Decrease in Enrollment Could Lead to Financial Trouble for Iowa’s Public Schools

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DES MOINES, Iowa — Every year, Iowa legislators set the State Supplementary Assistance (SSA) rate, which is basically the cost per pupil. You take that cost and multiply it by enrollment and the district has its state funding figures. For the first time in a decade, enrollment in Iowa schools has gone down. Statewide enrollment numbers are down nearly 6,000 students as districts navigate the COVID-19 pandemic. Without a significant increase in that assistance rate, hundreds of schools across Iowa could be in financial trouble.

Margaret Buckton is a partner with the Iowa School Finance and Information Services, which helps school districts understand budgets and tax policy. Buckton says if legislators set a 2.3% increase in the cost per student funding, which is the amount of increase they made last year, 142 school districts would fall into a budget guarantee category and will be guaranteed over $29 million for the upcoming school year. Each district would have to cut their portion of that money from their budgets the following year if their enrollment numbers don’t return to their previous levels.

“If your enrollment decline is greater than the percent increase in cost per student, then typically you’d expect a school districts budget would drop,” said Buckton.

Buckton says the sweet spot in avoiding the budget guarantee and potential cuts for most districts looks to be a 3% increase in that cost per pupil category, where a large and usually growing district like Southeast Polk would receive new spending money.

“If that SAA rate is set at 1%, they have a budget guarantee of over half a million dollars. If the legislature sets that rate at a higher amount, say 3%, they’d have $882,000 in new spending authority,” said Buckton.

History isn’t on those districts’ side. Last years 2.3% increase was the second highest by legislators in 11 years. Even at a 3% increase, Des Moines Public Schools, which took a 3% loss in enrollment, would be facing some tough decisions. “At 3% SSA, they still have a budget guarantee of $2.6 million, but if the legislature were to set that rate lower at 1%, Des Moines would have a $7 million budget guarantee and the next year they’d have to cut seven million dollars which is hard to do,” Buckton said.

While a 3% or even 4% increase may seem unprecedented, Buckton says it’s an unprecedented year and fits the trend of people wanting to return to normalcy. “You look back more than 11 years, it typically ran around 4%, so you might call it a return to normalcy rather than a historic increase,” said Buckton.

Another issue legislators may take a long look at is preschool funding. It is currently the only grade level without a budget guarantee. Buckton says Iowa City saw a state-high 25% decline in preschool enrollment. Without any changes in legislation, they will receive 25% less preschool funding for next school year.

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