Monday, January 11, 2010

Allowable Growth: What does it mean?

As the page of the calendar turns to January, the State Legislators come back into session in Des Moines. One of the issues that will be discussed that directly affects the funding for public schools districts is allowable growth. Normally, allowable growth is expressed as a percentage. During my tenure as a superintendent, allowable growth has ranged from 1%. to 4%. But what does that really mean? Does that mean that schools have 4% more money than the previous year?

All Iowa school districts are funded on a per pupil basis. Each student equates to and generates a certain dollar amount for districts to operate. The amount of “growth” in that per pupil amount is referred to as Allowable Growth. For example, the funding per pupil for the 2008-09 school year was $5,546. The Allowable Growth set by the Legislature was 4% for the 2009-10 school year. This 4% increase added $222 per pupil for the 2009-10 amount per pupil. The new funding amount equated to $5,768 per pupil. Since this funding is based upon the number of students, it is important to remember that districts that are declining in enrollment may actually receive less total funding even though the amount per pupil has increased.

As we all know, the State is continuing to have significant financial challenges. I do not expect the $290,000 of lost revenues from the 10% Across-The-Board reduction in State Aid to be funded. Calculating that loss in revenues per pupil would equate to $453 less per student. In effect, this had a -8% allowable growth in revenues per pupil. The added difficulty with this scenario is that this revenue reduction happened in October and the district is required to certify their budget in the previous April.

Normally, the Legislature sets the Allowable Growth rate fairly early in the session. The current legislative session will set the rate for the 2011-12 school year. In addition, I am sure there will be some conversations as to the 2% Allowable Growth rate set last year for the 2010-11 school year. According to the most recent revenue estimating conference, there has been very little improvement in State revenues and the difference between State revenue projections and obligations is approximately $1Billion. With education constituting almost one half of the obligations, certain reductions will need to be made.

I hope this information helps you understand the term allowable growth and how it is used by the legislature and the school districts.