STANGELAND: Property tax and community variations

Tax season is stressful. Whether you own a business, farmground or are simply trying to balance your family budget, calculating your taxes is often an exercise in uncertainty, fear or frustration.

Those emotions are present on the other side of the coin as well, as public entities are charged with levying taxes to manage their organizations. Counties, cities and schools must submit their budgets to the Department of Management to determine how much of their operating costs were met by their current funding formulas. For schools, our foundation formula consists of the Uniform Levy, the State Foundation Aid and an Additional Levy. Those three components are referred to as the Combined District Cost.

The Uniform Levy provides $5.40 per $1,000 of taxable valuation. This is levied by every school district in the state of Iowa. State Foundation Aid fills a district’s formula-driven authority up to the 88.4% level. This is most often referred to as “state aid” and varies from district to district. The Additional Levy is what is needed to fill the last 12.5% of a district’s formula-driven authority. There is no rate limit, but the rate adjusts automatically based on the dollar amount authorized by the formula.

This can lead to immense variations in the Additional Levy for school district communities. According to the Iowa Department of Management’s FY2026 reports, the Additional Levy this year ranged from a low of $7.98 per $1,000 of valuation in Spirit Lake to a high of $19 in Ballard. While the majority of Iowa’s 325 school districts were in the $11 to $14 range, many districts levied a rate of $16 or more. Only 28 districts (8.6%) had levies below $10 per $1,000 of valuation.

The tax rate is impacted primarily by certified enrollment, supplemental weighting and state supplemental aid. These factors are largely out of the control of the school district. Other factors more within our ability to impact are our Dropout/At-Risk dollars, Income Surtax Levy, Cash Reserve Levy, Management Levy and Debt Service. Of course, many community members point to “tightening the belt” and cost cutting measures as a means of fiscal responsibility and keeping taxes low.

Since the influx of Covid funds in 2020-2023 and their mandated sunsetting, most districts have been in a state of cost-cutting for the past several years. When Supplemental State Aid does not keep up with inflation, increased utility costs, double digit school insurance costs and other major factors, schools must make drastic programming cuts and simultaneously keep their budgets afloat by increasing taxes.

Ultimately, our communities are most healthy when we have healthy schools. If we can not afford to keep programs, provide safe and engaging learning environments and retain quality teachers and staff, our communities fail as schools are forced to close their doors.

Serving two communities, I am acutely aware of the needed tax differences for both. While the proposed maximum tax levy for CAM has increased by approximately $2, the tax rate for Nodaway Valley has been lowered by over $2. Superintendents do not like being in positions to either substantially raise or lower rates, but there are compelling reasons for both. Not levying for cash in CAM for over three years has left the district depleted of resources and in peril of a negative solvency ratio. Our insurance costs have doubled, leaving our Management fund insufficient in the case of major property claims. Approximately 94% of the Orient-Macksburg taxable valuations will be joining the Nodaway Valley CSD for Fiscal Year 2027. That provides a larger tax base and decreases the need to sustain a $13 tax levy.

While taxes are complex and often anti-intuitive, the staff in our districts are working hard to maintain high quality programs and services and also to be effective stewards of your tax dollars. I encourage you to reach out to me or your board members if you have any taxing questions this time of year and always.