Fact Sheet: State school funding bills shortchange Iowa students

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Governor Kim Reynolds and Iowa House and Senate leaders once again are holding PK-12 school funding below what the state can afford, below what is needed to catch up with longtime funding deficiencies, and below what is needed to keep up with current costs.

Lawmakers’ rhetoric against sustainable increases in funding doesn’t hold up

1. School funding lags costs of educating kids

For 14 years, Iowa per-pupil spending growth has averaged 2% a year. The Senate-passed school funding proposal for Fiscal Year 2026, SF 167, sticks with that number for a 15th year. Iowa’s recent surpluses of about $2 billion a year[1] show the state has – and has had – resources to help schools keep up with cost increases and enhance learning opportunities. New tax cuts are slashing revenues,[2] assuring it will be very difficult to reverse these trends without harming other critical public services funded by diminished state budget resources.

2. Holding down state support means state-imposed property tax increases for many

When the Legislature sets the Supplemental State Aid percentage, it caps budget growth in an enrollment-based formula of state aid and property tax. The “cost per pupil” used to build a school budget increases by that percentage – 2% in the Senate bill or 2.25% as proposed in the House (HF 319). If a district has stable or increasing enrollment, its budget will increase by that percentage. But if declining enrollment in that per-pupil formula pushes a district's budget below the level for the previous year, the district is permitted just a 1% budget increase that must be paid for totally out of property tax. In FY 2026, 159 school districts will be on that so-called “budget guarantee,” funded by property tax at a cost of $25 million to affected local property taxpayers.[3]

3. Voucher spending, already set to expand, increases automatically with SSA

Iowa’s new voucher program to subsidize private school systems will make eligibility universal in 2025-26, meaning that students in families of any income will be eligible. These are students in families that already can afford private school and do not need a subsidy. The voucher amount is tied directly to the “State Cost Per Pupil,” or SCPP, that is used in the funding formula combining state and local revenue for school district budgeting. That figure will be $7,983 if the Senate bill becomes law, up from $7,826 this year. The Governor’s budget projects the voucher cost in state funds to be $314.6 million.[4]

Policy Recommendation: Better focus use of taxpayer funds to public education

Legislators often boast that they spent more this year than last on education, but years of small increases below inflation do not meet public school needs. The state now funds a separate education system that it expressly does not supervise,[5] while slashing tax revenues and holding public schools’ resources below their costs. Iowa can afford a far better investment in its future.