presentation: financing education financing education how iowa’s taxpayers pay for public...

Presentation:Financing Education

Financing Education

How Iowa’s Taxpayers Pay for Public Education

The Iowa State Budget(Receipts)

The Iowa State Budget(Expenditures)

Iowa Department of Education(Funding Sources Comparison)

Where Does the MoneyCome From?Income (1999-2000)

$3,065.6 Million

1,017.8 Mil

110.4 Mil

73.6 Mil9.2 Mil

1,606.4 Mil

153.3 Mil

85.8 Mil 9.2 Mil

Local Taxes

Interagency

Other Local Services

Intermediate Services

Sate Foundation Aid

Other State Sources

Federal Sources

Other Financial Sources

What Does the Money Go To?

Expenditures (1999-2000)From $3,065.6 Million

475.2 Mil

309.6 Mil

193.1 Mil

92.0 Mil

12.3 Mil

1,983.4 MilSalaries

Benefits

Purchased Services

Supplies

Property

Other Objects

Property Taxes

• Property taxes are assessed against the “adjusted-equalized value” of real property expressed per $1,000 in valuations.

• For a $100,000 home in Davenport, the initial school tax will be $850.74– $296.20 is assessed as a base-line– $554.54 is assessed to complete funding of the

district’s educational budget (last 12.5%)

Iowa Income Tax

• Tax on estimated income of $50,000:$50,000 x .05 = $ 2,500

• Income Tax used for Education:[.42 (Tax) x .57 (SFA) = 24%]$2,500 x .24 = $ 600

• 7th Cent Sales Tax on estimatedexpendable income:$25,000 x .01 = $ 250

Insidious Taxes

• Determining the actual cost of education is not possible without a detailed accounting for all monies involved.

• EDUC tax on gas heat $ ??.??

• EDUC tax on gasoline $ ??.??

• Tax Incremental Financing $ ??.??[TIF]

• What else? $ ??.??

Iowa Education TaxesBased on a projected income of $50,000

& $100,000 property valuation• Property Tax $ 850.74

• Community College Tax(assessed on $100,000 property valuation) 33.08

• Personal Income Tax 600.00

• 7th Cent Sales Tax 250.00

• Insidious Taxes ???.??

• Total $ 1733.82

Taxation Applied to Education

$296.20

$600.00

$554.54

$283.08

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

Iowa's Educational Taxation Sources: $1,733.82

Other

Additional PropertyTaxationState FoundationAidBaseline PropertyTaxation

The Cost to You

• The average Iowa household pays $1,733.82 for education based on:– Projected household income of $50,000– Personal property valuation of $100,000

• When you become a property-owning taxpayer, you will owe a similar amount each year. (Ask me about taxation surcharges to renters.)

• Are you mad yet?

Per Pupil Expenditure (1998-1999)

• National Average $ 6,232

• State of Iowa - 5,583

• Difference $ 649

• Cost per household$5,583 x 2.3 = $ 12,841

The Bottom Line

• Cost per household $ 12,841

• Household contribution - 1,734

• Deficit per household $ 11,107

• Who pays the difference?

Who Pays the Difference?• I do.

• Everyone who owns a home and does not have children in public school:– the Elderly (your grandparents)– “Empty Nesters” (your parents)– single persons (your brothers & sisters)– childless couples (people that you know)

• Agriculture assessed at 1.7 x residential rate

• Business assessed at 1.8 x residential rate

“The Graying of Iowa” Public Education Enrollment Trends

What Does the Future Hold?

• Initially, more people will be paying for fewer students, reducing the average cost.

• If you do not like the methods that the State of Iowa uses to pay for public education, it may not matter. Why?

• In the future, there may not be anyone left to pay for public education, and the State of Iowa will have to find other methods.

Iowa’s Impending Future

• Iowa is facing a 3.2% shortfall in revenue at a minimum. Why?

• Proposed changes to State Foundation Aid– reduces mandated $5.40 assessment of taxable

valuation by half– eliminates local option sales taxes

• What would be the result?

Proposed Change to Iowa’s Taxation

$148.10

$998.10

$554.54

$33.08

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

Iowa's Educational Taxation Sources: $1,733.82

Other

Additional PropertyTaxationState FoundationAidBaseline PropertyTaxation

ReferencesGood news about our public schools. (2001, January) National education

association. http://www.nea.org/publiced/goodnews/

Obradovich, K. (2001, March 14). Panel OKs sales tax for schools.Quad-City Times. p. A1.

Scott County, Iowa. (2000). Scott county tax levies. Pamphlet.

State of Iowa. (2000). Annual condition of education report (FY 1999). Retrieved February 22, 2001 from the World Wide Web: http://www.state.ia.us/educate/publications/finance.pdf

State of Iowa. (2000). Citizens report. Retrieved February 22, 2001 from the World Wide Web:http://www.state.ia.us/governor/agenda/2000/CITIZENS/REPORT.pdf

Sate of Iowa. (1999). Final Report of the task force to study Iowa's system of state and local taxation. Retrieved March 7, 2001 from the World Wide

Web: http://www.legis.state.ia.us/GA/77GA/Interim/1998/comminfo/iatax/final.htm

State of Iowa. (2000). House file 1. Retrieved March 6, 2001 from the World Wide Web:http://www.state.ia.us/government/drf/taxlaw/HF1.html

References (Cont.)State of Iowa. (2000). Legislative guide to basic Iowa education finance.

Retrieved March 9, 2001 from World Wide Web: http://www.legis.state.ia.us/Central/LSB/Guides/edfin.htm

State of Iowa. (2001, February). Monthly Revenue Report. Retrieved April 20, 2001 from the World Wide Web: http://www.state.ia.us/government/dom/01-02.doc

State of Iowa. (1997). Task force to study Iowa's system of state and local taxation. Retrieved March 9, 2001 from World Wide Web: http://www.legis.state.ia.us/GA/77GA/Interim/1997/comminfo/iatax/mn971008.htm

State of Iowa. (2000). Tax incremental financing (TIF). Retrieved March 9, 2001 from the World Wide Web: http://www.smart.state.ia.us/financial.htm#tif

Teacher's salary. (2001, January 16). American association for employment in education. Retrieved March 6, 2001 from World Wide Web:http://www.ub-careers.buffalo.edu/aaee/salary.shtml