Written by Director of Business & Operations Randy Denham

Iowa school finance can be complex, but the Marshalltown Community School District (MCSD) is committed to providing a clear understanding of how the district’s funds are determined and allocated. The district Business Office is responsible for maintaining the MCSD’s financial integrity and ensuring compliance to Iowa public school finance laws.

Iowa school districts have limited funding sources, as state and federal laws can dictate what funds can be used with specific expenditures. MCSD, along with other public school districts, has several funding “buckets” dedicated towards specific operational items. Additional information on each of these buckets can be found on the district website’s Business Office page. The focus of this article will be on the General Fund, which serves as MCSD’s primary main operating fund, used to support the educational programs and most district operations. 

The General Fund’s annual funding amount is driven by student enrollment, calculated per student, and established by the state legislature each year through State Supplemental Aid (SSA). This combination of student enrollment and SSA flows into the Iowa School Finance Formula to calculate the amount of funding the district receives each year. Funding comes from a combination of state aid and local property taxes. It’s essential to highlight that the local property tax rate levied each year is driven more by the Iowa School Finance Formula rather than by district actions. 

In Iowa school finance, there’s a unique concept called “spending authority,” which only pertains to the General Fund. This is a mechanism the state uses to control the maximum amount of spending that can be done by school districts. The state created spending authority to guarantee equitable funding for all students, ensuring every child receives the same amount of funding regardless of location.

It’s crucial to understand that the spending authority is not actually cash. Spending authority is calculated through the Iowa School Finance Formula to determine the amount of authority each school district is allowed each year. Unused spending authority can carry over from year to year. Spending authority is significant because it is illegal for a district to exceed its total spending authority. Going over the spending authority could lead to the closure of a school district by the Iowa State Board of Education, not due to educational reasons, but for the lack of compliance or financial unviability. 

The district closely monitors our Unspent Authorized Budget (UAB), a financial metric, each year to measure our Spending Authority. We also closely monitor our solvency ratio, which helps us keep track of the cash we have on hand and our ability to meet financial obligations.

MCSD is in a very healthy financial position currently. During the school board meeting held on October 16, 2023, we presented the financials for the most recent fiscal year, which included a review of the financial metrics mentioned earlier as well as an assessment of the district's financial health. The district will continue to leverage our strong financial position and resources to continue to provide opportunities for students to develop into learners who have the knowledge, skills, and positive mindset to successfully pursue a meaningful future through personalized learning experiences.  

If you have questions about MCSD finances or Iowa school finance, please contact Director of Business Operations Randy Denham. He can be reached at rdenham@marshalltown.k12.ia.us or calling 641-754-1000. MCSD educates over 5,000 students to have the skills for a rapidly changing world.