Iowa law currently requires the Legislature to set the amount of state aid growth within 30 days of the start of the session. But this amount would not be given to schools for over a year and a half. This can be helpful for school districts to set long-range budgets, but what happens when revenue projections change?
The current law isn’t helping to produce positive results for the state’s fiscal health. Over the past decade, there have been several occasions where the state has over-promised on school aid, only to ultimately under-deliver.
Just as we have brought stability and responsibility to the state budget, we should also work toward the same goal for local school funding.
Recent history reveals many examples of broken promises to local school districts. In Fiscal Year 2002, there was an across the board reduction of 4.3 percent, under which school districts lost $74 million in state aid. In Fiscal Year 2003, the state underfunded school districts by $13.5 million. And in Fiscal Year 2004 there was another 2.5 percent across the board reduction, costing school districts $39.2 million.During Fiscal Year 2009 there was a 1.5 percent across the board reduction, which cost school districts $31.9 million.
These reductions shift the burden on to local property taxpayers and shortchange our students.
In Fiscal Year 2010, schools were hit twice. The Legislature initially underfunded schools by $30.3 million. Governor Culver followed this up with his huge ten percent across the board cut to schools and all of government. That one action cost school districts $227.1 million. In what ended up being his final budget, Governor Culver and the Legislature promised schools a 2 percent increase in funding but didn’t appropriate any state aid to cover it. Instead, school districts were forced to cover this by raising property taxes another $156.1 million.
In each of these situations, the Governor and the Legislature made promises that could not be kept. Tax revenue was not at the level needed to fulfill the state’s promises.
Budget practices changed in 2011 when Republicans took the majority in the House and Governor Branstad was re-elected. This Legislature’s budgeting principals in the past three years have made Iowa one of the most fiscally sound states in the nation. We feel it is important that we honor our funding commitments, ensuring that ongoing expenses are funded with ongoing revenue sources.
The House has passed a bill this year to change the way school aid is promised, to bring this in to line with how we set the state budget. One of our state budget reforms has been the use of a two-year budget, which we are now working to extend to school aid funding. This will allow us to make promises to our schools that we can actually keep.
When families make financial commitments lasting several years into the future, they do so when they have a good picture of their future resources. Making a funding promise to school districts without knowing other budget factors, including the amount of revenue, is poor budgeting.
It is my hope that we will continue to work with the Senate to change the law to set supplemental aid in the odd numbered years, in line with our two year budgeting plan. This would make sure that we honor our commitments and provide the most stable funding for our schools and the rest of the state budget.
Due to actions of this Legislature, Iowa is second in the nation for post-2008 recession spending for education. And next school year, Iowa taxpayers will contribute $10,000 per student to our local schools through property tax, state taxes, and federal taxes. This is an investment that Iowans have said they are willing to make, but the investment must be made wisely, and within our means.