Lawmakers in Iowa Pass School-Finance Measure

By Peter Schmidt — May 10, 1989 2 min read

The Iowa legislature has adopted a new formula for distributing $1 billion in state aid to public schools.

The measure, one of the most contentious items on the legislature’s agenda this year, won final approval late last month after members of a House-Senate conference committee agreed to a compromise that will allow school districts to levy a special property tax without voter approval.

Gov. Terry Branstad was expected to sign the finance-reform measure last week after making a few minor modifications under his line-item veto authority, according to a spokesman for the Governor. The legislature was scheduled to end its 1989 session late last week.

The new funding formula, which takes effect in the 1991-92 school year, will raise state aid to schools by $35 million over its current level. The measure will allow districts to increase their budgets for instruction by 10 percent, with 75 percent of the funds coming from the new special property taxes and the remainder from the state.

The debate over the property tax was the chief obstacle to the bill’s passage. The House voted to allow districts to levy the tax unilaterally, but the Senate insisted that such increases be imposed only after voter approval.

Under the compromise, taxpayers in districts where increases are imposed will be allowed to launch petition drives to place referenda on their ballots to roll back the tax hikes. In addition, districts were given the option of holding referrenda on proposed tax increases before adopting such hikes.

In a concession to rural lawmakers, the conference committee also agreed to create an interim legislative panel that will draft a plan for consideration next year to provide $30 million in property-tax relief.

Backers of the compromise also pointed out that the bill will provide some measure of relief because it will increase the state’s share of local costs.

In an effort to make the distribution of state funds more equitable, the measure also ends the practice of allowing districts with declining enrollments to include so-called “phantom students” in their pupil counts.

Representative C. Arthur Ollie, chairman of the House education committee, predicted the measure “is going to turn out to be successful, because no one really feels they lost.”

The House minority leader, Delwyn D. Stromer, who had warned that the old school-aid formula had become so unfair that its constitutionality was in question, praised the new measure for coming closer to the goal of providing “equal dollars for every student.”

“Before the final passage of this bill, we had nearly a 70 percent disparity between the highest- and the lowest-spending district in the state,” he noted.

William L. Sherman, a spokesman for the Iowa State Education Association, said the union was “generally positive” about the new formula. But, he added, the group fears the new funding scheme may not leave room for increases in teacher salaries.

The compromise was criticized by David M. Stanley, president of Iowans for Tax Relief, a citizens’ group.

“We are going to see more adversarial relationships between the voters and school boards” as a result of the boards’ new taxing power, he predicted last week.

A version of this article appeared in the May 10, 1989 edition of Education Week as Lawmakers in Iowa Pass School-Finance Measure