LEE COUNTY – Information from the Iowa Association of School Boards shows the new property tax law will reduce funding from the state’s SAVE fund to the tune of about $8 million over the next 10 years in Lee County.
Fort Madison and Central Lee school officials are concerned about the impact of the cuts, but stopped short of saying it would cause a crisis in budgeting.
Secure an Advanced Vision for Education (SAVE) funds in Iowa are distributed to school districts monthly on a per-pupil basis from a statewide 1-cent sales tax, providing a consistent funding stream for school infrastructure, technology, and property tax relief.
The new property tax law signed by Governor Kim Reynolds this month now will move an increased amount of the funds through what’s called an ‘equity transfer’ back to the state to pay down the current $5.40 state foundational school levy. The new law will reduce that to $4.90/$1,000 of assessed valuation by July 1, 2029.
That’s also the same date that county’s must have a general fund levy not to exceed $3.50, all part of recent heavy legislative work to reduce property tax burdens on Iowans.
State Rep. Blaine Watkins (R-Donnellson) said this makes districts go to voters more for spending increases as well being another way to help reduce property tax drains on Iowa’s families.
“We’re trying to buy down that levy, because people have been paying on it, down from $5.40 to $4.90 but yeah it's to make up those funds.”
Watkins said district officials need to start thinking about property tax dollars like they do their own money and re-evaluate what are needs and what are wants. He said the state legislature has increased supplemental aid to public schools in the state every year and districts should be having harder conversations around spending.
“We can look at some of the stuff and say, ‘hey what's a need and what's a want’,” Watkins said.
“I mean we're giving them what $8,149 a student and then we've got 10s of thousands of dollars on top of that from the feds and the local property tax money. I saw a number the other day that showed we're at about $20,000 a student now, which you know is great. But I'm sitting here thinking to myself, ‘you know, what else is needed.”
According to a data sheet from the Iowa Association of School Boards, the new law will reduce funding to Fort Madison by about $3.5 million over the next 10 years, while Keokuk is projected to see a decrease of about $3 million and Central Lee will lose close to $1.5 million.
Fort Madison Superintendent Mike Wolter wrote in an email to Pen City Current the hit certainly won’t cripple the district as far as infrastructure, but it will create some shortfalls in future flexibility.
“The recent legislative action reducing future SAVE funding will certainly impact school districts across Iowa, including Fort Madison,” Wolter wrote. “At this time, however, we do not anticipate the reduction creating issues with our current debt service obligations. Based on our current projections, those obligations remain manageable within the anticipated revenue stream.”
Wolter said the district doesn’t anticipate any increase in property tax ask to compensate for SAVE fund revenue, however the district is still using the funds to pay down bonds issued for the Jr./Sr. High School and Elementary renovations.
“At this point, we do not anticipate this change directly resulting in a property tax increase related to our current debt obligations, but it will likely limit districts’ ability to address future facility needs as efficiently as they have in the past,” he wrote.
“SAVE funding has historically allowed districts to complete facility improvements and infrastructure projects without increasing property taxes through separate bond referendums. As that funding is reduced over time, districts will have fewer resources available for additional projects and long-term facility improvements. For Fort Madison, this could affect the timeline or scope of future projects such as athletic facility updates and other capital improvements that we would otherwise consider in the coming years.”
Watkins said he would like to see more of the spending put in front of voters, but Fort Madison Community School District Board President Josh Wykert said technically SAVE fund spending has already been approved by voters.
“A lot of districts, ourselves included, have already bonded against that money to improve school facilities without increasing property taxes, and passed voter approved revenue purpose statements saying as much. Not to mention part of those funds already go to property tax relief,” Wykert said.
Central Lee Superintendent Dr. Andy Crozier said the new law takes needed school funding and redirects it to other local governments.
“This scoops 25% of your SAVE funds. The fact of the matter is school districts won’t see a property tax decrease until 2029 when they reduce the uniform levy at the point,” Crozier said at Tuesday’s Central Lee school board meeting.
“They’re going to take public education dollars that (district voters) county-by-county voted to have done - and pay for other services in the state. So - great job, I guess,” he said.
Board member Mark Hulsebus asked Crozier if there would be lawsuits against the move because legislators are going against measures that were approved by voters throughout the state with the voter-approved Revenue Purpose Statements that are required by Iowa code for SAVE spending.
“I don’t know. I would hope so, but I have not heard anything,” he said. “All I know is that another bill was passed in the dark of night and that normally is not a good thing for Iowans.
“Obviously no one wants to pay more property taxes and I’m sure this helps in other ways, but I don’t see why public schools have to pay for property tax reform for municipalities and cities and counties - and that’s what’s happening. But that’s my two cents.”
Board member Matt Doty said reducing the SAVE could cause Central Lee, who is currently the only district in the state to not have the board approved Physical Plant and Equipment Levy (PPEL), to institute that levy, which would ultimately increase property taxes, or at a minimum eat up any savings to district taxpayers through the SAVE transfer.
“You wonder why legislators weren’t asked that question, but, no, they did not ask that. You are right, Matt. I told our superintendent candidates that the property tax bill could result in a higher tax rate at Central Lee,” Crozier said.
“Now they just took funding from SAVE. So what do they think we’ll do to get that? We might have to levy the board approved PPEL in the future. This is what happens when legislators don’t interact with their local constituents, local school boards, and local administrators.”
Hulsebus said all the local legislators including Watkins, State Sen. Jeff Reichman (R-Montrose) and State Rep. Matt Rinker (R-Burlington) voted for the property tax reform.
Reichman said the bill also extends the SAVE program until 2071, which is another 20 years so districts can look at possibly refinancing current debt service being paid with prior SAVE revenue projections. Those revenue projections are what banks used to set interest rates and amortization schedules for bonds issued. He said the law changes the mix between state aid and property tax that comes into play after State Supplemental Aid is determined.
"This bill changes the mix between these items to provide greater property tax relief," he said. "I think schools are just wired to say it's not enough, we need more money."
Comments
No comments on this item Please log in to comment by clicking here