Funding Primer for new school facilities and renovations of existing facilities
When we think about funding new schools and renovations for existing schools there are two main sources of revenue for Iowa public schools. One of those sources is SAVE or the Secure an Advanced Vision for Education Fund (formerly known as the statewide penny for school infrastructure) and the other is voter-approved general obligation bonds.
The SAVE funding stream is set to expire in 2029 and as a school district, like many others, we have bonded the majority of our yet-to-be collected future SAVE revenues for our existing infrastructure needs. In the 2016 and 2017 legislative years, the Iowa legislature has entertained discussions around a 20-year extension of the SAVE funding time horizon extending it until the year 2049. Should the Iowa legislature pass such legislation in 2018 without any diversion of these monies for other non-school uses, the SAVE fund would yield approximately $212 million in additional funding for new schools and renovations of existing schools beginning on July 1, 2020. Through the Facility Master Planning process, the general guidance from the School Board is that SAVE would be the first fund of choice to pay for what emerges in a plan. Extending the SAVE time horizon will be a legislative priority for Cedar Rapids as well as most other school districts in the state.
General Obligation Bonds
The second source of funding is general obligation bonds. A 60% super majority, voter approval is required with repayment of this debt from local property taxes. There are two limitations for Iowa public schools under Iowa law in regards to taxing authority for general obligation bonds.
- The first is a legal limit, tax levy increase of $2.70 per $1,000 of taxable property valuation. This levy increase would be added to the District’s current levy rate of $15.37 and would generate approximately $183.5 million in resources that would be used for funding new schools and renovations of existing schools.
- The second legal limit allows Iowa schools a maximum taxing authority of $4.05 per $1,000 of taxable property valuation, but only if a 60% super majority of voters approve both an increase in the tax rate above $2.70 per $1,000 of taxable property valuation AND approve the specific uses of funds identified on the voter ballot. This second, higher limit of $4.05 per $1,000 of taxable property valuation would generate approximately $281 million, combined, in resources for new schools and renovations of existing schools.
- For comparison, it is estimated that a tax rate of approximately $3.10 per $1,000 of taxable property valuation would generate $212 million, which is the equivalent in funding to a 20-year extension of the SAVE fund through the year 2049 described above.
We remain grateful that District patrons voted in 2014 to increase the Physical Plant and Equipment Levy (PPEL) to the maximum allowed by law. This fund generates approximately $9 million each school year. Unfortunately, we have identified annual needs of approximately $20 million. This includes such maintenance essentials as resurfacing of roofs, replacing hallway tile, and updating restrooms to meet ADA compliance. With each year, we actually fall further behind on meeting the general maintenance needs at our schools and this is, in part, why we are discussing the future of facilities in our district.
There are also needs related to a common set of requirements that was established for each of our schools through a collaborative stakeholder process that was concluded in April 2013. These are related to front entry security, modernized heating and cooling systems, common student meeting spaces, and more. Additionally, we are working to forecast future facility needs where it is projected there will be future increases in student enrollment. The Secure an Advanced Vision for Education or SAVE Fund currently has $52.7 million in unobligated reserves available for use in remodeling existing school buildings or constructing new ones. Even so, this is significantly less than the $200 million in identified needs.
for details on the District’s promise to the community regarding use of PPEL resources, called the “PPEL Promise.”