School finance, simplified . . .  (see presentation links at the bottom of this page)

School districts in Iowa receive funding based on a finance formula as established by the state. The formula determines the maximum amount a district can spend in a year and also details where the money will come from.

To better understand the concept, consider the process of applying for a credit card and receiving a credit limit. The credit card company sets your credit limit. Even though you may be able to afford a higher limit, you cannot spend over the limit set by the credit card company. In Iowa, it is illegal for a school district to spend beyond their spending limit.

The finance formula contains very specific components that when added up, total the maximum spending limit for a district. The biggest funding element of the district’s budget is based on the number of students in the district. Each year the state legislature establishes a per pupil dollar amount that districts will receive for each student enrolled in the district. This comprises over 80% of the district’s budget.

Other components that add to the total spending limit include dollars passed on to the Area Education Agency, funding generated by the Instructional Support Levy, miscellaneous income brought into the district and any special exceptions as granted by the state. That’s it.

Once the district has determined what the spending limit will be for the year, the next step is to identify where the money will come from and where it will be spent.

The money the district receives for each student enrolled in the district comes from two sources: the state provides funding and property taxes generated within the district provide funding. Again, a formula is used to determine the percentage share that each source will fund.

School district budgets are unique in that the spending limit is determined first, and then the district determines the sources to fund the limit. If a district were to generate more funding than the spending limit allows, the district would not be able to spend the additional funding.

Obviously, school finance is complex. Davenport Community Schools has a Finance Department filled with highly qualified individuals to insure the district remains financially healthy and in compliance with federal and state guidelines.

School Finance and Budgeting – This is a series of  presentations before the Board of Directors discussing the components and details to finance and budgeting for school districts in the state of Iowa.  At each regular board meeting a presentation is made discussing a different concept or topic involved in the process of formulating the budget.

• November 8, 2004
• October 25, 2004
• October 11, 2004
• September 27, 2004

School Finance & Budgeting “101” is a condensed version of the above series and was presented to district administrators on January 13, 2006.