Iowa schools left in limbo despite growing state revenues

School districts across Iowa are flying blind with less than a month left to certify their budgets for the coming fiscal year. Although Iowa’s state revenues are rising and expected to grow more next year, administrators have no idea whether K-12 district budgets may increase, and if so, by how much.

Students and teachers will pay the price for the decision by Iowa House Republicans and Governor Terry Branstad to hold school funding hostage to education reform.

Under an Iowa law Branstad signed in 1995, the Iowa legislature is supposed to set an “allowable growth” level for K-12 school district budgets more than a year in advance. That bill passed the Iowa House by 96 votes to 0 and passed the Iowa Senate by 50 votes to 0.

Following the schedule outlined in the Iowa Code, the Democratic-controlled Iowa Senate approved 4 percent allowable growth for fiscal year 2014 (covering the 2013/2014 academic year) in early 2012. However, the Republican-controlled Iowa House honored Branstad’s preference to delay action on school funding until after the legislature had passed comprehensive education reform.

The Iowa House and Senate managed to agree on a scaled back education reform bill late in the 2012 session, but school funding was left unresolved.

In late January of this year, the Iowa Senate again approved 4 percent allowable growth for K-12 school districts in fiscal year 2014. Senate Republicans unanimously opposed that bill. Incredibly, one Republican claimed senators were acting prematurely by setting a school funding level that should have been set a year earlier, under Iowa law.

Last month, the Iowa Senate approved 4 percent allowable growth for fiscal year 2015 (covering the 2014/2015 academic year) as well. Senate Republicans uniformly opposed that action, and Senate Minority Leader Bill Dix asserted that “it is fiscally irresponsible to commit to fund a system before it is reformed. The Legislature has no business setting this rate two years out when the fiscal year 2014 rate is not yet solid.”

Hey, Senator Dix, how about, “The Legislature has no business disregarding the 1995 law that says lawmakers should set the percent of growth for the state school foundation aid program a year in advance?” For many years, Iowa lawmakers followed that timetable no matter which party controlled the state House and Senate.

Nevertheless, Iowa House Republicans again refused to consider school funding in a stand-alone bill this year. Instead, they included allowable growth language in an education reform bill that passed the House on party lines in mid-February. (Click here, here, or here for more details on the education reform provisions.) House File 215 calls for 2 percent allowable growth in the coming fiscal year that begins July 1, and 2 percent allowable growth in the 2015 fiscal year.

During the last four decades, allowable growth for Iowa school districts has rarely been as low as 2 percent. Iowa House Democrats tried to amend House File 215 to set allowable growth at 4 percent for each of the next two fiscal years. However, Republicans defeated that effort by party-line vote (see pages 316 and 317 of the House Journal).

The Iowa Senate is scheduled to start debating the House education reform bill this week, but resolving the differences on education policy and teacher compensation will likely take weeks.

Meanwhile, school districts are trying to draw up budgets for next year. Nearly 180 superintendents indicated in January that “aid to local schools must be set by March 1st or earlier to avoid teacher layoffs, crowded classes, and harm to student achievement.” The legislature failed to act in time.

Four school board presidents in Linn County co-authored an editorial in the March 20 Cedar Rapids Gazette. Excerpt:

This is the second year the governor and the Legislature have failed to fulfill their responsibilities to school districts and the students in Iowa. It is disappointing to see the highest elected officials in our state simply ignore the law. If the governor and the Legislature disagree with the school funding law, then they should follow the democratic process and change the law. […]

Over the past three years, education has been funded at the lowest level in the 40-year history of the school aid formula. In the late 1980s Iowa was as high as eighth in the United States in education funding on a per student basis. We now stand at 31st. Iowa invests about $1,000 per student less than the national average and that gap is widening.

Before the recent economic downturn, allowable growth on average was set at 4 percent per year. We in education understand that during the tough economic times, we are all expected to make sacrifices and we have done so. However, lower education funding levels and an increase in expectations have left school districts with little capacity to fund programs and respond to the needs of our students. The state treasury is expected to close the current fiscal year on June 30 with a balance of more than $1 billion. The state is now in a position to increase education funding to 4 percent allowable growth.

Why is on-time funding important? School district budgets must be approved and certified by April 15, collective bargaining agreements must be negotiated, and staffing and program decisions need to be made. Unless the Legislature acts promptly, school districts must assume the worst, perhaps even reducing staff and cutting programs in the next few weeks.

It should be a huge scandal that the governor and Iowa House majority ignored a state law in order to gain leverage in a political battle over education reforms. But aside from a few newspaper editorials buried on inside pages, Iowa’s mainstream news media have mostly failed to communicate what is happening with K-12 education funding. Few Iowans are even aware that Branstad and Iowa House leaders placed themselves above the law.

The normally conservative Gazette editorial board commented last week,

Digging deeper into reserves, layoffs and/or increasing local property taxes again are the fallback options [for public school districts]. Fixed operating costs can and do increase despite cutting expenses elsewhere.

This is no way to run a budget. The state is making life unnecessarily painful for local school districts.

It’s high time for legislators to get their act together. Metro area school board presidents are urging a prompt decision that includes 4 percent growth (see adjacent guest column). While we’re not sure that figure is the right one, after three lean years of state aid, a significant increase is due.

Most important, this decision must no longer be held hostage by political differences or the governor’s preference to do reform first.

I’m outraged that staff and programs are likely to be cut again in my children’s school district, and in hundreds of other districts, when state revenues are solid and rising. Iowa’s Revenue Estimating Conference just predicted that revenues in the current fiscal year will be $325.9 million higher than in the year that ended on June 30, 2012, and revenues in fiscal year 2014 will grow by another $233.6 million.

Clearly Iowa can afford to fund 4 percent allowable growth, which works out to about $135 million in additional state support for K-12 schools in fiscal year 2014. But administrators have to draw up budgets not knowing whether state aid will increase at all. Perhaps they’ll get the 2 percent growth House Republicans prefer, or the 4 percent Senate Democrats prefer, or something in between, but for now they can’t count on anything extra.

Any relevant comments are welcome in this thread.

  • Holding allowable growth hostage to reform

    is unnecessary and irresponsible because it appears that the senate will go along with most of Branstad’s reform proposals — maybe more than the house.

    Between this issue and Branstad’s stubborn opposition to Medicaid expansion, it seems that his imperious attitude toward governing has gotten worse with age.

    • and the collateral damage

      is extensive. Before long, school districts will announce decisions to cut programs and start sending out pink slips to staff. Not all of those actions will be reversed even if the legislature eventually comes up with 3 or 4 percent allowable growth for FY 2014.

      Branstad talked about reforming Iowa schools but never campaigned on a platform of blowing up the funding formula, that’s for sure. It’s also bizarre that he made such a big deal about the need for biennial budgeting but doesn’t comprehend that school districts need some predictability.

      • Yes. Schools will lose some good teachers.

        Those who get pink slips will start looking for other jobs. When (and if) the district has funds to recall them, they may no longer be available.

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