Understanding Public School Finance in Iowa:
As the eighth largest school district in the state of Iowa, Waterloo Community Schools maintains a budget of over $200 million. We recognize our responsibility to be both fiscally responsible and accountable in managing the resources entrusted to us. Through thoughtful stewardship, we aim to provide the necessary funding and support to ensure high-quality instruction across all areas. Our priority is to ensure that every student is equipped with the tools, support, and diverse experiences required to graduate with a diploma and a plan.
The Basics of School Funding
- In Iowa, the funding for our school district is primarily based on student enrollment numbers. While the state provides funding based on this enrollment, there are restrictions on how much local revenue can be raised beyond state-provided funding.
- Annually, the Iowa Legislature establishes the District’s general fund budget growth rate. This is called the supplemental state aid percentage.
- A district’s property tax rate is primarily set by the school aid formula. There are only limited steps a school district can take to increase or decrease the property tax rate.
- In school finance, certain funds are designated for specific purposes. Each tax levy is assigned a limited function, and the general fund is specifically intended for supporting the educational program. While it may seem illogical that we might have enough funds to pave a parking lot or purchase equipment, but not enough to hire additional teachers—or vice versa—this is due to the way state law allocates and restricts the use of these funds.
- Schools are a labor-intensive business: about 80 percent of a district’s General Fund is made up of staff salary costs and benefits.
District Funding Overview
Definitions of School Funds
General Fund
This fund receives the revenues from the school finance formula. It is a governmental fund under GAAP (generally accepted accounting principles) and accounts for the revenues and expenditures for the educational program and most school district operations. All money received by a school corporation from taxes and other sources must be accounted for in the General Fund except money required by law to be accounted for in another fund. Expenditures include employee salaries and benefits (except nutrition), textbooks, tuition, open enrollment, supplies, contracted services, travel, etc.
Management Fund
This fund is supported by a property tax levy used for property and liability insurance, early retirement, unemployment, and tort liability. This fund may also be used for equipment breakdown insurance and premium payments into a local government risk pool to protect against liability.
PPEL (Physical Plant Equipment Levy) Fund
This fund is a capital project fund providing a maximum of $1.67 per $1,000 of assessed valuation. The board may approve 33 cents annually in property tax. Voters may approve up to $1.34 for a period of up to 10 years and funded by property tax. At Waterloo, the voter portion of PPEL is currently $0.67, but is scheduled to increase to $1.34 beginning in fiscal year 2028. PPEL funds may be used for construction/renovation of buildings, purchasing property, equipment, technology, vehicles, etc. This fund cannot be used for salaries or instructional programming needs.
Debt Service Fund
Voters may approve bonded indebtedness for a period of up to twenty years and a rate limit up to $4.05 per thousand dollars of assessed valuation. The debt levy revenue is used to pay the interest, interest, and indebtedness costs. Money available to service this debt and received from other sources are transferred to the debt service fund and the payment is then made from this fund. Waterloo Schools does not currently have a debt service tax levy. This fund cannot be used for salaries or instructional programming needs.
Secure an Advanced Vision for Education (SAVE) Fund
This fund accounts for the revenue and expenditures connected to the one-cent statewide sales tax for a school district. Funds may be used for the same purposes as the PPEL Fund and include construction/renovation of buildings, purchasing property, equipment, technology, vehicles, etc. This fund cannot be used for salaries or instructional programming needs.
Student Activity Fund
Money from student-related activities such as admissions, activity fees, student dues, student-fundraising events, or other student-related co-curricular or extracurricular activities is deposited in this fund. Expenditures for interscholastic athletics, student councils, clubs, and other student activities are in this fund.
Nutrition Fund
This fund accounts for revenues and expenditures connected with operating the District’s lunch and breakfast programs. All nutrition funds are enterprise funds used to account for food service related costs and are operated in a similar manner to private business where revenues are based on fees charged and expenses are directly associated with the operations.
Budget Planning and Certified Budget Process:
The budgeting process is a fluid and flexible exercise that is monitored, analyzed and considered all year long. The formal budget certification process begins in the fall of each year with the official student enrollment count based on students in attendance on the first school day in October. Student enrollment and cost per pupil (supplemental state aid established annually by the State legislature) are the two main factors that determine the budget spending authority provided to the school district for the entire fiscal year. After a series of public hearings, an Iowa public school district’s budget certification process concludes each year on April 30.
Financial Documents Available for Download
- Annual Comprehensive Financial Reports (Audits)
- Certified Annual Budgets
- Proposed Property Tax Notices
