BCLUW Board Communication on School Budget and Tax Rates
BCLUW Board Communication on School Budget and Tax Rates
The BCLUW Board of Education and District Administration would like to share this information to provide some details and clarification regarding the school budget proposed for the 2025-26 school year. Part of the reason for this is that the state now requires two separate budgetary public hearings before an approved budget, and we want to share more details and comparative information on the proposed rate than what the state calls for during the budgetary process.
In the first public hearing (held April 2), the board was to receive written or oral comments in regards to the published proposed school budget for next year, which included a maximum overall school tax rate of 11.93 per thousand dollars of taxable valuation. While overall school funding in Iowa also includes things like State Aid and Federal funds, property taxes are a portion of school funding as well. The current total school tax rate at BCLUW is 10.53.
BCLUW has been among the state’s lowest school tax rates for many years, lower than over 85% of Iowa school districts in the current year, including all six districts that border BCLUW according to data from the Iowa Department of Management. The initial published rate of 11.93 for next school year cannot be increased prior to final adoption, but the Board could take action to lower that slightly prior to final approval at the April 21 meeting. In many years, legislative action also later impacts the final rate. A primary reason the proposed rate is higher for next school year is due to a Cash Reserve Levy for the General Fund. While the final rate may be slightly lower than 11.93, it is also worth noting that this amount would still be significantly less than the current state average school tax rate of 13.14 according to the Iowa Department of Management. Also of note is that “taxable value” in Iowa varies widely depending on things like the classification of property and rollbacks, and is generally a much different (lower) value than the assessed or market value of a property.
Schools have a variety of different types of funds that are restricted in use (cannot be mixed). The General Fund covers many aspects of a school’s functioning, including staff salaries and benefits, curriculum, fuel, and utilities. There is a formula at the state level that has restricted BCLUW from levying for Cash Reserve for many years due to the district having a relatively high level in the General Fund. However, after years of factors such as increasing costs in many areas, declining enrollment, and operating with a special education funding deficit, BCLUW’s General Fund has decreased to a level that the district is now eligible for a Cash Reserve Levy, which allows it to back more of the district’s spending authority. Spending Authority is a concept unique to Iowa schools, and refers to an amount a school district can spend from its General Fund, acting as a legal limit, not a cash on hand amount. We expect that beginning with the 2026-27 school year and beyond, due to consolidation from three to two attendance centers, that BCLUW will make operational changes and reductions that will result in some significant cost savings in the General Fund, and may therefore allow for a less impactful cash reserve levy in the long term.
We know there have been some conversations or questions regarding whether a proposed increase in the school tax rate for next year at BCLUW might be going to pay for building construction or renovations. This is not the case; the construction project is being financed by a combination of borrowing against a portion of the district’s future state-wide Sales Tax (SAVE) funding, as well as some current reserves (savings) in both SAVE and PPEL (Physical Plant and Equipment Levy) funds, which can both be used only for things such as buildings and grounds projects, technology, equipment, and transportation vehicles. Of the total rate, the portion towards PPEL next year is the exact same rate as it was in both the current and previous school year; 1.67 per thousand dollars of taxable valuation. The district cannot levy an amount of PPEL in excess of this rate.
We know that school finance can be a complex subject, and hope this helps to shed a little light on the topic. The graphic below from Iowa School Finance Information Service is something shared with new school board members, and may be helpful in understanding some of the different types of revenue sources and funds in Iowa schools.
We are committed to both fiscal responsibility and maintaining BCLUW as a strong rural Iowa school district for generations to come; our community deserves nothing less. Please feel free to contact Ben Petty, Superintendent, for further information on these topics or rates at BCLUW.
Thank you for your time,
The BCLUW Board of Education
