FORT MADISON – Early preliminary budget numbers show that the Fort Madison Community School District will be able to use a budget guarantee this year to levy for additional funding due to the loss of just over 32 students.
The district’s Business Manager Sandy Elmore said it’s still too early to tell the impact of the Educational Savings Account legislation that moves public school funds per pupil to private educational savings accounts for residents to use to put students in private schools.
The district is looking at a budget of about $16.2 million for the next fiscal year beginning in July of 2024.
The district’s general fund is a compilation of property taxes and state aid which are set by state formulas, and a 10-year instructional support levy that is currently in place and is a mix of property tax and income surtax.
In addition to the general fund, the district has a management fund and Physical Plant & Equipment Levy (PPEL) fund which are both property tax driven. Other revenue comes from the state’s 1-cent S.A.V.E. distribution based on enrollment which lands in the PPEL account, student activity fund, the nutrition fund, a debt service fund, and any state or federal grants the district is awarded.
The SAVE Fund is the penny tax implemented on all taxable sales and services in the state. It's collected at the state level and distributed to all districts in the state based on per pupil, or enrollment. It is interest-bearing.
“This is the fund we borrowed against to reconstruct, remodel, and do our Prek-6 and 7-12 facilities. We did not issue any general obligation bonds, so no property taxes were used. So, I just want people to know those buildings are not being remodeled or reconstructed with property tax dollars,” Elmore said.
She said the SAVE fund is governed by a Revenue Purpose Statement which is approved by voters.
The SAVE penny tax gets transferred into the district’s debt service fund because legally the district cannot pay debt except from the debt service fund.
She said the assumption used in developing the budget to this point is a 2.5% growth, which is what was proposed by Governor Kim Reynolds earlier this year. She said the district will likely be eligible for about $50,000 in guaranteed budget money. That money kicks in when the district loses students and gives them a year to adjust to the loss of students which, according to state aid formulas based on enrollment, can take some time.
She said the governor’s proposal to lower the state income tax level to a flat 3.9% will impact the district on the income tax surcharge revenue stream.
“That’s the assumption. The income surtax is a tax on a tax. If I have a $100 liability to the state of Iowa on my Iowa 1040, in our school district you would owe three dollars. It kind of helps not overburden the property taxpayers,” Elmore said.
She said the district has had that income surtax as high as 6 percent, but for the past several years it’s been at 3. In order to have an ISL, the district said it would always use a mix, so that it couldn’t make the surtax so high a property tax component in the ISL wouldn’t be needed.
In the 2023-24 the district set its tax levy at $11.79/$1,000 of assessed valuation. That rate was second lowest when compared to eight area districts. Fairfield was the lowest on the chart Elmore presented, however Central Lee’s figures were not represented on the chart.
This year’s rate won’t be known until the rest of the budget process takes place, which includes additional calculations based on assessed values, some public hearings and several budget notices being submitted to the Lee County Auditor.
The final adopted budget needs to be submitted to the county April 18.
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