School districts in the state of Iowa have three ways that they can fund the repairs, renovation or construction of facilities. The Local Option Sales Tax, Physical Plant and Equipment Levy and Bond Issue for property tax are the three methods to do infrastructure repairs and construction. It is my intent to break down each of these methods and apply them to the Washington Community School District.
School Local Option Sales Tax (SILO) :
Sometimes also referred to as the 1 cent sales tax and Local Option Sales Tax (LOST). When the Local Option Sales Tax was initially implemented in the late 1990’s, it was voted on county by county. The revenue schools received was based on the sales revenue raised within that county. It took 10 years until every county in the state to pass the sales tax, with Linn County being one of the last to do so. It was determined to be unfair that school districts in a county with large numbers in sales should receive considerably more than a county with small numbers in sales. On July 1st of 2008, it became a statewide sales tax with the funds being pooled statewide and distributed equally across the state on a per pupil basis.
The Washington Community School District has committed the use of the School Local Option Sales Tax in the construction of the new high school. Two bond issues ago, the proposal was the construction of the new high school and the renovation of the old high school combined together through a local property tax bond issue and the use of School Local Option Sales Tax. When the bond issue did not pass, the school board went forward with the School Local Option Sales Tax portion and committed to the construction of the new high school, bonding $15 million over 20 years.
The School Local Option Sales Tax is a variable fund that will change from year to year based on annual state of Iowa sales. When a district uses these funds for bonding purposes, they are not bonded for 100% of estimated revenue. That means that in normal economic times, there will be a percentage of these funds that would become available in the future, but that percentage is not a large amount, especially with the economic times we have faced lately. In fact, the contingency amount anticipated at the completion of our high school project has actually been reduced based on collection of sales tax funds being lower than projected. Still more than what construction cost will be, but not as much contingency for furniture purchases as what we had hoped. As a result, there is not a lot of optimism that there will be extra sales tax funds in the near future for other purposes.
School Local Option Sales Tax may be used for infrastructure needs, repairs and purchase of equipment over $500. It may not be used for salaries or education materials or supplies. School Local Option Sales Tax revenues and expenditures do not have any relationship to property tax.
Physical Plant and Equipment Levy (PPEL)
This is a property tax levy that the majority of has to be approved by the voters of a school district. It takes a 50% +1 voter approver to enact or renew a PPEL levy. The maximum voted PPEL a school district can hold is $1.34 per $1,000. Individual Boards of Education are able to enact an addition .33 per $1,000 without voter approval. Typically, a voted PPEL is approved and renewed on a 10 year basis. The Washington Community School District voters approved the renewal of a $1.00 PPEL last February. The Washington Community School District Board of Education annually approves the additional .33 during their budget hearings. This $1.33 brings in approximately $450,000 a year.
PPEL funds may be used for infrastructure construction, repairs and replacement. It may also be used for equipment over $500. The Washington Community School District recently purchased new Copier equipment throughout the district through the use of PPEL. This is more cost effective than the copier leases the district had prior. PPEL may be used for transportation vehicles, such as busses, vans and cars. The Washington District budgets $100,000 a year for transportation needs (usually a bus and another vehicle each year), $200,000-$250,000 a year for technology needs and the remaining $100,000-$150,000 is used for district wide repairs. These repairs may include things like boiler repairs, sewer repairs, sidewalk replacement/repairs and so forth. PPEL funds may not be used for salaries or school materials and supplies.
Property Tax Bond Issue
School districts who are seeking funds for construction or repair of school facilities may seek voter approval for a bond issue. This is where a sizeable construction or renovation project would be funded by voters through an additional property tax levy. It requires a 60% +1 super majority to enact a bond issue in a district and most are passed for a 20 year period of time. The last successful bond issue in the Washington Community School District would have been construction of the Junior High Building in 1960, meaning that the patrons of this district have not paid for a property tax bond issue since 1980. There have been five attempts at bond issues in the last 11 years with two reaching above 50% approval, but all falling short of the 60% level.
I listen to the various reasons why or why not. There have been many mistakes made several individuals and parties. Some by Central Office staff, some by past boards of education, while there have been patrons who have been guilty of false information as well. It has been a black eye for the district over the last decade. I am unsure as to what the future holds. The district has not completed their needs for facilities, though we have made significant progress with the completion of the Stewart renovation and the anticipated new high school. The Washington Board of Education is holding very critical discussions on the future of the 1918 building and will need to choose how they will prepare the building to become the district’s middle school. Local district resources are limited to less than $1 million dollars without a bond issue. Your input is important to the board and we are at a cross roads for the future. One thing that is interesting about the most recent bond issue election is that the average age of the voter was 60. This means that the younger patrons of the district did not participate in the voting. I would think this is the group who would be the most interested in the topic and whose children’s will be the most impacted. I would hope all stakeholders would participate in the future of the district’s facilities.