The basics of school finance
The basics of school finance by Brian Bartz, Director of Business Operations
What does school finance mean? Like many things it means different things to different people. Does it mean to supply the resources to educate the children who attend the Marshalltown Community School District? Does it mean to employ an adequate number of people and pay them a competitive wage? Does it mean to keep property taxes low?
To some it means all of these things, to others maybe just one of these things, and some people may not think of any of these things when they hear school finance. School finance affects everyone in the district whether they know it or not. Most purchases that are made have a one-cent tax on it for schools. If you own property or rent you are paying property taxes directly or indirectly and if you have children or grandchildren in school you are definitely affected by school finance.
This may surprise some people, but schools are multi-million dollar operations. In most communities school districts are the largest employer and organization. School districts run on a fiscal year that starts July 1 and ends June 30.
For the year ending June 30, 2016 the Marshalltown Community School District had expenditures of $84,801,758 and revenues of $84,640,737. Of the amount of expenditures $48,830,548 was for salaries and benefits. For 2016, the district sent out 1,207 W-2s to employees. The Marshalltown Community School District is the 15th largest district out of 333 school districts in the state of Iowa. As you can see from these numbers, the school is a very large organization and this is just one school district in the state of Iowa.
The majority of a school district’s revenues come from taxes. Those taxes are property taxes and income taxes. In simple terms, the amount of revenue a school district receives to be spent on salaries, benefits, utilities and supplies depends how many students they have. A student count is held every year in October. The formula is regular program district cost per student multiplied by the number of students. For the Marshalltown Community School District there were 5,321 students and the regular program district cost per student is $6,632 for the 2016-17 school year. This gives the district $35,289,535 in revenue for regular education. Of this amount, a portion of it comes from property taxes and a portion of it comes from the state utilizing the funding formula. This was the simple part of school finance. There are many other funding streams that are required to be spent for specific purposes.
School districts have very little control over revenues. The state legislature determines the regular program district cost per student. A balancing act happens each spring. The district must decide how much money is needed to operate the organization efficiently yet give students the needed resources needed to excel. Unfortunately, sometimes this requires reductions in expenses when revenues are not what they need to be.
School finance can be confusing to some. I have heard from some school leader veterans that it is one of the hardest things to learn. Schools are very regulated and have many rules and regulations that must be followed. If you have additional questions about school finance please feel free to contact me via email at firstname.lastname@example.org or call 641-754-1000.
Brian Bartz is Director of Business Operations with the Marshalltown Community School District.