Let’s head to the top of the Dome and dip our toes into something even more complicated than property taxes. State aid for schools.
If you thought local city and county government financing was complicated from last week’s 275-Foot View, that financing pales in comparison to all that goes into school finances. Schools get their spending money from a variety of sources. Based on a Google search, on average 40% of their funding comes from the State of Iowa, mostly from the state’s General Fund. Another 40% comes from local sources, primarily property taxes. Another 8% comes from federal funds for programs like special education. The remaining 12% comes from other revenues, such as bonds (usually for the construction of new buildings, infrastructure updates, and the like).
But, that is just a good snap shot. Last week, I mentioned “siloes.” When it comes to state and local funds that are derived from property taxes, those funds can generally be spent for specific things. A quick search of the Iowa Department of Revenue shows that there are up to 9 different funds that a school can maintain, all but one that is entirely or in part derived from property taxes. I should add that a school can also derive funds from the SAVE (Secure and Advanced Vision for Education) 1% sales tax that is added to each of your taxable purchases.
Now, I’m going to admit up front that this is not my area of expertise. It’s taken 7 years in the legislature to understand it to the level that I do. This area is so complicated that schools employ a school business official that has a particular background, receives specific training in school finance, and must be authorized to be a school business official by the Iowa Board of Educational Examiners. I just went to law school. That was easy compared to this.
This is why I said we will only be dipping our toes in on this topic. If you want to learn more, I would encourage you to attend your local school board meetings around budget time!
When we convene each January, one of our first topics we begin to discuss is what we refer to as SSA (State Supplemental Aid). The State of Iowa contributes to local school districts a set amount of money for each student enrolled in the school district. However, this is a bit misleading because the student enrollment number is based on the enrollment at a certain point during the current school year, while the funding is meant to cover school’s costs in the upcoming school year. Thus, a growing school can be left a little short, while a contracting school may get a little extra. It’s not a perfect system and we’ve had discussions about changing it, but as with anything, there can be consequences and complications that can crop in as we make what sounds like positive changes.
So, let’s put some numbers in here to illustrate what we do. In the 2025 legislative session, the legislature ultimately approved a 2% increase in SSA funding for the 2025-26 school year. This calculated out to be an increase of $157 per pupil enrolled in a school district in the spring of 2025. This added $62.7 million dollars to the state budget just for SSA. In all, the state spent an additional $107 million+ on K-12 education for a total of over $3.9 billion for FY2026. K-12 education spending reflected about 42% of the total budget.
In addition to SSA, the legislature approves funding for a number of different costs incurred by school districts. In 2025, the legislature approved additional funds to help with school district transportation costs, to equalize some enrollment disparities in certain districts (this is called “per pupil equity”), to assist schools with “operational sharing” (which, for the most part, is what it sounds like), and to enact the second phase of increasing teacher starting wages to $62,000 per year. In addition, the Iowa House stood firm and found the funding to follow through on the plan to raise para-educators pay to a minimum of $14 per hour.
Now, back to SSA. It is one of the largest and most debated expenditures in the General Assembly. The conversation has been heated, and not just between Republicans and Democrats. The Iowa House, the Iowa Senate and the Governor’s office have had very differing views on what the percentage of increase in SSA, and overall education spending, should be year over year.
In my time in the legislature, the average increase has been 2.39%, with 3% being the highest and 2% being the lowest.
Another reason that SSA is one of the most debated topics is our time constraint in reaching an agreement. The General Assembly is bound by statute to agree on SSA funding for the next fiscal year within 30 days of the Governor providing the legislature with her budget proposal. Now, there is an “escape clause” that allows us to go beyond that date – and we have certainly done so. I will say that, at least from my perspective in the House, we have used the escape clause during my time primarily because of the sharp disagreement that the House has with the funding levels proposed by the Senate and Governor. The House has continually tried to hold firm for larger increases. We will see what happens in this legislative session.
As I mentioned, school funding and all that goes into it is a very complicated issue and I cannot delve too deeply into that topic without getting everyone, including myself overwhelmed and confused. In the end, we all want schools that provide the best education for our children.
I hope that this sparks continued conversation with additional food for thought and a perspective that perhaps you have not yet contemplated. Thank you for taking a moment to take a look at this issue from the 275-foot View!
