Strings Attached - Categorical Funding in Schools

This blog post was submitted for publication in the Friday, November 13 edition of the Traer Star Clipper.

In my column two weeks ago, I explained that North Tama’s certified enrollment is down by 39 students this fall compared to a year ago, and that our enrollment has decreased by about 100 students over the past six years. While our school district’s current financial position is still good, I am very concerned about the long-term implications for North Tama if the trends of declining enrollment and inadequate state funding don’t change.

In this week’s column, I’d like to explain why a school district like North Tama is able to pay for a major facility renovation project -- such as the recent new restroom building at the softball/baseball complex or the remodeling of our secondary office -- while being forced to reduce staff, share administrators, or take other cost-saving measures. It comes down to the way schools are funded in the state of Iowa. A large percentage of the money schools receive is considered categorical funding.

Categorical funding is financial support that is targeted for particular categories of students, certain special programs, or other very specific purposes. North Tama receives categorical funds in areas such as capital projects, dropout prevention, at-risk programs, special

education, core curriculum implementation, talented and gifted programs, professional development, teacher quality, and early literacy to name a few. School districts accept this money with STRINGS ATTACHED, meaning we are obligated to spend the funds exclusively as directed by the state or federal government, or the agency granting the funds. The funds that were recently spent on the new construction at the athletic complex and the remodeling at the high school came from the capital projects fund which can ONLY be spent on projects like this. Spending this money on salaries, supplies, utility bills, or other general expenses would be illegal.

While it is great to have a source of funding for construction and for other special programs and projects, the allowable uses of these funds is quite restrictive, and these funds do nothing to help us pay the general bills such as utilities and salaries. More than 80% of most school district’s budgets is taken up with these types of general expenses. Adequate funding or lack of adequate funding to pay these general expenses is the main factor in whether a school is able to maintain its long-term viability. The problem is for many schools is that the state continues to trend toward providing more categorical funding streams while providing fewer general fund dollars. To keep the school’s doors open, adequate support for our general fund is a necessity.

In a press conference on August 3, Governor Branstad spoke about his desire to continue the practice of earmarking funds for specific programs. Specifically, he stated, “It’s not like the old days -- you don’t just ‘throw money’ at schools...We want to become best in America again and I think that’s going to take specific and strategic investments in education that focus on things that really make a difference.” His strategy is to shift from providing general fund dollars to providing more categorical funding that is focused on specific programs that he believes will improve student achievement.

While I agree that many of these programs are great and will truly make a difference for our students, I think we also need to understand that when categorical funding is provided at the expense of general funding many of our smaller rural school districts will be forced to cut teachers and support staff, and may eventually need to close their school buildings or merge with another district. Is this really what is best for students?  

The North Tama School Board’s number one goal is to maintain the financial stability of the district and retain existing programs so that North Tama will remain a viable K-12 school. Declining enrollment and decreased flexibility in funding due to the shift from general funding to categorical funding will make it even more difficult for us to achieve this goal. To make this goal a reality, we will need to be intelligent and intentional with our resources and will need to take further measures to cut costs during the coming months and years.

The 2016 legislative session is just 8 weeks away. Please consider contacting your legislators and the governor's office to let them know that it is critical for them to provide adequate GENERAL FUND support for our schools. Our legislators need to realize that many smaller schools are struggling to keep the doors open due to declining enrollment and unreliable, inadequate funding. By providing adequate supplemental state aid WITHOUT STRINGS ATTACHED, local school boards can have the flexibility to set priorities and continue providing a quality education for our students. The students in our smaller schools deserve the same opportunity as students in larger urban and suburban schools. These students represent the future of our state, and they deserve nothing less.  

You are welcome to visit my blog at http://redhawksupt.blogspot.com/ where you can read all of my Star Clipper columns and leave comments if you wish. You are also welcome to follow me on Twitter, where my handle is @DavidRobertHill.