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Iowa Republicans say backfilling TIF and property tax abatements continue to grow

The following is a an update on the status of education in the state of Iowa from Republicans:

As discussions about state school aid heat up at the State Capitol, questions have again arisen about how much the state is paying to cover lost school property tax revenue due to local tax incentives.  While some interests contend that backfilling TIF or abatements has no impact on the state budget, the facts say otherwise.

The Tax Increment Financing program was established in 1992 as a method to help local communities finance community improvement projects.   Under TIF, when a municipality (city or county) decides to set up a TIF project – known as an urban renewal area – the property tax from parcels within the project do not go to the levying authorities (school district, county, city, etc) but instead are used to pay for the improvements made to the urban renewal area.  A school board or county board of supervisors that is not originating the TIF district does not have a vote to approve the use of their property tax revenue for this project.  Schools are held harmless by the state, which replaces the lost property tax revenue through the school finance formula.  Counties are not.

The cost of backfilling the schools’ lost property taxes is something not easily found, as there is no budget line item for it.  The funds needed to backfill the lost revenue are taken out of the General Fund before any action is taken on the budget.  It is not accounted for in a manner like normal spending or even much discussed tax credits.

Why is this the case?

When TIF was created by the Legislature, the law was written in a manner where the uniform school levy (aka the $5.40 levy)diverted to the TIF district would be replaced by state funding and thus there would be no financial loss to the schools.  This process is part of the school finance formula, with the annual cost is built in to the annual calculation and no separate appropriation is required.

When TIF started in 1992, it had a relatively small impact on the state budget of $5.2 million in backfill payments.  But as the use of TIF has proliferated across the state, the hidden impact on the budget has grown significantly. In Fiscal Year 2019, the state is backfilling $61.7 million of school property tax payments diverted into TIF districts.

Tax Increment Financing is not the only type of incentive that the state is replacing lost local property tax dollars.  A number of property tax abatements also have the school’s share of taxes covered by the state.  These abatements range from urban revitalization districts to data centers to forests and fruit trees.   In FY 2019, the state will provide schools with $26.1 million to cover lost property tax revenue due to the abatements.

The financial impact to the state has grown significantly over the last three decades, as demonstrated by the following chart from the nonpartisan Legislative Services Agency:

10 Year Look at Student and Teacher Stats 

With last week’s release of the annual Condition of Education Report (found here), a few areas of note are available for viewing.  This week, in chart form, are stats on student and teacher statewide totals.

Students
Student numbers have continued their climb, increasing for the 7th year in a row.  The number of students last year reached 486,264.  This is up 9,245 from 10 years ago and up 12,771 from the lowest number in the 10-year span (2010/11).


Teachers
Teacher numbers have continued to climb as well, to meet the student demand.  10 years ago the number of teachers in the state was at 34,744.  The latest number is 37,035, an increase of 2,291.  During that period, however, teacher numbers dipped even lower to 33,916.  Today’s numbers are 3,119 above that low-water mark.


Student/Teacher Ratio
Both teachers and student numbers have increased, but has the teacher number kept up?  Yes.  The overall teacher/student ratio has decreased to another low.  It reached 13.13 students per every teacher, down from 13.73 10 years ago and 13.96 at its highest point (2010/11).

Salaries
Salaries for teachers have continued to climb as well.  Last year saw an increase to $58,765.  This is up from $49,664 10 years ago, an increase of $9,101.  For rankings nationally we held steady at 22nd in the nation and 5th in the Midwest.  22nd is not only the lowest in this 10 year span, but also by far the lowest over the past 2 decades.  We reached 40th in the nation in 2005/06.

Class Size
While a few charts above looked at teacher/student ratio, that doesn’t actually show classroom size.  It just compares the total number of students to the total number of teachers.  Class size information is kept only for grades K-3 and efforts to reduce those numbers are helped by supplemental funding each year of over $30 million, started in 2008.  Since that funding began, we are at our lowest numbers in this period:  19.5 students in Kindergarten, 20.0 in 1st grade, 20.6 in 2nd, and 21.3 in 3rd.

These stats and many more can be found in the 2018 Condition of Education Report: https://educateiowa.gov/sites/files/ed/documents/2018ConditionOfEducation.pdf

How Hostile are Democrats to Homeschoolers and Private Schoolers? 

During the 2018 legislative session, House Democrats voted to ban homeschooling and private schools in Iowa.  That is not a hyperbolic sentence.  It is a fact.

Amendment H-8105 to House Joint Resolution 2009 added language to the resolution requiring all youth in Iowa to attend public schools.  The language was clear and without exception.

“The state shall provide all youths of this state with an education through a system of public schools.”

“Youth” is defined in various places throughout Iowa Code but in all cases it includes individuals under the age of 18.  In some cases it includes college age Iowans.  The word “all” does not mean “some” or those who choose to attend public schools and clearly does not provide any exceptions to students who choose to be homeschooled or to attend non-public schools.   “Public school” clearly does not mean homeschool situations nor does it mean private schools.

According to the Iowa Condition of Education Report, in the 2017-18 school year, 32,848 students attend non-public schools.  Many of these schools are Catholic or Christian based schools.

Requiring all students in Iowa to attend public schools means through the force of an amendment to the Iowa Constitution, seems extremely hostile to families who choose a different educational setting for their children.

2018 Annual Condition of Community College Report Available 

The Department of Education last week released the annual Condition of Iowa’s Community Colleges report.  It includes data on programs and services, student enrollment and demographics, student success and completion, college costs and affordability, instructional staff salaries and characteristics, and financial information. The report also includes success stories that illustrate how community colleges impact Iowans and the economy.

Some of the highlights, pointed out by the Department:

  • 131,144: The number of students enrolled in community college credit courses, down slightly from 132,694 the year before.  It’s down from 141,226 in 2014.
  • 51,001: The number of jointly enrolled students who earned college credit while in high school, up from 49,868 the year before. Jointly enrolled high school students account for 38.8 percent of total community college enrollees and 24.1 percent of total credits.
  • 22.4%: The percent of community college enrollment from racial and ethnic minority groups, which represents a record high.
  • 16,747: The number of credit awards earned (associate degrees, certificates and diplomas), down from 18,115 the previous year.
  • 26,005: The number of noncredit program awards, up from 19,261 the year before. The majority of these awards (69.2 percent) were industry-awarded credentials designed to lead to or enhance employment opportunities.

In addition to the Condition of Iowa’s Community Colleges report, disaggregated data tables and interactive data visualization tools are available on the Publications webpage of the Department’s website.

Both can be found on the Department’s website:  https://educateiowa.gov/adult-career-and-community-college/publications

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