Property Tax Rates: A Bit More Complicated

It's budget season and taxing authorities all around the state are in the process of considering priorities and the needs of the corporation. Staffing decisions are being deliberated, replacement of equipment is being discussed, and in some places budget reductions are part of the conversation. At the same time, these varying governing bodies are considering the interests of property owners as they contemplate tax rates.

In the coming weeks we will be publishing our budget proposal for fiscal year 2020, which is the year that runs from July 1, 2019 to June 30, 2020. Most people will scan right to the bottom of the proposed budget and look to see the tax rate, then compare that to what they are paying this year and either be happy or not so much. Unfortunately, individual entity rate comparison will tell you very little in terms of overall tax impact. The fact of the matter is, it is a bit more complicated than comparing the rate you pay this year with the rate you paid last year. If viewed in isolation the rate will not tell tell you at all whether or not your property tax bill will be higher or lower than it was the previous year.

There are 7 taxing authorities in the
Hudson Community School District

First things first. A typical resident of Hudson will pay an overall tax rate of about $34 for every $1,000 of valuation for the budget year we are currently executing. Of that, $14.33 is the portion of property taxes for the school district. The school district is but one of 7 taxing authorities in our geographic area. So then, reason number one you won't be able to tell if your property tax bill is higher or lower is that while one taxing authority may lower their tax rate, another may raise their tax rate. Granted you can look at the sum of the rate structure for the other 6 taxing authorities, and while that will tell you the total rate, it still doesn't answer the question about whether or not your tax bill will be higher or lower than it is this year. The chart to the right illustrates the breakdown of taxing authorities in Hudson and percentage of overall rate they contribute. The largest portion of the total property tax bill for this year is the school at 42.2% followed by the city at 34.2%. The county rounds out the top 3 at 19.7%.

But even if all taxing entities had a stable tax rate year after year, it is unlikely that you would see an overall property tax bill that stayed the same. Think about this for a second. Since 2010, the school property tax rate has fallen $2.56. Over that same time period, the average property tax bill has gone down $114.98. Admittedly though, while the rate has consistently been declining for the last decade some years your total tax bill may go up a bit in spite of a lower tax rate. Even in a scenario where your property valuation hasn't changed! Here is how that can happen.

It's because the percentage of property valuation that you are paying taxes on changes annually. The average home in Hudson is valued at $157,686. So in fiscal year 2019, that homeowners property tax would be based on 55.62% of the property value, or $87,706.37. With a tax rate of $14.39, that would be a tax bill of $1,262.32. In fiscal year 2020, that same property owner will pay taxes on 56.98% of the property value, or on $89,851. Even if the value of the home remains the same. Let's say then we lower the tax rate to $14.22. Under this scenario your tax bill would be $1,278.24, a roughly $15 increase from the last year. There is no doubt property tax rate is important! But as we can clearly see, it doesn't tell the whole picture. Of equal, or even greater importance is the residential rollback. In 2010, the residential rollback was 45.48%. Ten years later, homeowners are paying taxes on almost 57% of their property value. With the recent addition of a rollback feature for commercial and industrial property, this will have the natural effect of shifting the property tax burden from one class of property to another.

One final item to keep in mind as we enter this budgeting season, at least when it comes to property tax rates for the school district. The school board works very hard to keep your property tax bill as low as they can while still maintaining the level of programming for the school district to which we are accustomed. Yet as we indicated above, they can only control so much. After all, valuation and rollback are completely out of their control. Even so, when it comes to the actual property tax rate for the school, over 81% of the rate is determined by the school foundation formula. The school board only has control of about 8% of the property tax rate of the school district, with the other 11% being determined by you, the voters!

Unprecedented!

The roads may be fine in town, but out in the country they
were a different story the afternoon of February 13. This
the Grundy County line; western border of our district.

Remember a few weeks back when I told you how I didn't want to break a particular record? That was fun, right? Surely, we all thought the worst was behind us....didn't we? Unfortunately those musings are long in the rear view mirror. At the writing of this column, we have had eighteen days that have impacted our regular school day. Those days included late starts, early dismissals, and cancellations. Ten of those days were outright cancellations. The bad news at this point is that it is only the middle of February. The good news is, we have a plan!

This is the first time in my career I can recall a winter like this. While it is not necessarily uncommon during a winter to miss two days of school in a row, missing four days in a row is simply unheard of; at least in my experience. To say this is an unprecedented winter is certainly accurate. I would imagine when we experience a long hard winter in the future, this will be the new benchmark. 

Because of the unique and unprecedented situation we are experiencing, I have been forced to make decisions that I would not have otherwise made. Indeed, I keep thinking about all our activities that have gone weeks without practice while still being expected to compete. The next big date on the calendar is the spring musical, so I have had to relax the rules a bit to allow them the proper time to prepare for the performance. I continue to remind our coaches and directors these are exceptions to normal operating procedures and in no way meant to be precedent setting for future actions. For certain we value and honor family commitments and those days typically set aside where no school activities are scheduled. All our moderators have been asked to work closely with those under their charge and to be accommodating as possible. So far, that seems to be working and we appreciate your support. 

The million dollar question for all of you has to be when is school going to dismiss for the summer? Ah yes! Summer! Warm sunshine, green grass, blooming flowers. It all sounds so nice right now, doesn't it? To help come up with a solution, I asked our faculty and staff to weigh in and offer suggestions and ideas about how best we might end the school year. After soliciting and considering those opinions have come up with what I think is the most appropriate plan. Before we get to that, it is important to understand what exactly we are trying to make up. 

School districts in Iowa have the option of counting hours of instruction or days of instruction. That requirement is either 180 days of instruction, or 1,080 hours of instruction. In Hudson, we count hours of instruction because it gives us the most flexibility. At the same time, our faculty is contracted for days of work (not hours). Because of this, our calendar is counted in hours but built on a framework of days. I know its a bit confusing, but hang with me here. The good news is that the length of our day within that 180 day framework builds in a natural cushion of hours. The 2018-2019 school calendar had 1,128.8 hours of instruction scheduled, creating a cushion of 48.8 hours. This is the prime reason we usually never have to worry about making up late starts or early dismissals. Unfortunately we have blown completely through that cushion by a long way, and we are only in the middle of February! In fact, without making up any of the time missed we would only have 1,044.25 hours of instruction. So here is what we are going to do.

Scheduled Makeup Days.

The last day of school for the 2018-2019 school year will be May 31st. School will now be in session on March 15, April 19, and May 28-31. Also beginning March 27th we will forego the remainder of our Wednesday early dismissals, opting instead for a full day of school on those Wednesdays. This adjusted calendar will create a cushion that will enable us to maintain the May 31st last day of school. In other words, if we have another snow day between now and then, we will not plan to make it up unless the cushion is completely exhausted again. This plan will give us a cushion of 16.9 hours, so hopefully that will be sufficient. You should also note that under this plan, we will not be making up the days of school missed on January 23, 30, February 13, or 20. Teachers will report to work June 3-6 to make up the professional development that is being cancelled beginning March 27th and will check out on June 7th. This adjusted calendar will meet the instructional hours required by law and the number of work days in the teacher contract.

In closing, I want to share how much we appreciate your support and patience as we have dealt with what is no doubt an unprecedented year of weather related disruptions to our schedule. In appreciation of that support, I am going to end on a very light hearted note today. Many of you have asked for a singing weather cancellation, and while I haven't had the opportunity to oblige, I have something for you that is much better! Instead of encapsulating the joy of the occasional snow day, instead we lament the fact that it has been a long time since we have had a full week of school. Enjoy my son-in-law's rendition of Billy Joel's 'For the Longest Time'. Both Dan and my daughter Megan are music teachers at College Community, hence the references to that district. The super cute little ones in the video are three of my grandchildren. Enjoy!

Steady Progress in the Legislature

We are closing in on the fifth week the 88th General Assembly has been in session. In my opinion (and mine alone) it has been relatively quiet. Sure, there have been the normal fireworks and legislative proposals that have caused bloggers and news outlets to throw the penalty flag, but in terms of education policy I don't have a lot of complaints right now. Well, I do have a few but they are relatively minor. 

The best news to come out of Des Moines so far came yesterday when the Senate approved the funding package for K-12 education. That action followed the House passage of the same legislation earlier in the week, meaning it has cleared the final hurdle. With this bill now on its way to the governor, the legislature will for the first time in many years meet the 30 day deadline that is required by law. This legislation will increase the state cost per pupil by 2.06%. In total it will invest $78.6 million in the per pupil formula, $7.8 million to address transportation costs for school districts with large transportation budgets (Hudson is not one of them), and $2.3 million for school districts who have the lowest per pupil costs in the state (again not Hudson).

For Hudson's regular program cost, this will mean an increase of $188,647. Sure, we would have liked more and certainly advocated for a larger percentage! But in the final analysis we should be able to meet our budget obligations for fiscal year 2020 without too much trouble. Plus, albeit a smaller number than we would have preferred, it is the highest dollar amount of growth we have had in the last five years. However, my relative calmness comes with a caveat: the primary reason we will be fortunate enough to see an increase in our regular program district cost is because of enrollment growth. Consider this: in the last five years, our certified enrollment has by 38.42 students. However, this enrollment growth hasn't always translated into greater revenue growth. The prior two years the state cost per pupil only grew by 1.11% and 1.0% respectively. In FY 2017, when our regular program cost grew by $169,172, the percentage increase that year was 2.25%. In school districts with declining or stagnant enrollment, the 2.06% increase simply isn't enough. 

In other legislative news, plans to extend the SAVE fund are moving forward. Last year the House passed this extension on a 95-3 vote, but it ultimately stalled in the Senate. This year, identical bills are being run through both chambers simultaneously and it appears they are gaining momentum. This extension would maintain the one cent sales and infrastructure tax for schools through 2050. An important piece of legislation since schools like Hudson bond against future sales tax revenue with a mechanism known as a Tax Anticipation Revenue Bond (TARB), in lieu of a general obligation bond which would come with a property tax increase. Passage of this legislation is critical for a school district like Hudson! We are currently finalizing a $5.14 million TARB to fund Phase III of the elementary renovation project, which is about the maximum we can bond under the current legislation,  which is scheduled to sunset in 2029. I suppose that would be fine if we wouldn't have to do any more facility projects after this one is completed. But we know that isn't true! Once we finish Phase III, we will need to start planning for our next facility project. Using SAVE will be the key to paying for it!

New Statewide Assessment Administered in the Spring

Guest blog by Dr. Jon McKenzie of Central Rivers AEA.

In 1935, the “Iowa Test of Basic Skills” (ITBS) were first administered in Iowa. Students in grades six through eight completed the ITBS tests in subjects such as reading comprehension, spelling and mathematics. These assessments were state of the art. Continuing with level of excellence the “Iowa Tests of Educational Development” (ITED) were developed in 1942. They were first administered to students in grades nine through 12, and again in subjects such as reading comprehension and mathematics. Generations of Iowa students completed these tests and they quickly became recognized as nationally accepted standardized basic achievement tests across grades K-12.

Students across Iowa, the United States and other countries continued to complete these fill-in-the-bubble, number two pencil tests annually. Updates were made over the years, but the names (ITBS and ITED) remained the same, as did their purpose. The tests measured student academic achievement across a variety of subjects for multiple generations. Eventually in Iowa, they were also used for accountability purposes during the No Child Left Behind (NCLB) era.

The next updated version of these assessments was called the “Iowa Assessments.” These tests were first administered in Iowa in 2011. Again, their purpose was to measure student achievement across a variety of subjects and grade levels and for NCLB accountability purposes.

The newest version of these tests, developed at Iowa Testing Programs, will be called the “Iowa Statewide Assessment of Student Progress” (ISASP). These tests will be administered in Iowa starting in the spring of 2019. However, there are only a few similarities between the newest version and the later versions. If desired, students are still able to use a number two pencil when filling in the bubble answer sheets when testing in reading and math in grades 3-11, and science in grades five, eight, and ten.  However, this is where the similarities end.

There are many upgrades with these new tests. For instance, students will be able to complete all tests using a computer. In addition, a writing test will be added to these assessments in grades three through 11. Further, thanks to impressive improvements in scoring technology, all tests can be scored using technology, including the writing tests. The content of these tests will be aligned to current standards being taught across the state.

Additional improvements with these online tests include a variety of useful tools built into the computer operating system that will aid students when taking the tests. These tools will help students with special needs, English Learners, as well as all other students better demonstrate what they know and are able to do. Some of these tools include a text to speech option, built in highlighters, enlarged print, as well as some Spanish versions. More state of the art updates are scheduled in the future, such as an adaptive versions of the test.

In a few shorts months, current Iowa students will be the first to sit for the new ISASP assessments. However, at this time, there is still work to be done before Iowa students can use these tests to demonstrate what they know and are able to do.

In a few short years, these different versions of assessments (ITBS, ITED, IA, and ISASP) may serve Iowa students and educators for 100 years!  It is unlikely that any other state can make such a claim.

Dr. Jon McKenzie is the Director of Assessment & Comprehensive Improvement with Central Rivers Area Education Agency (AEA). He can be reached at jmckenzie@centralriversaea.org. Central Rivers AEA supports educators, parents, and the communities we serve as we work together toward one ultimate goal: to improve student learning. We provide support in the areas of quality classroom materials, curriculum planning, best practices in teaching and learning, safe and caring learning environment, appropriate educational opportunities for all learners, technology planning, professional learning, assessment, special education, leadership development, and more. Learn more at www.centralriversaea.org.