This is Week 4 of a 6-part series.

I am writing about what I’ve learned so far as a STC school board member. This week I am talking about our district’s budget and finance. I feel one of the biggest roles of the board is viewing and passing a certified budget. It is due to the state auditor every year by April 30th. There are a lot of moving parts for that to happen. The budget needs to be completed by all school districts a year in advance. This allows the state of Iowa to make policy and still stay within their budget.

When I was first elected to the school board, I attended a finance training session with the Iowa Association of School Boards. I learned that school finance is more complicated than I imagined. There are a total of 10 different fund sources that school districts have to pay their bills, and each source is assigned a specific expense. It’s like having 10 checkbooks! Each checkbook can only pay for certain things. Some incomes can only go into certain accounts. These fund sources include a few major categories like the General Fund, Debt Service , PPEL(Physical Plant Equipment Levy), Management Fund and others. So the school’s Nutrition Fund can only pay for the school lunch program. PPEL, both voted and board approved, can only pay for the buildings and grounds improvements, repairs as well as equipment, buses and school vehicles. PPEL money cannot be spent on monthly bills, employee wages, or benefits. The general fund is more flexible; however, the school district’s biggest expenses are salaries and benefits. They are paid from this fund, along with curriculum expenses, fuel and electricity. It can be very confusing for a beginner!

So what goes into a certified budget? A lot!

#1 Income. How much income can we expect from our many different sources like property and sales tax income, state and federal assistance programs, grants and even donations. Our district receives about 6 million dollars in local property tax monies per year and close to 15 million dollars in government aid in one form or another. As of next year, the schools portion of property taxes collected has gone up a total of 18% over the last 12 years. That’s 1.5% per year on average (based on ag land property taxes). Fifty to sixty years ago, all school districts ran on 100% of property taxes collected locally. Thankfully for us that is not the case. Today we are just shy of 30% property tax funded in our district. Some higher industrialized communities school districts run on 80% or more from local property taxes.

#2 Expenses. Most of our expenses are no different than those at home. Do these sound familiar? Things like electricity, food, insurance, debt repayments, repairs, fuel and improvements. In addition to these and by far the biggest expense for our school system is personnel labor and benefits. Our labor cost is roughly 80% of our overall $21,000,000 budget. After the district’s $1,200,000 budget reduction this last spring, our new budget will be closer to $20,000,000.

This is a good place for me to talk about the “operational sharing” our district does to reduce costs. This year in an effort to save money, we made several cost saving measures. The STC district now shares our superintendent two days a week, director of maintenance and one of our business officials with the North Tama School District one day a week. We share our Student Resource Officer (SRO) with the City of Toledo during school months and just recently, we added our Director of Curriculum position to share with Grinnell Newburg School District one day a week. The state assigns an incentive for each of these positions. Our benefit is saving the salaries and benefits for the time shared. We receive maximum incentive dollars from the state that brings in an additional $165,000. Our overall income and savings to the district is closer to $335,000 when you include their salaries and benefits.

#3 Enrollment. In the last two years, our roughly 1460 student enrollment dropped by 60 students in our district. At around $7,635 per student of state aid, that is close to a $458,000 reduction for our budget alone. The only expenses that drop are the teaching staff salaries of those 60 students. The lights are still on, the buses still run etc, it basically

increases the overall cost per each student remaining, currently around $14,000 per year. So when enrollments drop, so does our state aid. This next year state aid is $7,864 per student, a $229 increase will amount to a $320,600 increase for our district. Another concern for our district is the opening of the new christian school in Tama. How will this impact our district? The state and federal aid money will follow those students if they leave.

#4 Lastly, how much money is unspent from the previous year.

Now, the first three points are the basic things that have to happen. The more complicated version is a little over my head. Our financial person is Katie Mathern. She knows her stuff! Things like the unspent authorized budget ratio, maximum spending authority, solvency ratios and percentage of revenues spent. Figuring out numbers like the district’s overall property tax rates, certified enrollment, last year’s budget and next year’s projected budget. Katie knows just about everything in between and it has to be right! School districts that are out of balance financially can be shut down by the state. When using taxpayer money, there are a lot of rules to follow.

So after all the information is put together and next year’s budget is figured out, the board holds a public meeting to give everyone an opportunity to voice their opinion or objection to any or all the numbers that make up our budget. Then shortly after that, the board revises if necessary, votes to pass and sends it off to the state auditor for even more scrutiny.

Our district is in good financial shape, not too much and not too little. It’s where we should be. That being said, there are millions of dollars in repairs and updates that are on the 5 year plan. Most of those are just going to have to wait.

I’m happy to inform you that as of now we are NOT going to pursue a PPEL vote this fall. The main reason we are not is we feel there is a lot going on in the district with the building of the new middle school. Upon completion next May, we will have a better understanding of where we sit financially and that our academics are going in the right direction. Our superintendent John Cain, and the board feels that when things settle down in a year or so and old property is sold, we can more accurately assess our needs for the future. This will mean that some future tough decisions will have to be made as we go. So if you want to do your part in our district, have more kids! We get more state and federal aid and they are tax deductible! Anyhow, that’s a wrap for this week. I hope you learned a little bit.

Next week is all about our athletics and activities at STC. Until then, that’s how I see it!

Rick Hopper is a member of the South Tama County Community School District Board of Education.