Chapter 11
School money
Public schools are Iowa’s biggest state expense. Here’s how the money is figured, who sets each piece, and where property taxes, vouchers and AEAs fit in.
The school funding formula
Most of a district’s day-to-day money comes from one formula in state law. It starts with how many students the district has and a per-student amount the Legislature sets.1
- Count the studentsEach district’s certified enrollment, counted every October, sets the next year’s budget.
- Multiply by the per-student amountThe state cost per pupil: $8,148 for FY27. Some students count extra, like English learners and students in shared classes.
- Local property tax firstEvery district levies a uniform $5.40 per $1,000 of taxable value toward that cost.
- State aid fills the restThe state pays up to 88.4% of the cost, less what the uniform levy raised. Districts with less property get more aid.
- The additional levyA second local property tax covers the remaining share.
- 1,000Students counted in October (a made-up district).
- × $8,148State cost per pupil for FY27.
- $8,148,000The district’s regular program spending authority for the year.
- $7,202,832Up to this much comes from state aid plus the uniform levy (88.4%).
- $945,168The rest comes from the district’s additional levy.
The split between state aid and property tax is in the Code.2 The formula gives a district permission to spend, called spending authority; it isn’t a check. A district that loses students loses authority the next year, though a “budget guarantee” softens big drops.
Supplemental state aid: the yearly raise
Each year the Legislature passes a bill setting supplemental state aid (SSA), the percentage the per-student amount grows. It went from $7,988 in FY26 to $8,148 in FY27, up 2.0%. In FY17 it was $6,591.
- The law asks lawmakers to set it within 30 days of the Governor’s budget, so it’s often one of the first bills of the session.3
- Because it’s a percentage of a big number, each point is worth tens of millions of dollars statewide, which is why it’s fought over.
- Compare it with inflation: a raise smaller than the rise in prices means less buying power. School pages show state aid per student after inflation.
See every district’s state aid on school money statewide.
School property taxes
Your district’s rates and what each raises are on its school page; find it on Local. The property tax chapter shows how they land on your bill.
Money for buildings: SAVE, PPEL and bonds
SAVE
One cent of the statewide 6% sales tax goes to schools for buildings, technology and property tax relief, shared per student. It isn’t a property tax. Districts can also borrow against it.
PPEL
A property tax for repairs, equipment, buses and technology. The board can levy part of it; the rest needs voters.
General obligation bonds
Borrowing for a new school or a big renovation, repaid by a debt service levy. Voters must approve with 60%.
Education savings accounts
Since 2023–24 the state has paid into an education savings account (ESA, often called a voucher) for students who go to an accredited private school. Each payment equals the state cost per pupil, $8,148 for FY27, and can pay tuition, fees, textbooks, tutoring and some other costs.4
At first, students already in a private school qualified only under a family income limit; since 2025–26 every Iowa student can apply. The money comes from the state’s General Fund, not from a public district’s budget, though a district that loses students to private schools loses formula money as its count drops. ESA spending statewide; each school page shows how many students living in the district use one.
Open enrollment
A family can send their child to a public school in another district. The student is counted by the home district, which pays the new district about the state cost per pupil, so the money follows the student.5 The new district has to have room, and the family usually handles transportation. School pages show students going out and coming in, and the estimated money that follows them.
Area Education Agencies after 2024
Iowa’s nine Area Education Agencies (AEAs) give districts special education help, and media and teaching services. Their money comes out of the school formula. A 2024 law, HF 2612, changed who controls it:
- Until FY24 the state sent every district’s special education, media and educational services money straight to its AEA.
- In FY25, a year of transition, the AEAs still got all the special education money but only 40% of the media and educational services money; districts got the rest.
- Since FY26 the money goes to the districts. Each must spend at least 90% of its special education support money on services from its AEA, under a contract; the media and educational services money is the district’s to spend with the AEA or elsewhere.6
The same law raised minimum teacher pay. On a school’s budget, the “AEA support” line shows the money that goes to its AEA.
Who decides what
The Legislature sets the per-student amount, the levy limits and the ESA program. Your school board sets the budget within that, the optional levies and whether to ask voters for a bond or PPEL. Board meetings are open and have time for public comment; the agenda is posted at least 24 hours ahead. See open government for how to follow them.
On Iowa Funnel
- School money statewide · state aid and ESAs for every district
- Your school district · find its page: budget, levies, enrollment and results
- School sharing · districts that share students or staff
- Tax calculator · your school’s share of your property tax
- Local ballot measures · school bonds, PPEL and other votes
Check yourself
Pick an answer to see how you did. Nothing is saved.
1. What was the state cost per pupil for FY27?
$11,810
Not quite. The per-student amount was $8,148 for FY27, up 2.0% from the year before.
$5,050
Not quite. The per-student amount was $8,148 for FY27, up 2.0% from the year before.
$8,148
Right. The per-student amount was $8,148 for FY27, up 2.0% from the year before.
2. Who sets supplemental state aid, the yearly raise in the per-student amount?
The Legislature, by law
Right. Each year the Legislature passes a bill setting supplemental state aid, the percentage the per-student amount grows.
Each school board
Not quite. Each year the Legislature passes a bill setting supplemental state aid, the percentage the per-student amount grows.
The Department of Education
Not quite. Each year the Legislature passes a bill setting supplemental state aid, the percentage the per-student amount grows.
3. When are students counted for the next year’s funding?
Every October
Right. Certified enrollment, counted every October, sets the next year’s budget.
The first day of school
Not quite. Certified enrollment, counted every October, sets the next year’s budget.
At graduation
Not quite. Certified enrollment, counted every October, sets the next year’s budget.
4. What is the uniform levy?
A sales tax for buildings
Not quite. Every district levies a uniform $5.40 per $1,000 of taxable value; state aid fills the rest of the formula, up to 88.4%.
The state’s income tax for schools
Not quite. Every district levies a uniform $5.40 per $1,000 of taxable value; state aid fills the rest of the formula, up to 88.4%.
$5.40 per $1,000 every district levies toward the formula
Right. Every district levies a uniform $5.40 per $1,000 of taxable value; state aid fills the rest of the formula, up to 88.4%.
5. How big is an education savings account payment?
The state cost per pupil
Right. Each ESA payment equals the regular program state cost per pupil (Iowa Code §257.11B).
Whatever the private school charges
Not quite. Each ESA payment equals the regular program state cost per pupil (Iowa Code §257.11B).
Half the state cost per pupil
Not quite. Each ESA payment equals the regular program state cost per pupil (Iowa Code §257.11B).
6. A student open-enrolls into a neighboring district. What follows them?
Their family’s property tax
Not quite. The home district counts the student and pays the new district about the state cost per pupil.
About the state cost per pupil
Right. The home district counts the student and pays the new district about the state cost per pupil.
Nothing; the home district keeps it
Not quite. The home district counts the student and pays the new district about the state cost per pupil.
7. Since FY26, where does AEA special education money go first?
Straight to the AEA, as before
Not quite. Since FY26 the money goes to districts, which must spend at least 90% of the special education support money on AEA services.
To the district, which must spend 90% with its AEA
Right. Since FY26 the money goes to districts, which must spend at least 90% of the special education support money on AEA services.
To the Department of Education
Not quite. Since FY26 the money goes to districts, which must spend at least 90% of the special education support money on AEA services.
8. What does SAVE pay for?
School buildings, technology and property tax relief
Right. SAVE is one cent of the statewide sales tax, shared per student for buildings, technology and property tax relief.
Teacher salaries
Not quite. SAVE is one cent of the statewide sales tax, shared per student for buildings, technology and property tax relief.
Private-school tuition
Not quite. SAVE is one cent of the statewide sales tax, shared per student for buildings, technology and property tax relief.
9. What share of voters must approve a school bond?
60%
Right. General obligation school bonds need 60% of voters, and are repaid by a debt service levy.
Three-fourths
Not quite. General obligation school bonds need 60% of voters, and are repaid by a debt service levy.
A simple majority
Not quite. General obligation school bonds need 60% of voters, and are repaid by a debt service levy.
10. What is whole-grade sharing?
Students repeating a grade
Not quite. In whole-grade sharing, districts send all students in some grades to one another, often a step before consolidating.
Two nearby schools sharing one bus route and its driver every day
Not quite. In whole-grade sharing, districts send all students in some grades to one another, often a step before consolidating.
Districts sending all students in some grades to one another
Right. In whole-grade sharing, districts send all students in some grades to one another, often a step before consolidating.
Next chapter
Money & lobbying →Campaign finance rules and reports, PACs, and how lobbyists register, report and are limited.