Iowa lawmakers have put forward a proposal for state per-pupil funding that has drawn criticism from local school officials. The Iowa Senate recently passed a bill setting the annual state funding increase at 1.75% for the 2026-2027 fiscal year. This rate is the lowest proposed increase since the 2018-2019 fiscal year, when the increase was 1%.
School districts across the state, including Dubuque and Western Dubuque, are expressing concern that this funding level will not cover the rising operational costs they face. The bill now moves to the House for further consideration.
Key Takeaways
- Iowa Senate proposes a 1.75% increase in per-pupil funding for 2026-2027.
- Local school officials deem the proposal insufficient for rising costs.
- Many districts may need to use budget guarantees, potentially impacting property taxes.
- The House and Governor have suggested a 2% increase or higher.
Proposed Funding Increase Falls Short
The state's funding formula determines how much public school districts can spend on operations each year. This is calculated by multiplying a district's certified enrollment by a per-pupil amount. Currently, the per-pupil amount is $7,988.
Under the new Senate bill, this amount would increase to $8,133 next year. The annual percentage increase in the per-pupil amount is known as supplemental state aid, or SSA. A 1.75% increase is significantly lower than recent years.
Funding History
The SSA rate has been at or above 2% for seven consecutive years, peaking at 3% in fiscal year 2023-2024. The proposed 1.75% is a notable decrease from these levels.
Local school leaders have voiced strong opposition to the proposed rate. They argue that operational costs are increasing at a faster pace than the proposed funding.
"When the consumer price index is hovering around 3%, we are seeing that same rising cost with fuel, with food, with wages, salaries and benefits," said Dan Butler, Superintendent of Western Dubuque. "There needs to be coverage to meet that ... or districts will need to dip into their (financial) reserves and their unspent balance, and continually doing that is not a long-term sustainable strategy."
Impact on District Budgets
Butler highlighted estimates from statewide officials. These estimates suggest that a 1.75% SSA rate could force at least 200 districts statewide to rely on a budget guarantee for the upcoming school year. This mechanism ensures districts receive 101% of their previous year's budget.
However, relying on a budget guarantee often means districts must increase local property taxes to meet the target if state aid is insufficient. The current bill includes a one-time provision for fiscal year 2027 to help districts on budget guarantee avoid property tax increases, but this is not a permanent solution.
Dubuque Schools Face Financial Strain
The Dubuque Community Schools district is already operating on a budget guarantee this school year. Officials from both Dubuque and Western Dubuque anticipate they would likely be on a budget guarantee again if the 1.75% SSA rate is approved.
"Every time we don’t get the funds to meet those increases in our costs, then we’re going to have a gap, and over time, that gap has grown," explained Amy Hawkins, Superintendent of Dubuque Community Schools. "I think our district has done a really good job of trying to be proactive and keeping our spending and our staffing within our means, but eventually, we get to a point where it’s really hard to find ways to reduce either our staffing or our resources that don’t end up having a huge effect on our (students)."
What is Supplemental State Aid (SSA)?
SSA is the annual percentage increase in the per-pupil amount that the state provides to public school districts for their operational budgets. It directly impacts how much schools can spend per student each year.
State Senator Mike Zimmer, a Democrat from DeWitt, also expressed concerns. A retired public school teacher, principal, and former school board president, Zimmer voted against the Senate bill. He believes the proposal puts school boards in a difficult position when trying to provide appropriate salary and benefit increases for staff.
Legislative Debate and Alternative Proposals
Senator Carrie Koelker, a Republican from Dyersville, offered a different perspective. She argued that the 1.75% increase is sufficient. Koelker pointed to declining enrollment numbers while noting that administrative costs are outpacing funding increases.
She emphasized that schools receive other federal and local funding sources. These sources significantly boost their per-pupil amounts. Koelker stated that the Legislature has appropriated more than $1.23 billion in new funding for K-12 education in Iowa since 2017.
"We’re delivering sustainable funding while increasing the focus on teaching the fundamentals Iowa students need to succeed," Koelker said.
Declining Enrollment
School districts with declining enrollment face particular challenges. Losing a few students per grade level may not allow for a proportional reduction in teaching staff, maintaining similar operational costs with less state funding.
Despite the Senate's vote, the discussion is ongoing. Representatives in the Iowa House have not yet proposed their SSA rate for the coming year. However, House Speaker Pat Grassley indicated that Republicans in that chamber are considering an SSA proposal of 2% or higher.
Iowa Governor Kim Reynolds also suggested a 2% increase in her budget proposal, released on January 12. This means the Legislature missed its self-imposed deadline to pass an SSA bill within 30 days of the governor's budget release, a deadline that has been missed in previous years as well.
- The proposed 1.75% SSA rate is significantly lower than the 2% or 3% increases seen in recent years.
- School districts are concerned about covering rising costs for fuel, food, wages, salaries, and benefits.
- Reliance on budget guarantees could lead to increased property taxes for residents.
- The Iowa House and Governor have indicated support for a higher SSA rate, potentially 2% or more.
