Stealth school tax increase on hold

DES MOINES, Iowa — After approving a tax increase without having given the public notice or taking a formal vote, the Muscatine Community School District has pulled back — for the time being.

After objections were made, the School Board, which had at least twice before passed tax hikes without taking votes, scheduled a vote on this latest increase for Monday’s meeting in order to give the  public a chance to comment.

TAX INCREASE ON HOLD: Without public notice or a formal vote, the Muscatine Community School District approved a property tax hike last week. Now the district has backpedaled and decided to hold a public vote on the increase.

“I didn’t realize there was any controversy over the issue until Monday,” School Board President Nathan Mather told Iowa Watchdog. “I think it’s very important when you’re dealing people’s money to involve the public. And to actually hold a vote. It’s a matter of trust.”

Mather was quick to point out, however, the School Board isn’t required to take a vote.

The school funding law passed by the Legislature in 2008 requires each school district to submit its budget for the upcoming fiscal year for review to the Iowa Department of Management.

Any budget surplus results in an automatic lowering of a district’s general levy by the amount of surplus.

If IDM finds a shortfall in a budget, the district must either reduce expenses or raise further revenue or the state will raise the district’s general school levy. Changes in a school district’s general levy after a budget review are common, according to Lisa Oakley, school finance director for the Iowa Department of Management.

“Because many of the numbers included in the budgets are only estimates, things change when we know what the final numbers really are,” Oakley told Iowa Watchdog. “If there is a budget shortfall, it’s up to the district how to handle it. They can make cuts, find other funding or allow the general levy increase to take place.”

On May 12, IDM informed the Muscatine Community School District its budget was $180,000 short. The district had until May 30 to take action or allow its levy to increase automatically.

At its meeting May 29, School Superintendent Jerry Riibe told the School Board it had the option of filling the hole in the budget using money from the district’s $4.2 million cash reserves, or doing nothing and allowing the state to raise the levy.

After a quick, informal discussion, the School Board decided to take no action at all, thereby allowing the state to raise the general levy by 15-cents per $1,000 taxable valuation. For a $200,000 home, this would $30 property taxes hike.

No mention of the shortfall in the district’s budget or a potential levy increase was made on the meeting’s published agenda. The omission was simply an oversight, Mather said.

Asked after last week’s meeting why there had been no effort to inform the public of the budget issue, Mather told the Muscatine Journal there hadn’t been enough time.

“I don’t know that we could have been able to get anything out meaningfully,” he said.

According to Mather, ““We’ve never voted on increases like this in the past. On the two or three occasions we’ve had levy increases since the law changed in 2008, we’ve never treated them as action items. But we have included a notice of the increase as an information item on the agenda.”

On Tuesday morning, Mather and Riibe requested and received from IDM a delay in the increase in the district’s levy until after Monday’s School board meeting.

Mather said he has changed his mind about how to handle the district’s budget shortfall but doesn’t think a public vote actually will change anything.

“Based on my informal poll of my fellow members,” he said, “I believe the increase will pass.”

Contact Paul Brennan at pbrennan@watchdog.org. This story originally appeared on Watchdog.org.