Sept. 23, 2015 Sharing, Reorganizing, Efficiency and Finance in Iowa School Districts Keota...

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Sept. 23, 2015Sharing, Reorganizing, Efficiency and Finance in Iowa School Districts

Keota Community Public Meeting

Margaret Buckton, Partner

About ISFIS• Our mission is to add value to data to help school leaders more

accurately assess their situation, advocate for what their school needs, and confidently chart a direction for the future success of their students.

• Provides finance consulting for Iowa school leaders• Provides training and information on Iowa School Finance• Does policy work and research and representation at the Capitol

(UEN and RSAI)• Offers programs that create markets or provide competition in

services that schools need that either save districts money, improve services, save district staff time, or all three.

• Partnership, subscription based, for profit consulting firm.

Who is Margaret?

• Partner at ISFIS• Lobbyist for the Urban Education Network and

the Rural School Advocates of Iowa• Former Des Moines School Board Member• Prior experience at IASB, Fiscal Staff for the

Iowa Legislature, Restaurant Manager, Manufacturing Customer Service Rep.

Purpose of Tonight’s Meeting

• Understand the financial pressures and trends facing the Keota Community Schools so you know where you stand on key indicators

• Provide information about various kinds of efficiency measures (and state incentives if applicable)

• Learn the timelines required in the law for various kinds of incentives

• Share some considerations for any kind of efficiency decisions• Answer Questions • Not to advocate a position or direction – that’s up to all of

you in this community

We hear: “Why don’t Iowa

Schools ever reorganize?” They do . . A lot!

1949-50 1954-55 1959-60 1964-65 1969-70 1974-75 1979-80 1984-85 1989-90 1994-95 1999-2000

2004-05 2009-10 2014-150

5,0004,652

453 449 443 437 430 384 374 367 361 338

Number of Public School Districts in Iowa 1949-50 to 2014-15

DE Annual Condition of Education Reports, Bureau of Information and Analysis, Basic Educational Data Survey, address files

Recent History of Consolidation

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

371 371 371 370 367 365 365 364 362 361 359 351 348 346 338 336

Number of Public School Districts in Iowa 2000-01 to 2015-16

School Finance 101

Four Key School Finance Principles

1. Enrollment Based/$ set by Legislature2. Formula primarily controls tax rate3. Spending regulated by fund by state law4. Education requires staff

Iowa State Cost Per Student Funding HistoryPe

Calculated by formula considering inflation and economic factors.

Legislatively set and required to be one year in advance of the budget year.

Historical annual cost increase of do-ing school is 3.5-4.0% (orange band below)

Keota FACT SnapshotFY 2016 =338 students served

Keota FACT Snapshot

Open Enrollment Caveat

• May look like enrollment increase results in more funding

• Each open enrolled-out student takes district cost per pupil with them– Each student generates $6,446 in FY 2016– District pays neighboring district $6,446 in FY 2016

for each open enrollment out• Local district staffing adjusts to actual students

served

Keota FACT Snapshot FY 2015 =$783,370

Increase in Unspent Authorized Budget Caveat

• Categorical funds have restricted purposes• Special Education is the biggest one, with cost

of services outpacing increased state funding per pupil (results in a special education deficit)

• District gets that additional spending authority– It’s all special education– It’s basically already spent– Can’t just hire another 2nd grade teacher with

special education categorical authority

Keota FACT Snapshot FY 2015 =26.5%

Solvency Ratio Caveat

• It’s a measure that reflects how much cash the district has

• Cash in the bank is a critical metric for assurance of repaying bonds

• Cash on hand may exceed spending authority• Spending authority is the more important

issue for financial feasibility

Why would school leaders and their

communities consider sharing,

consolidation, reorganization,

dissolution?

Reorganization History and Involuntary Merger

• Reorg and dissolution historyhttps://www.educateiowa.gov/sites/files/ed/documents/sfin_Reorganization_History_0.pdf • Russell Community School District, Involuntary

Merger, July 1, 2008 • Phase II Financial Audit and State Oversight

Iowa School Reorganizations, 2011 through 2015, by prior year enrollment of districts

smaller of the partner's enrollment larger of the partner's enrollment

2012 2013 2014 20152011

• Program, staffing and accreditation requirements are becoming difficult

• Too few bodies require staff to be generalists, which minimizes specialized expertise and increases risk

• Building conditions require investment or relocation• General financial constraints• Natural population changes• Natural relationship progression (already sharing)• More opportunity for students• Self determination for community

Why think about sharing?

Concept of Weighting

• In 2015-16, the state cost per pupil is $6,446 (funded with a combination of property tax and state revenues)

• Supplementary weighting applies a percentage increase to that amount to generate revenue for specific purposes

• A supplementary weighting of 0.1 is equivalent to 10% of the state cost per pupil, or $645 applied to the number of students by formula

• The legislature defines the terms of the weighting as incentives to generate intended action

Types of Incentives/Sharing• Operational Function Sharing Agreement• Shared Teacher / Student• Sharing Under Joint Employment• Sharing Under Community College Offered Classes • Regional Academies• Whole Grade Sharing Agreement• Reorganization Taxpayer Incentive• Reminder: Incentive is an additional consideration, but sharing may occur for

efficiency without an incentive

DISTRICT REORGANIZATION, DISSOLUTION, AND SHARING GUIDE, Sept. 2014, by the Iowa Department of Educationhttps://www.educateiowa.gov/sites/files/ed/documents/Reorg%20Guide%202014_0.pdf

Operational Savings Incentives• July 1, 2013 through June 30, 2019• Districts and AEAs are eligible for weighting from shared

operations with other districts for maximum of five years• Specific job functions generate different weightings, but

combined max = 21 students per district (AEA range of $30,000 to $200,000).• May share with other school districts, AEAs, or any other

governor’s subdivision. • Must be shared for at least 20% of the staff person’s

Operational Sharing Opportunities • Functions and the number of students’ worth of weighting they

generate, each student at $6,446: – Superintendent Management 8– Business Management 5– Human Resources Management 5– Transportation Management 5– Operations and Maintenance Management 5– Curriculum Director 3– School Counselor 3

• $135K max, but beware the cliff. Five year limit and then incentive is gone. • The efficiency, however, remains.

Whole Grade Sharing Incentives

Three years of supplementary weighting.Three more years of supplementary weighting if the

districts reorganizeWGS agreements must be signed by Feb. 1 to be effective

for the following school year (Iowa Code 282.10)To participate, districts must:– Pass a joint board resolution to study reorg to occur no later

than July 1, 2019– Report progress annually to SBRC by Aug.1– The 2018-19 school year is the last opportunity to include

WGS students for supplementary weighting per Iowa Code 257.11

(#Resident Students) X (.10) X (District Cost Per Pupil) = $

WGS Details

• Iowa Code 282.10 provides that a district may WGS students. All or a substantial portion of the students in any grade in two or more school districts share an educational program for all or a substantial portion of the school day under a written agreement.

• WGS may either be one or two way.• DE has a WGS handbook https://www.educateiowa.gov/sites/files/ed/documents/2013-2014WGSHandbook.pdf

Perpetual Whole Grade Sharing

• WGS Supplementary weighting limited to 3 years • WGS may continue under contract between the

two school boards• Some have sharing agreements for decades• WGS agreement may be rescinded• New contract is negotiated • Iowa Law regulates amount of funding– One-way WGS, tuition shall be no less than ½ of the

sending district’s cost per pupil– Two-way WGS, tuition is set by mutual agreement of

the districts

Taxpayer Incentive for Reorganization

• Uniform levy (property tax) reduced to $4.40 per $1,000 in the first year of reorganization or dissolution.

• Graduates to $4.90, $5.15, and $5.40 in succeeding years.

• Applies to reorganizations effective July 2007 through July 2019 for – District enrollment less than 600, students receive full

reduction.– District enrollment equal to or greater than 600, maximum

reduction is equal to reduction in districts under 600 students.

Other kinds of sharing

• 28E agreement: powers granted to local governments to provide joint services and cooperate in other ways of mutual advantage

• Board may discontinue any or all of grades 7-12 and negotiate an agreement to send the students to one or more contiguous school districts. Only entire grades may be discontinued and if a grade is discontinued, all higher grades must be discontinued. Agreement must provide for transportation, authority and liability of affected boards, and method for sharing costs and expenses. Iowa Code 282.7(1) (Iowa Code 282.10(1) states that this action is a WGS agreement)

Student and Teacher Sharing

• May jointly employ teachers• Formulas Shared teachers/students between districts: (#

Resident Students) X (% Time) X (0.48) X (District Cost Per Student) = $.

• Shared teachers/students sent to Community College – (CTE): (# Resident Students) X (% Time) X (0.70) X (District Cost Per

Student) = $. – (Arts & Science): (# Resident Students) X (% Time) X (0.46) X

(District Cost Per Student) = $.• ICN classes: (# Resident Students) X (% Time) X (0.05) X

(District Cost Per Student) = $. (50% of incentives goes to teachers who provide the instruction)

https://www.educateiowa.gov/sites/files/ed/documents/1314_sfin_reorganization_financial-incentives4.pdf

Regional Academies and ICN• Regional Academy incentives are for 2 or more school

districts and grades 9-12. – Must include two or more advanced-level courses (not

career-technical courses)– May include career-technical courses, Internet-based

coursework, and ICN courses – Regional academies are not eligible for concurrent

enrollment (Community College) courses and career academies are not regional academies.

• ICN Classes Incentives– District provides or receives eligible course via ICN– Requires half the supplementary weighting funding is for

additional pay for the ICN teacher.

• Online courses for HS credit taught by Iowa licensed teachers

• DE Waiver for accreditation requirements regarding offer and teach

• Good option, may incur costs in the future, may not be best for all students

District Options• Shared Operational Functions (build relationships, focus

expertise and achieve efficiencies)• Shared staff, students on a limited basis• Perpetual Whole Grade Sharing • WGS leading to Reorganization • Reorganization/Consolidation/Dissolution• Wait it out – eventual Phase II (State Determination)• Other thoughts:– Most options require willing partners, including vote of the public for

voluntary reorganization/consolidation– Dissolution is seen as a last resort, but happens when there is no

willing or natural partner (students may already be open enrolling in many directions)

– Local leaders have no say in Phase II State Action

Considerations for Local Leaders

• Student opportunities and achievement – what do students need to be successful?• Program, Accreditation, Staffing Requirements• Community Involvement, transparency and open process• Feasibility study to inform future trends and expectations• Student and parent preferences – are students likely to open enroll out of (or in to)

newly formed district?• Transportation costs• Which neighbor is the best match for any kind of sharing?• Special areas – do districts have different talents?• Building locations & grade level configurations• Levy issues: ISL & PPEL – lowest common denominator in the newly formed district• Debt issues: in original district or shared?• Meld into one salary schedule (TSS and PD too)• Property valuation issues: how will a newly reorganized district impact property

taxes?

Questions or Comments?Larry Sigel, ISFIS – Partner

Larry.sigel@isfis.net

Iowa School Finance Information Services

1201 63rd StreetDes Moines, IA 50311Office: 515-251-5970

www.isfis.net

Margaret Buckton , ISFIS – Partner

margaret.buckton@isfis.net

Sept. 23, 2015 Sharing, Reorganizing, Efficiency and Finance in Iowa School Districts Keota...

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