tax relief, but to shift additional costs on the state is unsustainable. Case in point: the Senate released their SSA proposal this week at 1.75% stating that is all they can afford. 

In the Senate, they also propose restricting the management fund levy ending balances. The management fund is used to pay for such items as property and casualty insurance and retirement benefits and programs. Insurance renewals can be unpredictable and retirement benefits and programs take a lot of planning and usually need a lot of runway to get off the ground. I won't get into the utility of a retirement program, but in short they are used as a tool to reduce costs over the long run. The bill also reduces levy rates for PPEL and bond levies. The danger of default is less here, because it does allow the district to continue the current rates for existing indebtedness. However, these restrictions would most definitely impact other priorities of the district, much the same as the SAVE discussed above since allowable uses of these funds is similar.

In the House, property tax reform is focused on broad structural caps, which is likely most equitable for all taxpayers. There are no specific proposals that would impact schools, and one of the provisions that would be incredibly helpful is to improve individual taxpayer statements. The only provision in the House bill that is a little puzzling is a component that would require voter approval of a 60% supermajority for any SAVE backed bonding. I am unsure how this relates to property tax reform.

Of the three bills, the one proposed by the House is most likely to protect school districts from harm. The Senate's bill is most far reaching in scope, impacting property valuations, rates, and total levy. The governor's version has the TIF component, which I'm eager to hear more about; but on the other hand the SAVE shift is problematic. All of these bills include some pretty big system changes, if not for school districts, most certainly for other local entities. I encourage our legislators to be sure they get detailed estimates from the legislative servicing agency prior to making any substantive changes.