This Was Predictable

It should come as no surprise that school districts all around the state are facing budget cuts. Des Moines cut $14 million from its budget during this school year and continues to have discussions about future budget limitations. Dubuque recently announced the closure of one of it's elementary schools and is poised to make even more budget cuts. Cedar Rapids is planning a $12 million reduction; and in our own backyard, Waterloo has announced a $10 million cut. 

As some of the largest school districts in the state located in metropolitan media markets, it is not surprising these are top of fold stories. For the most part, these budget cuts are due to enrollment decreases caused by private school vouchers. Now, I'll concede the point that school districts must staff their programs to match enrollment patterns. But as I have argued multiple times, it is never an equivalent tradeoff. In other words, a 20 student drop in student enrollment may well suggest the elimination of a teaching position, but that 20 student drop didn't occur in just one grade level. The by-product will be larger class sizes, the dilution of support staff to work with those students, and the elimination of programs. 

While the largest school districts in the state grapple with the implementation of what can only be described as austere budget cuts, smaller rural school districts have had to contend with decreasing enrollment for years. In our own conference, 10 out of the 14 districts represented had a decrease in enrollment averaging 17.04 students from last year to this year, and it isn't a 1 year anomaly. This is a pattern. If it were a 'one off' perhaps a more nuanced strategy of budget reduction could be implemented. But when you are shedding 20+ students a year it becomes a much more serious issue. It simply becomes unsustainable. That is what happened in the Orient-Macksburg Community School District. Located in southwest Iowa, the residents there voted to dissolve at the end of the current school year. 

Implementing a strategy that reduces expenditures in light of a decrease in enrollment is as obvious as the sun coming up tomorrow (as painful as it may be). Public school funding in Iowa is tied directly to enrollment, so the fewer students that are enrolled means less revenue. The remedy is to cut the budget. Granted, saying it and doing it are two completely different things. These decisions and discussions become quite emotional, particularly when a favorite teacher loses their job or a popular program is eliminated. 

But decreasing enrollment isn't the only reason why school districts are cutting budgets right now. Truth be told, the fact that annual growth in per pupil cost (aka SSA) isn't keeping up with inflation is another reason. And with the rate being set artificially low year after year, it only exacerbates the issue. When you compound decreasing enrollment on top of low supplemental state aid, well the outcome is quite predictable, and exponentially more challenging. 

Think about this. Currently, the general assembly is locked in a stalemate between the House and Senate about how much to increase the state cost per pupil for the next school year. Set aside the fact that the legislatively mandated deadline for doing so has long since passed, and that there is no mechanism or penalty for this abdication of responsibility. The Senate insists the rate should increase by 2%. The House insists 2.25%. Either way you slice it, this is below the the current CPI rate, or 'cost of living adjustment'. Both legislative chambers argue this is what the state can afford. Considering they blew an enormous hole in the budget when all the private school students were added to the state cost per pupil calculations-its no wonder. Furthermore, the states latest revenue estimations suggest a $1.2 billion decrease in revenue between FY 24 and FY 26. Yes, this was not only predictable: it was forewarned.

Frankly, I think 2% is the best we can hope for.

Consider a scenario where enrollment is exactly the same from one year to the next. That amount of budget growth (2%) doesn't even keep up with inflation, which means the only remedy is to cut expenditures. In Hudson's case, [if we had] flat enrollment this would equate to an increase of $127,723. To put that in perspective, our general fund expenditures next year are expected to top $12.5 million. That won't cover the fixed costs needed to manage the budget, let alone grow programs. Luckily, Hudson has growing enrollment so we are in a much better position than most. 

The point is this: a school district's enrollment grows or they will have to cut their budget. 

Understanding Your Property Tax Statement

If you haven't already, in the next couple of days you'll receive a notice of proposed property tax in the mail from Black Hawk County. The purpose of this notice is to provide transparency to property owners as it relates to your property tax bill. Prior to enactment of this law, the requirement was simply to publish the rate per thousand with the notice of proposed budget. The trouble with that practice was, without providing any context the rate [alone] is virtually meaningless. This notice is meant to provide that context. But it doesn't quite close the loop because it a bit confusing and a little misleading. 

First, it's important to understand the question we are trying to answer. I think its pretty simple. As a property tax payer, I want to know if my taxes are going up or down; and why. The problem with the way we used to do it is that when it came time to pay property taxes, our only reference point was the rate. If the rate went down or stayed the same, our working presumption was that our taxes would either be the same as the previous year or go down. Except they usually don't. When the tax bill came we were surprised (and not very happy) to learn that it was in fact higher than it was the previous year. So you might call the taxing authority and ask why (in this case, perhaps a Superintendent of Schools, County Board of Supervisors, or City Manager). The answer that you probably would get was less than satisfying: "Our rate is the same as it was one year ago". That answer is disingenuous at best. At worst, it's misleading because it fails to properly provide the context as to how property tax is calculated. 

The formula for calculating property tax is really quite simple: Taxes Levied = Value x Rate (T=VxR). Rate is the only variable that is controlled by the taxing authority. Value on the other hand is not, and quite frankly is a bit more complicated to understand. That is because value is determined by the county assessor and subject to the 'rollback'. So for starters, if your property assessment is $100,000 in year one, is it assessed at $100,000 in year two? If the answer is no, and with all other variables remaining equal your property taxes will rise. The other consideration is the rollback. Simply stated, a rollback does just that. It rolls back the percentage of your property assessment that you actually are responsible to pay taxes on, which is known as the taxable value. Last year, your assessed value was rolled back to 46.34%. So on that $100,000 house, your property tax bill was calculated on $46,343. This year, your assessed value is rolled back to 47.43% in taxable value. On that $100,000 property, your property tax bill is now calculated on $47,432. This means that even if the rate is identical from one year to the next, your property tax bill will increase. It will compound even more if the assessed value of your property increases. Kind of like a 'double whammy'. In this example, you can see how the rollback alone impacts your property tax bill- independent of rate and property value: 

What the legislature is trying to do with the property tax payer statement is to help you understand what is going on in this formula, and see what your property tax bill is going to look like compared to the previous year. Valiant effort for sure. But no doubt confusing and somewhat misleading. Let's take a look. To begin, if you haven't seen the notice yet you can download a copy of it from our school website. You can go to the 'About Us' page and find it as item #3 under the 'Basic Financial Data' submenu. Or, click right here. For the purpose of this conversation, I want to focus your attention on the bottom third of the notice, which is captured here for your convenience. 

First, let's take a look at the top line of the graphic depicted above. The arrow to the left represents the property tax rate for the current school year. If you follow that column down vertically, you will see the property taxes that were levied for the current fiscal year assuming your property value was $100,000. On the right (see the top right arrow) is the proposed property tax rate for the next fiscal year. This is where the property tax statement gets confusing at best and misleading at worst. In the far right column, those two arrows seem to suggest that the property owner can expect to see a 12.81% and 14.22% property tax increase based on their property valuation and whether or not it is residential or commercial property. However, this instrument makes the huge leap that your property valuations have increased by 10% from one fiscal year to another. See the section circled to the left. Unless you have made some pretty substantial renovations to your property, that kind of increase seems unlikely.

So, what of the 'effective property tax rate'? Well, it's a meaningless measure that is set by Code, which is why I crossed it out in this example. This number is arrived at by taking the 2025 property taxes and dividing them by the 2026 valuations. Think about it this way. If you are a basketball player and took the number of field goals you made last year and divided it by the number of shots you made this year. While you can certainly calculate it, it's not an incredibly useful metric.

Now that you have a better idea of how your taxes are calculated, the operative question must be, why the change? Good question! If you refer to the graphic above, you'll notice a stated reason. The trouble is that the graphic above is limited to a 300 character maximum, so we can't provide a lot of detail. What is 'cash reserve levy' and why is it important? Well, specifically this refers to a financial metric known as the 'solvency ratio' and measures the percentage of reserve fund balance against the total revenue for a fiscal year. In recent years, our fund balance, and solvency ratio has been dropping. This is because of two primary reasons: enrollment growth and special education expenditures not funded by the state. It is important to be specific though when we talk about enrollment growth. The enrollment growth that is being referenced here is residential enrollment and NOT open enrollment. Students who attend Hudson under open enrollment are funded through 'on time' funding whereas residential enrollment gains are funded a year behind, thus the reason for the drop in fund balance. The mechanism with which to recover this fund balance is through the cash reserve levy. The target range for our solvency ratio then, is 5%. 

The other levy rate that may tend to fluctuate from one year to another is the management fund levy. You should notice that the amount of levy has decreased from $546,065 to $347,560 for next year. This is done primarily to offset the increase needed in the cash reserve levy, and to deliberately lower the carry forward balance in the management fund. Don't worry, there is an overarching strategy here as well. The management fund, you may recall from previous posts, is used primarily to fund retiree benefits and property/casualty insurance for the district. In recent years, deductibles for catastrophic property loss have increased substantially: to 1%. This may not seem like a lot, but with close to $50 million in assets, 1% is $500,000. The strategy here is to maintain a balance of $500,000 in the management fund after meeting our other fiscal obligations and encumbrances so as to cover the deductible in the event of a catastrophic loss. 

While not incredibly intuitive, the purpose behind these taxpayer statements is noble. It is also meant to provide accountability from the taxing authority. For too many years, the focus was rate driven where instead it should have been revenue focused. Most people probably aren't all that interested in what the rate is. You are not writing a check for the rate. However, you are interested in how much you are writing the check for; and deserve to know the reason why it is different from what it was the previous year. 

Hiring for Our Future

This is shaping up to be one of the busiest hiring seasons for licensed staff we have had in more than a decade. As of the writing of this article, we've hired six licensed staff positions and have three openings remaining. Granted, of these nine, three represent new staff due to increasing enrollment. Even so, six of them (representing approximately 8% of our teaching staff) are positions that are being vacated for a variety of reasons. Whenever we have turnover it is imperative that we look inward and ask hard questions. Attracting teachers is one thing. Retaining them for the long run is entirely different. Naively, when we hire teachers I believe they are going to stay in Hudson for their entire career! Yet when I look back at our employment census over the last decade, I run across those who were here for a year or two before departing for other opportunities. In some of those earlier hires it is becoming somewhat difficult to put a name with a face!

We have worked very hard over the last handful of years to create climate and culture where our educators feel valued and respected. A place where they can earn a salary that recognizes their unique talents, educational level, and skill set. Hopefully they see in Hudson not only a great place to work, but a safe place to raise a family. But it is a bit discouraging when I see the number of vacancies that have piled up so far this spring. I suppose the bright spot is that, for the most part these vacancies have more to do with personal decisions than they do with an overall dissatisfaction with our district as an employer. It is my firm belief this hiring season is merely a confluence of coincidences.

While we may be able to take a bit of comfort in that regard, it doesn't erase the monumental task that has been placed on our hiring agents to fill these incredibly important vacancies. That is in part one of the reasons why we try to get a jump-start on hiring. The great candidates won't be around for very long! Furthermore, our hiring practices include making both tactical and strategic decisions. We are lucky insofar as our stronger financial position enables us to hedge a bit when making tactical hiring decisions. Keep in mind our financial position is directly linked to outperforming our enrollment projections. Because of this growth, hiring decisions are critically linked to maintaining educational quality and student-teacher ratios. It becomes much more difficult when enrollment is static or declining. With static or declining enrollment, tactical decisions are oftentimes not possible because the SSA growth factor isn't even enough to meet current employment contract obligations. The byproduct of which is delayed hiring decisions and larger class sizes. 

Increased student numbers necessitate additional staff, from teachers and support personnel to administrative roles. Case in point: we have 200 more students in our district today than we did in 2010, which was the last time we employed a middle level principal. At the same time, our incoming kindergarten class currently projects 68 students. One that could be staffed with 3 teachers, but tactically it makes sense to staff it with 4 teachers because we simply don't know how many 'move ins' we'll have over the next 6 months and financially we can afford it. You can be assured though, that if that particular grade level maintains an enrollment in the mid to upper 60s it will be converted to a 3 section grade level at some point in their continuum of education. 

Our hiring practice isn't simply about filling immediate vacancies; it requires strategic forecasting to anticipate future enrollment trends. This is one of the reasons why we have contracted with an outside firm to help us understand our enrollment patterns and develop sound projections. By analyzing historical patterns juxtaposed with statistically accurate projections, it provides for a proactive approach that ensures we can accommodate a growing student population without putting undo financial stress on the system or compromising the learning environment. For the last handful of years, we have budgeted for another English teacher at the high school without filling that position. The need has just 'not quite' been there yet. This year, because of some internal requests for transfer based on credentials we had available, we were able to move forward with adding this position. However, the reality was/is that we could probably get by staffing it as a half-time position. But to be honest, in this labor market there is very little interest in part-time employment. So we needed to think strategically. In order to be able to recruit (and hopefully retain) quality staff, we've added a course to the English department and created an additional section of another. While not yet a full time position, this strategy will ensure that our school not only meets its present day obligations but also builds a strong foundation for future success. 

Implementing AEA Reform

During the last legislative session, the general assembly was mired in debate over the future of the AEA system in Iowa. Legislation was proposed that would forever alter the mission and scope of the system. Almost everyone in the education sector argued against this legislation, claiming the change stood to do real harm. Parents advocated as well, sharing personal stories about how the AEA had positively impacted their families. All of this was to no avail. The decision was made, it was now just a matter of getting it through both chambers and to the governor's desk. Once the inevitability of the plan was set in motion there was no stopping it. Calls to at least slow down and thoroughly study the issue were dismissed. Legislators who stood opposed quickly fell in line, and the speed at which a proposal became the law of the land was quite dizzying. 

It may surprise you to know that in my role as Superintendent of Schools, I don't have to make a lot of decisions. Most of the day to day decision making in a school is done by the teachers and administrators. It may also surprise you to know that those daily decisions range in the hundreds. Mine do not. But the decisions that typically are made in my office have far reaching consequences. When it comes to the budget, a financial mistake can be catastrophic. When it comes to tax policy, it can be economic. And when it comes to capital improvements, those decisions can be generational. Because there are fewer decisions and they have impact far beyond my tenure, none of them need to be made with haste or immediacy. I have the benefit of time to study, gather feedback, float ideas, and most importantly: think things through. It is important to consider the long range implications of that decision. For example, when principals advocate for adding FTE I remind them this isn't a $50,000 decision. It is a $500,000 or a $1,000,000 decision. By taking the time to gather the data, study the issue, and listen to constituents, it gives me the opportunity to see my blind spots and shape the decision. Taking ones time when making big decisions leads to better outcomes. What happens when we rush things? Well, I would point to the current status of the AEA system as 'Exhibit A'. 

Since that bill was enacted, as a state we've largely moved on to the next thing. What's done is done, there is a new issue that needs to be addressed-advocated for; advocated against. Except for one thing. The education sector hasn't really moved on. The work of implementing this massive piece of legislation is ongoing. So how is it going? Well, it's going exactly like we thought it would: not great. 

Part of the beauty of the AEA system was the fact that school districts knew that working and partnering with the Agency was among the most cost effective ways of doing business and providing services to students. In other words, it was always cheaper to work with the AEA. From massive printing projects to repairing computer equipment; one couldn't beat the AEA. However, the legislation was explicit in the fact that fees for service needed to be 'market value'. Translation: more expensive. Now in fact, it makes sense to use Copyworks instead of the AEA for some projects. We could share positions with the AEA. Perhaps a school district needs an ELL teacher, but not a full-time ELL teacher. The collaborative network of the AEA could make that happen. Simply take the cost of that employee and divide it among the districts utilizing that service, and that was all there was to it. But now, if the AEA is involved, be sure to add in the operational fee. 

Right now, as we speak school districts all across Iowa are developing service delivery plans with their local AEA. We are trying to decide what services to contract, what professional development consultants should be employed, and whether or not to use Copyworks. Indeed it is very difficult to make some of these decisions; who knows whether or not we'll need a consultant for a 'problem of practice' that presents itself on March 4, 2026. Time of course is of the essence because the AEA has to submit their budgets by February 28th to the Department of Education. Without knowing for certainty what their staffing plan will be or supplemental state aid.

So what are districts doing? Well, they are opting out. It makes little fiscal sense to share a position with the Agency when they can avoid an operational fee by sharing directly with another school district. It makes little sense to commit the expense of a professional development consultant without knowing for certain it will need to be deployed. And if it is cheaper to get printing done a Copyworks, guess what?

It is both maddening and frustrating. But at the same time I have incredibly empathy for our colleagues all across the state who have worked in and for the AEA system. Most of us didn't ask for this, but here we are. I predict a year from now the statewide AEA system will be a shell of what it once was. And I predict the work that we once relied on the AEA to perform for us will now be done by the local LEA. It will be more work for those districts, and more expensive.

The Childcare Conundrum

At the end of January, I posted an article titled 'Growing Pains'. The theme of that post was to discuss the significant enrollment gains the district is experiencing and the stresses that growth is causing throughout the system. Part of that article explained that it was relatively easy to add an extra section of a grade level when the numbers dictated such. But, perhaps 'easy' isn't the right word. Maybe it is just easy to see? After all, the sheer numbers make these relatively simple math problems that can be observed by anyone. I ended that column with an explanation that led to our decision to proceed with the hiring of a middle level building principal. Ironically enough, we are interviewing candidates for that position this week. But if you recall, I also shared that the 'easy' decisions ended there, and there were in fact a lot of unanticipated issues lurking in the shadows. 

The fact that, once the current 2nd grade gets to 7th grade we are going to have some limitations that quite frankly could lead to larger class sizes. We'll need to answer some questions like: The number of restrooms we have? Computers for students? Where to serve lunch? How long would we like lunch to last? Where and how many classrooms do we have? All of these are issues that will continue to compound. Luckily we have a few years to figure it all out. Yet truth be told, we are reaching that tipping point where these constraints are now presenting in unique ways. Is another facility project in the future? Possibly. But before that conversation, we'll need to do a lot of legwork prior to embarking down that road. Nevertheless, space is now at a premium in our facilities and will be for the foreseeable future. 

School programs and all the trappings that come along with them take primacy in school facilities. I think everyone agrees with that. This would include everything up to and including those activities that take place before and after school, right? Our co-curricular clubs need a place to meet, athletic teams need a place to practice, and the after school program needs a space for after school study. That is why we informed the 'Y's Kids' program this past fall this would be the last year they would be able to operate in the school. Due to increasing enrollment, we simply don't have space available for the program next year. While we had considered some of our 'common space' as alternative locations, the number of activities and spaces they use make these solutions untenable. Yet we saw this coming. Last year should have been their last year, but we were able to make it work by sharing space with other groups. Further, it was just too close to the start of the school year for families to make alternative arrangements. 

Remember in the first paragraph where I made the comment that there are a lot of unanticipated issues lurking in the shadows? Well, this would be another. But, we're not the only entity to experience space constraints. Case in point: the largest provider of before and after school childcare in our community is also at capacity. St. Timothy Preschool & Childcare recently announced limitations to the number of children they will be able to serve in the 2025-2026 school year. As a community, we are incredibly grateful for the service St. Timothy provides. At the same time, I totally understand and empathize with the enrollment constraints they are currently contending with. 

St. Timothy is a great partner for the school district and we are happy to have them, not only as a resource for our school district but the community writ large. They have done real yeoman's work in the childcare arena. They have continually looked for opportunities to expand and grow their programs. We have engaged with them where we can. However, it is not St. Timothy's responsibility alone to solve the childcare conundrum. Nor is it the school districts. We are clear eyed that while this is a school related issue, it is not solely a school problem to solve. Even so, we are committed to helping find solutions where we can. But let's be clear, even working closely together, this will take a collective effort to solve. If you would like to be part of the group that has been working for the past 18 months to try to solve the childcare challenge (shortage), please contact Clara Nehmer, Director of St. Timothy Preschool & Childcare. 

We Haven't Forgotten

Early in the school year we had a discussion about the ubiquitous presence of smartphones in our district, particularly in the high school. To refresh your memory, I would encourage you to checkout the September 25th installment of my blog titled Smartphones in Schools. The cliff note version is that we were seeking community feedback on whether or not our policies needed to be strengthened and an invitation to join us in our quest to learn more by reading Jonathan Haidt's book, The Anxious Generation. That post was followed up by a survey and a November 5th article titled What You Told Me About Cell Phones. In that column, I shared results that indicated 63% of respondents believed that our cell phone policy needs to be strengthened. During this interim period, there has been very little in the way of discussion about this topic, at least in this blog. Yet that's not to say we haven't been engaged in policy discussions and proposals. In fact, those policies currently do exist in draft form and were scheduled for a first reading at the November 20 school board meeting. However, after reviewing those policies and debating them on their merits, I recommended the board table action on the policy. The consensus being that we needed just a little more time to iron out some inconsistencies and logistics. Throughout this dialogue I have asked that we take our time so as to get our policy position right. 

Then in December we learned the governor was going to propose a legislative policy on cell phone usage in schools. So, I recommended the board table action until we learned more about what the governor would propose. Even so this work has continued slowly in the background, along with a standing discussion on the school board agenda as one of our items of 'unfinished business' for the school year. In any event, the governor's proposal was introduced last week in the Senate as SSB 1065. The bill includes much of what one might expect in a cell phone 'ban' bill, primarily among them a restriction on student use of personal electronic devices during classroom instructional time. This proposal sets the floor for restrictions and further authorizes the Board of Directors to adopt policies that are more stringent. However, what is most interesting, and perhaps helpful, is a proposed legislative mandate that includes instruction related to the effects of social media for grades 6-8. So our work continues. We will monitor this bill through the process and offer suggestions and insights as it moves through the process. In my view, this is a great starting point. 

Meanwhile our book study continues. In part 4 of The Anxious Generation, Haidt argues that collective action is needed in order to tackle and counteract the negative effects of overuse of electronic devices in classroom. What action is needed formed the crux of the question I asked my administrative cabinet at our last meeting. What exactly is the problem that we are trying to solve, I asked them? If it is merely to combat the distractions caused by devices during instructional time (in class), then our current policies are likely sufficient. However, if instead our goal is to improve the mental health outcomes of our students then we likely need to go much further. I then pondered somewhat rhetorically, in twenty years are we going to have causal data that links extreme mental illness in children to the effects of electronic devices? Could we be looking at the next 'Big Tobacco' moment in American history? 

Perhaps. Haidt argues collective action is needed in order to address this issue. Schools are certainly part of the solution. But so too are the tech companies. When called to the carpet for the damaging impact of their products, tech companies will look their accuser in the eye, and with a wink and a nod tell you their products aren't intended for users under the age of 13. In fact, it is federal law. These companies are relying on the honor system to enforce these laws. How hard is it to create a fake profile? It's not. However, the technology for age verification exists; but these measures would impact the bottom line, it's all about the 'hook'. If you read nothing else in Haidt's book, read pages 230-231 where he claims that internal documents obtained from Meta show they have considered how to reach children as young as 4! (The Anxious Generation, Chapter 9 page 231).

Collective action. If we use the metaphor of a stool, I think it perfectly encapsulates the idea of collective action. We need schools to have strong policies regarding the usage of personal electronic devices in schools along with an educational component that teaches not only appropriate use but the negative mental health impacts of overuse. We need tech companies to implement strong age verification protocols to protect young people from harmful content. And finally, we need parental support. Indeed, a supermajority: 63% of respondents indicated that we need to strengthen our policies. That is impressive. But at the same time, 37% disagree with that statement. And a subset of that 37% have very strong feelings. While I may not agree with some of the reasoning surrounding these objections, I can empathize with those feelings. It is then, incumbent on all of use to underscore the rationale behind a policy change while at the same time incorporating into those policies measures that mitigate those fears. 

Our work continues and we haven't forgotten!

Where We're Headed: Part 2

At the beginning of the school year, we conducted a needs assessment survey to help us with the formulation of our next strategic plan. As part of that planning, I spent some time reviewing the progress we made on our most recent plan, which you can find in this article here. Respondents for the survey included 1 school administrator, 2 school board members, 11 staff members, 130 parents and community members, 29 teachers, and 50 students. Thank you to everyone who responded. The board subsequently used those responses to formulate our next strategic plan which can be accessed under the About Us page of our school website. 

Setting the stage for this strategic plan, we recognize foremost the district is experiencing robust enrollment growth, due to both open enrollment and residential enrollment. This, along with a strategy for controlling open enrollment was discussed at length in my October 16 article entitled, 'Counterbalancing Residential and Open Enrollment'. There is no mistaking the fact that residential construction in Hudson has been on the upward trend. In 2023, 22 residential home building permits were issued, adding a total residential value of $10.8 million to the district. Through the month of August (2024) 22 more residential home construction permits were issued, adding an additional $11.9 million in taxable value to the district. Over the last two years, 44 home construction permits have been issued in the Hudson Community School District. For more information on the growth of our school district, please refer to my January 29 article, 'Growing Pains'. 

This sets the context for this strategic plan. While the current plan suggested enrollment growth, it was much more conservative and speculative than what has actually come to fruition. This [enrollment phenomenon] is even further removed for the document titled ‘Hudson 2020’ where enrollment was actually declining across the district. Indeed, this is a very different school district than it was a decade ago, even five years ago when the previous plan was adopted. As we soon will see, the challenges facing the Hudson Community School District are vastly different from those faced in 2019.

Among the key findings in the survey, a plurality of both parents (45%) and students (33%) suggest that preparation for life after high school be the top priority for improvement. There is a significant drop-off after that, falling to 19% of parents suggesting that meeting the needs of all students should be the top priority. A second priority becomes less clear for students, as there does not seem to be a statistically significant finding. It is also less dramatic when board and staff members are asked to identify their top priority for improvement, although ‘reading’ is clearly identified (21%). However, the drop-off to ‘meeting individual needs of all learners’ is second at 15%. 

The district is currently wrapping up a major construction project at the high school attendance center. Included in this project is the addition of a career and technical education center. This career center, coupled with the addition of the CAPS program and more robust work-based learning opportunities, may help strengthen the top area of improvement as identified by both parents and students: prepare students for life after high school.

While only 26% of students indicate that anti-bullying efforts need to be improved, it did represent a plurality of students. On the other hand, 23% of board and staff members suggest teaching needs to changed, compared to 28% of parents and community members indicating that parental involvement needs to change. Both the elementary and secondary schools are engaged in continued efforts to combat bullying and harassment in schools, which was indicated as an area that needed to change by the students. The high school is currently involved in a social and emotional based professional development series designed to improve overall mental health in the system. Further, the district has recently taken steps as required by Iowa Law to combat chronic absenteeism and truancy. This work better enables the district to fine tune and understand what reasons may be leading to chronic absenteeism, including avoidance that sometimes comes from bullying. Finally, the board is currently engaged in work to strengthen our cell phone policy, which may be a contributing factor in online bullying and harassment.

In the future, the district may wish to consider major emphasis on instruction, content and the rigor of content standards keyed toward active student engagement in the classroom. In doing so, this will ensure that all students can learn at high levels, overcoming barriers and improving student achievement. Additionally, continued effort should be made to align the assessment system to the rigor of the standards. Finally, it will be important for all stakeholders to understand how leadership teams are organized and understand how they have a voice in decision making.

Our next step then, is to take those recommendations as outlined in our strategic plan and convert them to actionable goals. The School Improvement Advisory Committee (SIAC) will meet this spring to help formulate those goals. To read the full strategic plan, click this link. 

The Trouble With the State Budget

My first year teaching after graduating from college was in a small parochial school with a starting salary of $18,100. I can remember getting that first paycheck and thinking: wow, I can't believe they are actually paying me to do this job! 

After I got past the euphoria of being a professional, it didn't take all that long to realize that wasn't a whole lot of money, even in 1995 dollars. For perspective, the average starting salary for a public school teacher in Iowa at the time was $21,338. By the time I paid my rent ($250), a used car payment, and utilities, there wasn't much left. Then when the student loan payment kicked in a few months down the road there wasn't anything left. When faced with issues like this, there are a couple of solutions: find a job with more income or cut expenditures. For me, this meant no cable TV (cellphones weren't even a thing back then so no cutting to be had there), and a lot of canned food! I was young and healthy, so health insurance was also a luxury that I couldn't afford. For those of you too young to remember, in the mid 90s health insurance wasn't always a 'sure thing' as far as benefits were concerned. I could purchase it from my employer, but it was far too expensive and seemed like a waste of money considering I never went to the doctor. (I know, I know!)

Whether it's 1995 or 2025, that is how budgeting works. You live within your means. If your 'means' are too high, you cut expenses. Or you look for a way to improve your income stream. That's how it works for governmental entities as well. Except, not always. For public school districts, we really can't change the revenue side of the ledger. Our revenue is governed by property taxes and state aid. We have a statutory limitation on [spending] based on that revenue stream that is known as 'spending authority'. If revenue doesn't match expenditures we only have one option: cut expenditures. 

What if I told you that when faced with a budget problem instead of cutting expenditures, we were actually going increase our expenditures? You would probably tell me to update my resume. But wait, I'm not quite done yet. What if I also shared that instead of looking for ways to improve our revenue stream, I would actively pursue strategies to decrease that revenue? Up is down, down is up. Most people would probably question my competence. Rightfully so, rightfully so.  

Yet that is exactly what is happening with the state budget. In fiscal year 2023, the state of Iowa general fund net receipts were $9.721.3 billion. The Revenue Estimating Conference met on December 12, 2024 and set the 2026 fiscal year estimate at $8.601.9 billion. Yes, these numbers are quite large, but the math is quite simple: a $1.120 billion decrease in revenue. The decrease in revenue is because of policy decisions that have been made at the state level regarding tax reform. We'll all pay less in taxes this year. We're all for lower taxes! However....

In order for this to work though, there has to be offsets on the other side of the ledger. The expense side of the ledger, and we need to be prepared to accept the consequences of those offsets. It may come in the form of road repairs. Public safety. Or in the case of public schools, larger class sizes. The challenge of course, is that we want to have our cake and eat it too. The truth is that we like to have smooth roads and safe bridges. If we need to call 911, we sure hope someone shows up quickly. And parents, well I know you don't want your kindergartener in a class of 30. 

The reality is that very few things in our economy cost less than they did a year ago. In fact, its a safe bet they are going to cost more: fuel prices and natural gas are up. The software that runs our student information system cost $10,360.50 last year. This year, that same software package was $12,262.62. That kindergarten teacher is going to work wherever they can earn top dollar for their talents. So it goes. The only way to really impact the expenditure side of the ledger then, is to implement some of those 'austere' measures that were discussed in the paragraph above. We've actually had to do that before here in Hudson. I can promise you it is no fun and incredibly painful. I'm glad we don't have to do it right now. Even so, I understand the challenge.

Except that isn't what the state has done. No, quite the opposite in fact. Instead of cutting expenditures to match the revenue stream-they have actually increased the expenditure side of the ledger. And not, by the way through a natural 'maintenance of effort' type strategy. You know where I'm going, right? The expenditure side has increased because of the added expense of the voucher program. HF 68, enacted in the 2023 legislative session phased in state funded Educational Savings Accounts equal to the state cost per pupil set annually by the general assembly. It included a three year ramp up that this year includes no limit for income eligibility. The additional cost to the state, that didn't exist prior to 2023 is estimated to be more than $450 million annually.

So when compared to fiscal year 2023, we already estimate a revenue gap of over $1 billion entering fiscal year 2026. Add in the expense of the voucher program and the state has effectively decreased revenue while at the same time committing to new expenses. This only makes the gap worse. Now, there will be calls to use the emergency or rainy day funds to close this gap. Frankly, I'm not sure that is a wise decision. 

In school districts, this would be akin using our unspent budget authority-one time money-to shore up an ongoing revenue shortfall. We say one time because, once that money is gone it's gone forever. Budgeting 101: don't use one time money for ongoing expenditures. Further, we must ask ourselves: is it wise to use the rainy day fund for a self inflicted policy decision? Those are the questions that our legislators are currently wrestling with. I suspect it will get a bit uncomfortable before the dust settles. 

Growing Pains

On Monday we posted a new leadership opportunity for Hudson Schools by announcing our search for a middle level principal. While this is something that had been under consideration for the past several months, it follows a recent press release from the Iowa Department of Education that shared statewide enrollment figures. That communication indicated that Hudson achieved the highest percentage enrollment growth among all districts in the state for certified enrollment. Keep in mind certified enrollment is a depiction of resident students only and does not include those open enrolled. So how did we get here, and better yet; where are we headed? First, some context.

During the 2010-2011 school year, Hudson Schools enrolled 721 students. In the intervening decade, student numbers fluctuated between that 720 and 750, reaching a low water mark of 692 during the 2016-2017 school year. Then, beginning in the 2017-2018 school year, we began reporting enrollment PK-12 as that was the year we launched our statewide voluntary preschool. That first year of operation, we reported 28 students in the program. Over that epoch, staffing levels have flexed to meet the needs of all students throughout the district, sometimes requiring an extra section here or there, or other times not replacing a position when it became vacant. The point is, as enrollment either grows or retracts, so too does our staffing configuration. 

But what has happened to enrollment since 2020-2021 is not a mere fluctuation in enrollment. It has been a steady, if not rapid increase. Think about this. In the 2020-2021 school year, our PK-12 enrollment was 766. This year, enrollment tops 924 across that same grade span. Projections do not seem to suggest a slowdown anytime in the next 5 years. Even more jarring is a comparison between 2010 and 2025. A staggering difference of 203 students.

The question is, what is causing it? Well, we can certainly point to changes in the open enrollment laws that have made it easier for families to choose Hudson Schools. But that isn't the only, or likely even the primary reason for this growth in enrollment. After all when it comes to open enrollment, we have the option to deny those requests when we become full, or even slow open enrollment as residential enrollment growth accelerates. Both of these options have been and will continue to be exercised in our district as we even out our section sizes in open grade levels. The fact of the matter is that open enrollment today is largely limited to existing siblings who are enrolled and employee's children.

Yet, we still must wonder, what happened in 2020 and the subsequent years that sparked our growth? The answer is simple: residential development. When I arrived in Hudson in 2010, Upper Ridge Estates was the only game in town and it was just a little more than half full. In 2020, Ann and I built our home in the second addition of Upper Ridge, and ours was just the second home to be built in that development. Today, that section is full, and another section to the north of us is about 3/4 complete. I haven't counted, but would approximate there are somewhere around 75 homes in our neighborhood. The fact is, in 2010 we were able to swing a bus through that neighborhood on the tail end of an existing route. Today, that is a route in and of itself. 

Upper Ridges is only part of the story. We also have Twin Oaks, Dean Lee, Marian Lane, and Buffalo Trace. Am I missing any? Maybe. There are preliminary discussions occurring right now that likely will result in even more residential development. As of January 2025, there are currently 84 lots in Hudson available for residential construction. 

So then, back to staffing levels. Our staffing plan needs to meet the needs of the students that we are serving. And as I mentioned in the first paragraph, over the years our staffing levels have flexed to meet those needs. Sometimes the decisions are pretty easy calls. If you have 80 students in kindergarten, 4 sections of 20 is not that difficult. On the other hand, if you have 48 it becomes a bit more challenging. We've lived in both worlds and I can promise you that being in the '80 student' camp is much more preferable. 

But the easy calls really do stop there. There are a lot of other issues to be resolved that, well, are lurking in the shadows. For example, when the current 2nd grade class was in kindergarten (our largest current class at 87), we were about 2 weeks into the school year when the teachers pointed out that we didn't have enough restrooms available for the students. This year's first grade started out as 3 sections in kindergarten. We closed open enrollment early and held fast to that decision. This was partly to address the restroom issue, and partly because once we decided to add another 4 section grade level, it would require additional auxiliary positions, namely art. While it was a wise decision at the time, it was short sighted. What happened? Well, over the course of the school year families continued to move into the district. What had started out as a 3 section kindergarten became a 4 section first grade. Adding another classroom also comes with another set of classroom furniture. And Mrs. Betts pointed out to me a few weeks ago: we are out of lockers. So it goes. In 2010, we employed a professional teaching staff of 54. Today that number stands at 72 and will be larger next year. 

What hasn't changed in the past decade and a half is the administrative configuration of the district. For those of you who were around in 2010, you may recall we employed 3 building administrators along with a Director of At-Risk Services. In 2010, one of our administrative positions was eliminated when we had to cut approximately 10% of our general fund expenditures. So here we are. We have decided that now is the time to move forward with the appointment and hiring of a mid level principal specifically to serve grades 5-8. Please believe me when I tell you this decision was not taken lightly. I understand all too well the perception of 'administrative overhead'. But I think we all know the value that strong leadership can bring; not only to the students in that school, but the support they can provide our families, and the instructional leadership they will be able to provide the staff. It is my hope that a middle level principal will help all of us create a visionary framework that will best serve these students now and into the future.

As I wrap this up, it's probably worth mentioning, and wise to think about what is next for the district. Again, enrollment projections do not appear to be slowing anytime soon. Once the current 2nd grade gets to 7th grade we are going to have to figure some things out. Additional auxiliary and supplemental positions will be needed. To help us better understand our trends and trajectories, we have commissioned a study with RSP and Associates to dig deep into these very issues and provide us with the detail and expertise that will be needed to help chart our course. I am excited to learn what the future holds for us. However, there must be no doubt that the future is bright for the Hudson Community School District.

Indeed, its Great to be a Pirate!

Tax Rates and SSA: Part 2

Last week, we ended with a bit of a teaser. What will our budget look like in five years assuming a supplemental state aid growth factor of 2.5%? To remind you, we predict enrollment growth and property valuations to grow at 2.5%. We also expect miscellaneous income growth to fall to 1% due to our inability to serve open enrollment students. That, because increases in residential enrollment growth means there simply isn't room. Finally, we are predicting expenditure growth to drop to 4% per annum following fiscal year 2026.

Budget Forecast at 2.5%

Assuming those variables, the table above is what we can expect our budget forecast to look like. The top line measures the unspent balance. As I have reminded you time and again, in my opinion, the most important metric of school district financial health is the unspent balance. You will note in this example, that regardless of a low supplemental state aid (2.5% in this example), this metric remains healthy. 

However, look at the second line in the table. This is the predicted tax rate based on the variables that are described above. This tax rate has a direct relationship to the bottom line of the table. The solvency ratio is a measurement of how much cash the district has on hand. The low end of what is considered the target range would be 5%. Our property tax rates have been set at a range that ensures our solvency remains in the safe range, albeit the low end of that range. Now, you may be wondering how it is that our solvency ratio went from 17.4% in fiscal year 2024 to a predicted 5.2% in fiscal year 2026. I'll go even further. In fiscal year 2019, our solvency ratio was 25.15%!

So then, what's going on? The answer is quite simple: rapid enrollment growth. And let me be very clear; I am not talking about open enrollment. Remember, open enrollment comes with the cash tuition paid during the year. Residential enrollment is one year in arrears. When that enrollment count hits on October 1, any student that wasn't on that residential count from the prior October 1 count isn't funded in that current year. While we are able to capture the spending authority for that growth in enrollment, the cash doesn't come until the next year. That means we are funding residential enrollment growth with our reserves (and to some extent open enrollment tuition). Because the growth is so rapid, we are expending our cash faster than it can be replenished. Furthermore, there is a provision in Iowa Code that forbids school districts from growing their reserves if the solvency ratio is greater than 20%. The last time we were below that threshold was 2015. It wasn't until enrollment really began to take off that the ratio dropped below 20%.

There is one final caveat that is not depicted in the table above that also impacts property tax rates. The management fund. No, this is not the fund to pay for management expenses. The primary purpose of this fund is to pay for post employment retirement benefits and property and casualty insurance. In recent years, the deductibles for catastrophic losses for district property has increased to 1%. This may not seem like a lot, but considering the value of property in our district, we need to have enough in the fund to cover that deductible, which could easily top $500,000. We have made provisions in our forecast to maintain this balance.  

In last week's column, when discussing this idea of supplemental state aid (SSA), I argued the point that the rate should be set both timely and adequately. I also suggested that the adequacy of that rate is in the 'eye of the beholder'. It depends largely on the context of each local school district and the dynamics that are at play there. However, each year advocacy groups such as the School Administrators of Iowa (SAI), the Iowa Association of School Boards (IASB), and the Iowa State Education Association (ISEA) all publish a range of numbers. Those numbers may range from a low of 3% all the way to 6%! So what is the number for Hudson? Well, if we are looking purely within the context of the property tax rate, 4% would seem to be a great starting point in offering property tax relief for our residents. The table below illustrates the impact a 4% SSA rate would have on our budget forecast.

Budget Forecast at 4%

The only variable that changed between this table and the one at the top of the column is the rate of SSA growth per annum. All other variables: enrollment, property valuation, miscellaneous income, and expenditure growth are exactly the same. What I have done in this example however, is reduce the property tax rate so as to maintain that floor target solvency ratio of 5%. The result is a difference in property tax rate of $2.99! You should also note the difference in unspent balance-it is staggering. This is under that same spending plan, roughly 4% per annum. Granted, we were spending under our annual spending authority by roughly 1%, but in this example, by fiscal year 2030 we would be underspending our annual revenue by almost 6%. Think of all the programs and support mechanisms for our students that could be implemented with a 4% SSA rate!

Unfortunately because of such historically low SSA over the last decade, we have been conditioned to believe that a 2.5% growth rate is good enough. Even more unfortunate, last week we learned that 2.0% was proposed. I haven't even shared with you the impact that 2.0% SSA has for just one single year. With all other factors remaining constant, our solvency ratio will drop to 3.2% in fiscal year 2030. Math is math. The reality though, is that 4% used to be the norm. When I began the superintendency, it was 4%. 2015, the year right outside the decade I illustrated for you last week: 4%. 

In the final analysis, I do not believe we will even get close to 4%. The fact is, I am planning for the 2.0% scenario. Truth be told, we have some issues in the state budget. We'll dive into that next week. 

Tax Rates and SSA: Part 1

Well, the legislative session is now underway. Where the holiday season is the most wonderful time of the year, the legislative session is the most stressful time of the year. I'll spend the next several months waking up wondering what they are going to do to us next under the guise of 'fixing' education. But to pick up and carry forward my theme from the post last week, I'll hope for the best! As we have come to expect this time of year, the first order of business from the legislature should be to set supplemental state aid (SSA) timely and adequately. State law requires the SSA rate to be set within 30 days of the governor releasing her budget targets. That clock is now ticking.

To remind my readers, SSA is the amount which the state cost per pupil grows annually. Last year, supplemental aid grew by 2.5% or $191 per pupil. Remember, the base budget revenue for a school district, or regular program district cost is a simple calculation: cost per pupil multiplied by number of resident students. (Resident students will become important in a few minutes, so stick with me.) So, by knowing what the SSA rate will be, a district can determine how much their budget revenue will grow for the new fiscal year. This is important insofar as planning purposes are concerned. What staffing is needed? How will compensation packages be structured? Will the district be able to implement a new curriculum? All of these decisions need to be made in a relatively short window because state law requires a school budget cycle be completed by April 30, with legislatively mandated milestones along the way. We have a lot of big decisions to make in a compressed timeframe. This is the reason why it is important to set the rate timely. 

What that rate should be, the adequacy so to speak is largely in the eye of the beholder. Each of the 327 school districts in Iowa have differing enrollment(s), priorities, staffing needs, and operate within unique contexts characterized by diverse demographics, socioeconomic factors, and community values. School districts with decreasing enrollment may require greater resources simply for 'maintenance of effort'. Property owners in school districts with increasing enrollment may benefit from a higher SSA as it relates to their property tax rate. That is certainly the case for Hudson. Before I reveal to you the number that I believe is 'adequate' for Hudson, I think a historical perspective might first be in order.

The table above depicts the rate at which supplemental state aid has been set for the last decade. It averages out to 2.04%. The rate at which the governor recommended in her Condition of the State address on Tuesday evening was 2.0%. But, in the spirit of keeping the hope alive that was discussed last week, we'll presume the SSA rate for FY 2026 will be set at 2.5%. Furthermore, based on the last decade of known rates, I think we can [hope] speculate a rate of around 2.5% for the next five years. A bit of a teaser: the lower the SSA, the higher the property tax rate. 

How will this impact how our budget, and by extension, the property tax rate forecast into the next half decade? Well, to get there we are going to first need to infer some other key variables to understand how this interplay work. 

Enrollment Growth: For this exercise, we'll use a static growth factor of 2.5%. In the near short term, it has ranged from 1.9%, to this year being 4.1%. I want to underscore this important point: this is considering residential students only. Open enrollment won't factor into the equation since that cash inflow occurs occurs 'on time', or during the current fiscal year, whereas residential enrollment growth is in arrears by a year. When we complete our certified enrollment count on Oct. 1, that sets the base number for the follow on fiscal year. 

Property Valuation: This variable is a bit more difficult to predict due to ever changing state laws and how rollbacks may or may not be applied to different classes of property each year. Additionally, as the property tax base grows due to residential development, so too will our valuation. Over the last 5 years, property valuation has averaged 4.36%. However, if one were to look at how property values have changes from 2019 to 2020, you would see a growth of 2.06%. From 2020-2025, 2.44%. For our purposes, we'll use 2.5% as the operative variable. 

Miscellaneous Income: Anything that isn't either property taxes or state aid is considered miscellaneous income. For the current fiscal year (FY 2025), our miscellaneous income is expected to be just over $2 million. Now, the largest driver of miscellaneous income is tuition from open enrollment. In Hudson's case, approximately 70% of our miscellaneous income is generated by open enrollment and special education tuition. For this reason, I predict this will slow from a historical double digit increase to just 1%. Why? Because as our residential enrollment grows, we will have less capacity to serve open enrolled students. In fact, this has already begun to slow as we have made the deliberate decision to limit open enrollment in many of our grade levels. 

Expenditures: In the current fiscal year, our expenditures are expected to grow an eye popping 8.74%. For the budget year 2026, we anticipate expenditures will grow another 8.36%. While these are staggering numbers, it is very important to point out that in both fiscal years, we will exhaust just 96.7% of the available revenue for the current fiscal year and 99% of the available revenue for the following fiscal year. In the follow on years out to fiscal year 2030, we'll make the assumption that we can back that off to a roughly 4% growth rate per annum. If you are wondering why such large increases in the short term, the answer is simple. As enrollment grows, so too will our need for additional staff!

That seems like a good place to stop for today. We'll tackle part 2 next week. I'm sure that is a lot to digest. Plus, you want to hear the ending don't you? Next week, we'll answer the question: Based on the variables above, what can we expect our budget forecast to look like assuming 2.5% SSA. Stay tuned!

The Word: Hope

I've been doing the 'one word' thing since about 2017. A lot of the reason for that is that it means I don't have to worry about a New Year's Resolution that will quickly be broken! Whatever 'vices' I may have I'm perfectly willing to continue! So at the end of the year, when preparing for this post I like to look back at the word I chose from a year ago and reflect on that decision. Why did I choose that particular word? What was going on at that time that made me think of that particular word? 

Last year the word was acceptance. I chose that word because Ann was diagnosed with cancer the spring prior. At that time, she was going through chemo treatments every 6 weeks. Our social calendar revolved around doctor visits. We were very limited in where we could go and who could come to visit. It was scary and it was stressful. That regimen lasted through the entire 2024 calendar year. On top of that, both of us had lost parents. So in preparing for that blog post one year ago, 'acceptance' seemed like a pretty good choice. There wasn't anything I could do to change those circumstances but accept them. We had to learn to live with a new 'normal'. 

One year later, the challenges mentioned above continue to ring true. But a brighter future is on the horizon. So now as we stand on the precipice of a new year, I believe 'hope' is the perfect word for 2025. But please understand that hope is not blind optimism. It's the belief that even in the face of adversity, there is still good to be found. It's the courage to face uncertainty with a positive outlook. It's the fuel that drives us to persevere, to seek solutions, and to build a better future.

Hope is not a passive state of wishful thinking. It's an active, intentional force that fuels our resilience and propels us forward. It's the belief that even amidst the darkest of storms, there is a glimmer of light-a possibility of brighter days.

Indeed, uncertainty continues to loom large. Hope does not mean we ignore the realities of the world around us no matter what they are. Perhaps for you it is climate change, social injustice, or political divisions. For us it is largely personal health struggles. Whatever your reality, acknowledging these challenges is the first step toward finding meaningful solutions.

And let's be clear eyed about this: hope is not about ignoring problems. Since this blog is rooted in education and coming from an educator, it is about learning. It is about actively seeking solutions. It's about identifying areas for positive change and taking concrete steps. Let's also remember that while individual actions are important, collective action is even more powerful. By working together we can achieve far greater things than we could ever accomplish alone. 

In spite of our personal and collective challenges, hope cannot flourish in a state of despair. We must prioritize our own well-being. Hope is not a feeling; it's a choice. A decision to believe in the possibility of good things to come. So then, let 2025 be a year of cultivating hope. Hope within ourselves, within our communities, and the world. 

So about that brighter future? Ann was admitted to the hospital the day before Thanksgiving for a bone marrow transplant. We had planned on her being able to come home sometime between Christmas and New Year's Day. As it turned out she was able to come home on December 21, almost 10 days ahead of schedule! Think about the significance of that day. The winter solstice. The darkest day of the year. Even in darkness, we see light. Each day forward will be a little brighter, both figuratively and literally. The doctor told her that is she had to give her a grade on her progress, it would be an A+! There is nothing better than being home at Christmas. Granted the next 6 months will be challenging, but we have hope.

2025: Hope! We'll face the challenges ahead with courage, determination, and hope. Brighter days are on the horizon.