School Funding Can Be Confusing

Iowa's Bucket Sysytem

February 20, 2018

School Funding Can Be Confusing


School funding in Iowa can be a very hard thing to understand. Many people do not understand how a district could be constructing a building or remodeling while struggling to give staff raise and raising class sizes. These situations and others can happen as a result of the way schools are funded in Iowa.

The best way to think about Iowa’s funding system is to imagine it as a series of buckets in which schools receive and spend their money. School districts receive money in a number of  different buckets. Each bucket can only be spent on items that are allowed by law. Districts are not given the flexibility to transfer money from one bucket to another.

The North Scott Community School District is a governmental entity that operates on the fund basis of accounting.  Each fund, or bucket, is segregated for the purpose of carrying out a specific activity that has special restrictions.  You may wonder why North Scott has chosen to invest in millions of dollars of capital improvements over the last few years as opposed to other needed items.  This is because we have money in the bucket designated for building improvements and construction and is authorized for only this purpose by the Iowa Code.

Funds with legal, contractual, or other spending restrictions for the District include the Management Fund, Student Activity Fund, Sales Tax Fund, PPEL Fund, Debt Service Fund, School Nutrition Fund, Child Care Fund and Self-Insurance Fund.

Resources for the District’s Management Fund are derived from the management fund tax levy.  These funds are used to pay the costs of unemployment and early retirement benefits, insurance, judgments or settlements.  The Student Activity Fund is utilized to account for the various student-run organizations and athletic accounts of the District. Statewide school infrastructure sales and services taxes are to be utilized for school infrastructure, capital assets and the repayment of principal and interest on revenue bonds.  These transactions are accounted for in the Sales Tax Fund. Revenues from the regular and voter-approved physical plant and equipment levies (PPEL) are to be expended on the purchase and improvement of grounds, school buildings, equipment, technology and transportation equipment. The purpose of the Debt Service Fund is for the accumulation of resources for the payment of principal and interest. The School Nutrition and Child Care Funds are proprietary funds that derive their resources primarily from charges for services and expenses are salaries and benefits necessary to operate the programs as well as purchased services, supplies and equipment.

The General Fund is the general operating fund of the District.  All general tax revenues and other receipts that are not allocated by law or contractual agreement to another fund are accounted for in this fund.  From this fund or bucket,  the general operating expenses, including instruction (salaries, benefits, classroom supplies), support and other costs are paid.  However, even the general fund has other categorical funding sources that have spending restrictions.  Some of the categorical funding sources of the general fund include at-risk, gifted and talented, teacher salary supplement, professional development, and the statewide voluntary preschool program. For the 2018 - 19 school year, our district is estimated to get less than 1% new money.

Governmental accounting can be extremely complex given all of the funds, type of resources and spending restrictions.  The District tries to address all of the needs it is faced with while adhering to all legal and contractual spending restrictions. We are very appreciative of the funding we do get. We know that programs like the Teacher Leadership Compensation and the preschool program will have a positive impact on education. We also know that if our system of funding was less complicated and with more flexibility, our local schools could meet more of our local needs.

Jill Van Roekel, Director of Business Affairs and Joe Stutting, Superintendent

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