The Blend of Property Tax, State Aid and Federal Stimulus

As discussed a few weeks back, our budgeting evolution is a multi-month process that includes modeling and forecasting our future spending patterns, enrollment trends, and taxable valuation. Another important feature of budget development is determining the blend of state aid and property tax. In Iowa, we use a tool known as the Aid and Levy worksheet. Running around 8 pages at roughly 430 lines, the aid and levy is for all practical purposes the formula that determines the annual revenue stream for school districts. It is also a tool designed to reduce property taxes under an equitable formula. I would argue the aid and levy is the primary reason lawsuits that have been attempted to call into question Iowa's funding formula have failed. Granted, there are no perfect funding solutions for public education! But I would argue ours does a pretty decent job. I say that with caution and sincerity while at the same time stating unequivocally: there are areas for improvement. But that would be getting way too deep into the weeds for our purposes!

Luckily these days the aid and levy work can be finished with just a few inputs. Granted, these are very important inputs that we need to carefully consider and really know what we are doing, but by completing a handful of calculations the 8 page document is largely complete. (Back in 'superintendent school' we had to complete each individual calculation by hand. It took hours and hours of time over a several week period. Ah, the wonders of modern technology-and excel!)

So the question must be: what is the blend of local property taxes and state aid? As the chart to the left here indicates, just over 39% of our revenue comes from local property tax whereas the largest bulk of our revenue is derived from state aid. As you can also see, a very small fraction of our operating capital is derived from federal sources. Most of our federal revenue is dedicated to our special education program and Title services. In our school district, the most common title service that you may have heard of is Title 1 reading. 

However, this current year and next we will be receiving quite a bit more in federal funding due to COVID relief. Where the chart above depicts those federal funds at approximately $190,000; we will also see an infusion of federal funds of over $660,000, with the expectation those funds are expended by September 30, 2023. It is important to know these funds can't be used for just anything, but we do have pretty broad authority with which to operate. A portion of the funding will be dedicated to making up the learning loss from last spring, which is the reason we are planning a summer school program for this summer (and how we are going to pay for it). The school board is currently deliberating how best to maximize these dollars so we can get the best return on our investment.