Fed up with years of political battling over the fairness of Iowa鈥檚 education funding formula, Arthur Tate, the superintendent of the Davenport public schools, says in order to balance his books next year, he will illegally pull $2.7 million out of the district鈥檚 reserves. It鈥檚 an amount he bases on the state鈥檚 1971 funding formula, which leaves Davenport $175 less to spend per student compared to some other districts.
The state tightly controls how much districts can spend, and dipping into emergency savings accounts without state permission is strictly forbidden. Officials say Tate could lose his superintendent鈥檚 license given by the state if he goes ahead, and the district鈥檚 board members, who unanimously approved the plan this month, could be charged criminally.
鈥淚鈥檓 tired of the inequality,鈥� said Tate, the head of a district whose 15,500 students are mostly low-income, Hispanic, and black. 鈥淚 think there鈥檚 a higher philosophy and principle at stake here. Every student should be worth the same, and the state is saying ours are worth much less.鈥�
But Jeff Berger, the state鈥檚 deputy education director, said Davenport鈥檚 problems stem from the fact that its administrators have failed to cut their spending fast enough as 1,000 students left the district.
鈥淚f you know you鈥檙e going to be losing kids, don鈥檛 spend more, spend less,鈥� said Berger, who conceded that the formula has disparities. 鈥淲e鈥檙e way more equitable in Iowa than most other states.鈥�
If Davenport follows through with its threat, the state will decide how to handle the situation in September when the district sends state officials its budget, said Staci Hupp Ballard, a spokeswoman for the state education department.
It could be a potentially lengthy process, said Berger.
Jousting Over Funding
The jousting over how states should distribute billions of dollars to school systems has intensified in recent months as many states end the fiscal year with budget surpluses, and governors tout big increases in education spending, yet districts in a number of states lay off teachers and close schools because of funding problems.
鈥淭he norm is that states are getting budget increases, but it鈥檚 not translating down at the local level,鈥� said Noelle M. Ellerson, the associate executive director of AASA, the School Superintendents Association.
Memphis school administrators sued Tennessee last year after years of laying off hundreds of teachers and closing several schools despite state funding increases to its K-12 budget. Boston students staged a mass walkout last month after district officials, despite a $13 million increase in city and state funding, said they鈥檇 need to cut $30 million out of their budget.
And Chicago Teachers Union President Karen Lewis last week compared Republican Gov. Bruce Rauner to an 鈥淚SIS recruit鈥� for pushing a proposal to increase the state鈥檚 K-12 budget by $120 million, a spending plan that would at the same time result in the Chicago district losing $74 million.
Michael Griffith, who tracks school finance for the Education Commission of the States, said a number of factors can lead to a situation where districts have to cut spending even when a state increases overall K-12 funding. They include the particulars of a state鈥檚 funding formula, changes in a district鈥檚 student population, and local property-tax values.
鈥淲e鈥檙e seeing these increases in states in the 4 to 7 percent range, and some districts are getting increases of just 1 to 2 percent,鈥� Griffith said. 鈥淐itizens are asking, 鈥楬ow is it that you鈥檙e getting more money this year, but you鈥檙e cutting services?鈥� 鈥�
Although superintendents regularly criticize what they say is the unfairness of state funding formulas that are heavily dependent on local property taxes, few go as far as Davenport鈥檚 intends to do when the district鈥檚 spending account runs dry this summer. Tate refers to the potential withdrawal of reserve funds as an act of civil disobedience.
State鈥檚 Perspective
Republican Gov. Terry Branstad boasted this year that education spending has increased from $1.3 billion to $2.7 billion in the past 20 years. It consumes more than half of Iowa鈥檚 budget.
While he鈥檚 made improving education outcomes a central theme in 22 years as governor spread over various terms, he in recent years has voiced a lack of faith in the effectiveness of school district spending.
鈥淎cademic achievement in Iowa has dropped in comparison to other states,鈥� Branstad said in an editorial in The Des Moines Register published last October. 鈥淚t is clear that just spending more money has not improved academic achievement.鈥�
With a current state budget surplus of $150 million and projections that tax revenue will increase by 4 percent next year, the legislature approved a 2.25 percent increase in K-12 spending for the 2016-17 school year.
The governor, who originally proposed a 2.4 percent increase for K-12, set aside $150 million for a teacher-training program.
鈥淭his is a way that will increase student achievement rather than just simply appropriating more money for districts to spend,鈥� Branstad鈥檚 spokesman Ben Hammes said.
But district officials say local and statewide economic factors complicate their fiscal situations.
They say, for example, that any increases in state aid of less than 3 percent will, in effect, result in cuts because teachers鈥� unions typically ask for鈥攁nd typically get鈥攁n annual 3 percent bump in salaries.
In addition, thousands of workers in the Hawkeye State鈥檚 agriculture industry were laid off in recent years. Poverty has increased, and the birthrate has declined. Districts have had to cope with a loss in per-pupil funding, and the needs of poorer students can present additional financial burdens.
At least 60 of the state鈥檚 school districts were warned that they will likely end this year in a budget deficit. In an unusual move, the state will fully dissolve Farragut, a shrinking district in the southwest part of the state with 167 students, that, for years, overspent and refused to consolidate with its neighbors.
Funding-Formula Concerns
The state鈥檚 funding formula, passed in 1971, establishes a spending floor and a spending cap for every district to ensure that the gap between what districts spend per student doesn鈥檛 spin out of control, according to Berger, the state鈥檚 deputy superintendent. As a floor, districts are mandated to spend about $6,500 annually for every student. Based on 1971 local property evaluations and the tax rate when they were brought into the formula, some districts can spend up to $175 more per student using their own local tax dollars. In effect, that means that some districts get to spend more per student than other districts.
Unlike in most states, Iowa districts aren鈥檛 allowed to increase their local levies for their general fund without state authority.
鈥淥ne of the functions of our formula is to protect the taxpayers,鈥� said Ballard, the state department鈥檚 spokeswoman, who pointed out that the state supplements much of the base funding for poor districts. 鈥淏efore it was in place, it was all local and very uneven.鈥�
Tate and other local superintendents see the formula as unfair. But Iowa is one of just five states where district officials haven鈥檛 sued their legislatures over the constitutionality, fairness, or adequacy of their funding formula.
One reason: Unlike most states, Iowa鈥檚 constitution does not ensure an 鈥渆quitable鈥� or 鈥渁dequate鈥� education鈥攑rovisions on which districts in other states often base their legal claims. Some school leaders, such as Tate, have lately said more extreme measures need to be taken.
鈥淪uing is on the back burner right now,鈥� he said.
Davenport has lost 1,000 students in the past decade, though the student population has stabilized in the past two years.
To cope with the loss, its board has made $17 million in cuts in the past five years, including closing several schools and annually laying off teachers and slashing away at his central-administration staff.
Cuts next year will amount to $5 million, Tate said.
Taking A Stand
Over the years, as the spending cuts got deeper, Tate ramped up his protests against the funding formula, culminating in an emotional rally at the state capitol last year with several of his high school students who wore T-shirts that read 鈥淚 am worth-less.鈥�
By his calculation, the amount the state鈥檚 funding formula leaves the district short is close to the amount the district has had to cut in the past five years.
鈥淚t is hard for me to even conceive how a state government could have allowed this discriminatory practice to exist for so long,鈥� he said in a rousing speech to his board in March of last year when he originally proposed the idea of breaking the law by pulling money from the reserve account. The speech went viral among urban superintendents across the country.
A board member described the speech as akin to a church revival.
This year鈥檚 legislative session frustrated Tate even more. While the state鈥檚 funding formula took center stage, lawmakers regularly accused district administrators of mismanaging state funds. They didn鈥檛 agree on a budget plan until early this month鈥攁 year late. (State law forces legislatures to set spending limits a year before the budget year.) That forced district budget directors to make last-minute changes. The legislators will likely miss that deadline again this year for the 2018 budget.
That all led to the showdown between Davenport and the state.
By pulling that $2.7 million out of the district鈥檚 $30 million in reserves (the district spends about $200 million a year), Tate says he will avoid having to close another school, cut transportation for several hundred students, and shutter several music, art, and college-preparation programs.
He has the backing of his board.
鈥淚t鈥檚 ethically unfair that the formula, as it exists, rewards some over others based on ZIP code,鈥� said board member Richard Clewell. 鈥淭his is the first step we need to take to reach equality.鈥�
