Tax Rate in the Certified Budget for FY16

It is that time of year when school districts in Iowa must certify their budgets for the coming fiscal year, by April 15 according to Iowa Code.  This year knowing exactly what to certify is more challenging than usual due to the Iowa Legislature not establishing Supplemental State Aid.  As an aside, per Iowa Code Supplemental State Aid for FY16 should have been established by the Legislature in February 2014.

Iowa schools are bound to implement a tax rate no higher than they have certified.  This puts districts in the position to certify the highest possible rate when State Supplemental Aid is unknown.  Presently, it appears that Supplemental State Aid could be set from the Democrats' proposal of 4% to the Republicans' proposal of 1.25%.  A Supplemental State Aid of 0% is also within the realm of possibility if the two sides fail to reach a compromise.  Iowa Code dictates that in the lack of an agreed upon Supplemental State Aid number from the Legislature, it defaults to 0%.

Due to our increasing enrollment, the higher the Supplemental State Aid increase, the higher our tax rate.  So, the district has posted and anticipates certifying a budget based on 4% Supplemental State Aid.  If the Supplemental State Aid would, and it likely will, come in at less than 4%, the district's tax rate will be lowered to reflect the implemented Supplemental State Aid number.

Currently the CCA tax rate is $15.06/$1,000 valuation in the historic Clear Creek district and $15.26/$1,000 in the historic Amana district.  The $0.20 difference is due to the Amana Library Fund.  In the budget that will be recommended to the Board in April, using 4% Supplemental State Aid, the tax rate is $15.76/$15.96.  If Supplemental State Aid were to be 2%, the rate would be $15.69/$15.89.  In the event of 0% Supplemental State Aid our rate would be $15.60/$15.80.

The increase in our tax rate is due to a couple of factors.  First, while the valuation of the CCA district increased, it increased at a slower rate, due primarily to the commercial property tax rollback that has been implemented.  Commercial values are rolled back to 90% this year and will be stabilizing, so the district will likely begin to see our traditional increases again in the near future. Typically, CCA has seen a valuation increase of approximately 8%.  Another reason for the increased rate is our need to utilize the cash reserve levy.  This levy allows the district to levy for cash when we have the authority, but the funds lag behind from the State.  The two primary examples that generate the need for cash reserve levy are our growing enrollment, CCA receives the "authority" for new students in the year that they begin attending, but the cash doesn't come from the State until the following fiscal year.  The other need for the cash reserve levy comes from the special education deficit.  Again, districts are granted the "authority" for special education costs, but the cash must be generated through the cash reserve levy.

The debt service levy will again be $4.05/$1,000 of valuation.  There will not be a change in our debt service levy for the foreseeable future and it can not increase from $4.05.

In my opinion we are likely to see a Supplemental State Aid of 0% or 1.25%.  While that will result in a lower tax rate for CCA patrons, it brings with it another set of challenges.  We will have to implement larger class sizes and postpone adding staff to programs as our enrollment grows in order to maintain the fiscal health of the district.

If you have questions please email me: timkuehl@ccaschools.org, or call:  319-828-4510

Tim Kuehl, Superintendent

Legislators representing the CCA district: