Rate, Value and Valuation

Since we just finished our budget certification for the fiscal year that begins on July 1, 2021, I thought it might be interesting to spend a bit of time talking about the budget process. Budgeting is an ongoing evolution that includes forecasting as far as five years into the future. We have developed models that help us make assumptions based on enrollment trends, growth in per pupil cost, changes to tax policy, and fluctuations in property valuations. The challenge is understanding how each of these variables relate to one another and realizing that one minor change in any can make a big difference when looking into the future. Our models provide a platform to refine and develop our work on an annual basis. Budget development for the next fiscal year typically starts in late November and is wrapped up no later than April 15th. What you see in the newspaper each February or March is simply a summary that provides little insight into the total budget. The fact of the matter is that beyond publication of the tax rate, the usefulness of the published budget is limited as a tool of management, particularly since it provides only a high level of insight. Today I want to spend some time providing a bit of context. To begin, I think an explanation of property tax is a great place to start. 

If you have tracked our tax rate over time, you probably are aware the tax rate has dropped over the last decade. You can see our historical tax rate here, which provides perspective back to 1997-1998. The column titled 'certified' is the tax rate that was approved by the Board of Directors during the budget hearing in that particular fiscal year. The column labeled 'DOM' is the final rate as determined by the Iowa Department of Management following the legislative session. The finalized rate by the DOM generally isn't available until late May or early June and is almost always lower than the rate certified by the board. This is because there are typically changes made by the legislature following the boards certification of the budget that impact the tax rate. The only caveat to these changes is that by law, once the rate has been certified by by board it cannot be subsequently raised by the Department of Management.

So if the tax rate has consistently dropped, is your tax bill lower? Perhaps, but not necessarily. That is because there are a lot of variables used to calculate your tax bill. First, and perhaps most important: school taxes aren't the only taxing authority that your property taxes support. Among some of the entities in addition to schools that are funded through property taxes include cities, counties, and community colleges. Each taxing authority has the responsibility to set their rates, and obviously if one rate decreases while another one rises the property owner sees little if any change. 

A key variable in determining your tax bill is the value of your property, and more specifically the percentage of valuation [of that property] that is used to calculate your tax bill. For the sake of simplicity, let's assume you own property valued at $100,000. The Iowa Assessment Limitation has implemented a 'rollback' that is applied to your assessed valuation. Again, using that assumed assessed valuation of $100,000, in 2019, the property tax bill would have been calculated on a valuation of roughly $55,000 when using the rollback. In 2020, that same property would have been applied on approximately $56,000 of your assessed value. You can view the rollback chart by clicking here. You will note the rollback changes every year. It is important to understand this table doesn't take into consideration how your property value may change over time. Our homes do increase in value, which helps us to buildup equity in our investment. 

Once all those variables are known, the calculation of your property tax bill is quite simple. You simply take the taxable valuation of your property (after applying the appropriate rollback percent), divide it by 1,000 and then multiply by the tax rate. The example to the right assumes a property valued at $100,000 with a rollback of 56%. In our modeling, we use an assessed value of $157,686, which is the average home valuation in Hudson. 

It is important to point out the examples used in these illustrations are based on residential property owners. Nevertheless it is important to keep in mind there are multiple classes of property that are subject to rollbacks. We primarily focus on residential property since the vast majority of property owners in our school district are residential property owners. That stated, we have agriculture, multi-residential (apartments), industrial, and commercial all represented. Rates are also applied to utilities as well, but that is a complication we don't necessarily need to get into at this point!

Finally it is important to note that property tax is but one revenue source that is used to build our budget capacity. The fact is, the biggest contributor of revenue in our budget is state aid. In fiscal year 2020, 58.2% of our budget resources were from state aid whereas 39.4% came from property tax collections. In a future post, we'll talk more about how the blend of state aid and property tax is calculated in a mechanism known as the aid and levy worksheet. 

The Charter Dilemma

There is a saying during the legislative session that it isn't over until its over. That stated, signs do point to the fact that current voucher proposals don't appear to have enough support in the Iowa House to advance. That seems to square with public sentiment. The majority of Iowans feel the same way, at least according to the recent Iowa poll which found that more Iowans oppose public funds [being used] to pay for private education. 

However, the fate of an expansion to Iowa's charter school law remains uncertain at this point. There has no doubt been a heavy focus on education during this legislative session. The pandemic has shined a light on the importance of having schools open and in session, not only for the educational role that we play but for those secondary and tertiary benefits that during normal times we take for granted. The frustration some parents had with decisions made by schools that led to them not reopening in a timely manner, and their feelings of being trapped are understandable. Frankly, I was disappointed that some of my colleagues felt state law didn't apply to them. Unfortunately this has given our legislators all the permission they needed to focus a lot of attention on choice schemes that would do nothing but undercut the good work that is going on in our public schools around the state. 

So while I have cautious optimism the voucher bill has been stymied (at least for now), the charter expansion does not yet garner that same amount of confidence. Here is what you should know about this bill. First, it is important to note that Iowa currently has a charter school law on the books. That's right, a mechanism already exists for charter schools in Iowa. Granted, there aren't very many of them. Proponents of the expansion would argue the current law is too onerous and cumbersome to set up a charter. I might counter that point with the thought that when dealing with multi-million dollar organizations (which deal with taxpayer money); having a bit of oversight and accountability might be a good thing. 

What this current proposal would do is eliminate a lot of that accountability. In fact, this charter bill would permit an out of state corporation to set up a charter school in a community and completely circumvent the locally elected public school board. These folks who run the charter school would be accountable to their shareholders, and not even live in our communities. If the parents who sent their kids to the charter school had a complaint, they wouldn't have the option of airing their grievances with the local superintendent or having an opportunity to speak at the next school board meeting. The Board of Directors won't be elected by the local community and may be two states over. 

The arguments that I have made countless times against the privatization of public schools over the years remain the same, whether we are talking about voucher programs or charter school expansion. Public money needs to remain with public schools where there is proper oversight and accountability from the local community and locally elected school board. 

The latest installment of Jamie Vollmer's 'Schools Cannot Do it Alone' network video is 'The Privatization Game'. In this video, he rightly states that public money should be reserved for public schools. He goes on to state there is no higher return on our investment than public schools: 7:1!

Mission Creep

Early on in the school year, we were invited to participate in Jamie Vollmer's 'Schools Can't Do it Alone Network'. As part of this network, I have been passing along videos that Jamie has shared to all of you. If you are unfamiliar with Jamie's work and background, I encourage you to check out his website here. Jamie has long been engaged with public schools and was first invited to participate in reform efforts by viewing our system through his lens as a business owner. In the beginning, he was one of our harshest critics and suggested that if schools would simply operate as businesses we could fix all that ails us. However, after he really studied the public school system and discovered the tremendous success they have, he became one of their fiercest advocates. 

Today I am going to share with you two of the latest installments from the video series. Both of these very short videos (running about 4:00 each) speak about the growth of mandates in our schools over the last 120 years. The first addresses those that have been added from the period of 1900-1960 and the second talks about all the mandates that were added from 1960-2000. The list is staggering! Yet they are so interwoven into the fabric of our system that most think they have always been there. (We'll have a brief primer of the original function of public schools and their primary goal in a post after spring break.) That is not to say they are neither good nor bad, they just are. A couple of examples would include school meal programs or the introduction of kindergarten; (first half day then full day) which at one time were not ubiquitous with our system of schools. Good mandates, right? Mandates nonetheless, they are the responsibility of our public school system. Truth be told, it's no wonder schools are used as the vehicle to address the problems that plague our society. We are after all the largest governmental organization in our communities with logistical operations that can’t be matched by other agencies. Can you think of any other organization with the logistical structure and manpower that would have been able to pull off operating a comprehensive meal program during a pandemic? And we have a captive audience. But, how do these mandates come to pass? Legislation of course. 

Each year as the legislative session begins I post a series of blog articles that discuss legislative priorities that are endorsed by the board. By their very nature they form a legislative platform of sorts. They are the framework upon which our advocacy efforts are built. One of the standing items included in our annual agenda is that of unfunded mandates. That is because inevitably, each year public schools are asked to add one more item to our list of growing responsibilities-and without the resources we need to execute that daunting list of 'to do's'. 

Nevertheless, the one immovable variable that we seem unable to tackle is time. We continue to cram things into our annual list of school mandates all while nothing ever seems to go away. In fact, it would seem that we continue to reinforce the notion that schools can in fact do it all: and do it in roughly 180 days a year. Recently, our legislature introduced a bill that would have required schools to teach cursive writing. The bill didn't survive the funnel so it is a dead issue for now. Granted, we can have a debate about the pros and cons of cursive writing (perhaps we even should?!). For certain it can help develop fine motor skills and there are correlations between the tactile act of putting 'pencil on the paper' and brain development. But let's be honest: when was the last time you wrote something substantive in cursive? Or is a requirement your job? Be honest.

Perhaps we could all come to agreement that yes, in fact cursive is an important skill that needs to be included in our curriculum. But then our next question should maybe be: what are we willing to give up in order to make that happen? We only have 180 days. Choose wisely.

One Year Ago Today

One year ago today I posted my first blog article about COVID-19. We were still five days from the first cases even being reported in Iowa. The point of that article was benign. It included the usual talking points that would normally be mentioned during a typical cold/flu season. You know, the ones that are relatively common in Iowa during late winter/early spring: wash your hands and cover your mouth when you cough or sneeze. A week later, the regent universities announced they would be extending spring break and moving their coursework online. Following that announcement, superintendents in Black Hawk County released our own statement underscoring our plan to remain in person and assuring the community that our intent was to continue normalized operations for the foreseeable future. Of course that didn't happen. Nevertheless, we finished out parent teacher conferences that week, our music department headed for New York City, and we all prepared to enjoy a relaxing spring break. If you recall, we had experienced a relatively mild winter with few snow days (which meant no breaks), so everyone was very much looking forward to the time away. But by Sunday evening, we had recalled the music department (as they skyline of New York City was coming into view) and the governor had requested schools across the state close for the next four weeks.

That first article was really an after thought. I mean, the cases currently being reported were in Seattle, Washington: more than 1,500 miles away! I was also thinking that our timing was going to be pretty good for-what to this point I didn't think was going to be all that big of a deal. I figured, lets get everyone out of here and away from one another for a week of spring break. We'll have an opportunity to complete a deep clean of the campus and then everyone will return for the traditional 'mad dash' to the finish line. Well, you all know the rest of the story and none of that ever happened. By about the second week of our closure I was beginning to have serious doubts about whether or not we would reopen for the school year; but never let those dark thoughts creep into the conversation with anyone outside the cabinet.  

A year ago. This last year has been challenging for all of us. We have been through an awful lot together. A shutdown that separated us for months. A slow and agonizing march toward the end of a school year that no one could have imagined. Activities cancelled and a commencement ceremony that we made the best we could for our graduates. A reopening this fall that gave us all a sense of relief, feeling oddly familiar and foreign at the same time. 

As leader of this school district, it has been stressful at times, frightening at others, and inspiring throughout. Stressful because of the enormous pressure we were under to not just reopen this fall, but to do so safely while creating an environment where our students and staff could feel comfortable. Where parents and employees could trust that we had covered all the contingencies (and then wondering if we truly had). Stressful because, as your superintendent I am supposed to know the answer to the questions that eluded us but at times having no idea if our plans would work. 

Frightening because, well going into this knowing that it was not a matter of if, but when. Would our safety and mitigation plan prove to be effective? Would the quarantine firewall hold? Lying awake at night worrying that someone would get sick: too sick. Our low point came at about the middle of November. The countywide positivity rate was in excess of 26% and we had more than 11% of our student body absent due to a COVID related reason. While evidence suggested our plan was working and the firewall was holding, we were in a very tough spot. The odds were not good that we were going to be able to remain open (a lot of credit goes to the school board for making a very tough call).

And inspiring. You know, as we were preparing to reopen I was hearing stories from all around the state and nation that teachers and other school employees were refusing to return to the classroom (believe it or not, some schools in the country remain closed today). I have firsthand knowledge of multiple teacher from around the state who just up and quit. At Hudson? Not one. I didn't hear one complaint from any employee. Instead, I heard thanks. Thanks because I think they know we did everything that we could to prepare them for the challenges of this year. But most of all I think it was thanks for letting them return to the classrooms to engage in the work they love with the children they adore. 

Inspiring because of this community and the way you rallied around your school. Early on in the closure we had a teacher parade through town and I was deeply touched and inspired when we drove by one home in town and an elderly gentlemen stood at the end of a driveway waving an American flag as the caravan went by. Inspired by the notes you sent, the phone calls we received, and the grace you extended. Inspiring to watch our school board wrestle with issues that were the furthest things from their minds when they volunteered for this most noble of service.

Someone once told me that as humans, we can handle almost anything for a year: particularly if we can see an end in sight. Well today we are a year into it, a day that I have had circled on the calendar for awhile now. Over the holidays when we first started hearing good news about vaccines I began to believe that by spring break we would really start to turn the corner. I believe that now more than ever. While I don't think we will magically return to normal by spring break, there has never been a time to be more optimistic. 

Our theme, or hashtag for the year has been #PirateRising. I chose this because I thought it would be a year that would test our resolve. It would put challenges in front of us that we had never seen before, and it most certainly has. But, I knew that our school, our community would rise to the challenge. I can see it happening all around me. These Pirates. They most certainly are rising.