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CCA's SAVE: An alternative to asking taxpayers for more

CCA explores funding options through SAVE dollars

OXFORD– SAVE: “Secure an Advanced Vision for Education,” is a funding stream many school districts in Iowa rely on for a multitude of projects without having to dip into an already strained general fund. SAVE was previously known as “SILO” or the School Infrastructure Local Option tax, or more formally, “the Statewide School Infrastructure Sales and Services Tax.”
Like SILO, SAVE takes a percentage of sales tax money and provides it to the schools for infrastructure needs as well as property tax relief. Typical uses of SAVE money include construction of new buildings and/or additions to existing facilities, land acquisition for new facilities and paying toward outstanding school infrastructure bonds.
The funding stream is currently scheduled to expire in 2029. The Iowa House passed House File 2481 in April with a 95-3 vote to extend SAVE until 2050. The Iowa Senate, however, did not debate their Senate File 2216. Thus, pending action in the next or other upcoming sessions, the 2029 sunset is still in effect.
The Clear Creek Amana (CCA) Community School District has benefited from the SAVE revenue, which made construction of the Performing Arts Center at the high school in Tiffin possible, as well as an additional “pod” of classrooms at North Bend Elementary in North Liberty. The football stadium was also funded with SAVE dollars.
“We routinely utilize SAVE and PPEL (Physical Plant and Equipment Levy, a tax approved by voters) dollars to maintain our district facilities and complete smaller projects throughout the district,” Superintendent Tim Kuehl said. “When we can utilize SAVE funds for purchases, be it projects, technology, maintenance or transportation purposes, it allows us to make needed purchases without utilizing funds generated from local property tax.”
SAVE is also used as a “safety net,” Kuehl said, for the general obligation (GO) bonds (approved by voters) in case a project, such as a major addition or new school building, goes over budget. GO bonds authorize a maximum dollar amount with a specific purpose, neither of which can be altered once approved.
The district is currently utilizing GO bond money to construct a second elementary school in Tiffin, directly north of Tiffin Elementary, which will house fourth- and fifth-grade students. A new parking lot is also under construction between the middle school and high school, and other voter-approved projects are in the works.
However, the district, which continues to experience enrollment growth annually, and is forecast to continue to do so, has needs beyond the GO ballot voters approved in 2017.
Tim Oswald, a Managing Director with Piper Jaffray, the district’s financial service, spoke to the CCA School Board of Directors at their regular monthly meeting on Wednesday, June 20, to discuss the district’s borrowing capacity regarding anticipated SAVE revenues. Oswald explained the district has the ability to bond up to approximately $7 million. SAVE Bonds are paid back through future SAVE revenue, and thus do not impact property taxes and do not require voter approval.
One need for the district, which SAVE dollars could fund, is a bus and other vehicle maintenance facility. Currently, the district rents a two-bay structure on the edge of Coralville, which was the source of some controversy among board members when a three-year lease was signed in 2016 in the amount of $35,000 per year.
The board is actively pursuing bonding for approximately $2.5 million in the next few months to construct a facility north of the new elementary school. Kuehl added, the board is also concerned with having money available to purchase land, should a suitable tract be presented for consideration. The district will need a new, larger high school within a few years. Once open, the current high school will become the middle school, and the middle school will be repurposed to serve other grade levels.
General talk of a new athletic complex, and new baseball and softball fields in particular, has been an on-again, off-again topic of discussion for several years. Currently, such a complex is, “still simmering on a back burner,” according to Kuehl. “We are hauling in fill (dirt, from the new elementary site) to make that space (south of the high school) useable. But the board has expressed a desire to see where we end up purchasing land for the (new) high school.” Kuehl explained there has been discussion that, depending on the proximity of a new site to the current high school, the baseball and softball complex could be constructed right away, ahead of the new school.
“These projects would be done solely with the current SAVE that runs through 2029,” Kuehl said. He noted the likelihood of SAVE revenue being greater than current projections.
SAVE income is generated through a one percent sales tax (excluding certain items, such as vehicles and farm machinery), and is collected by merchants and sent to the state on a monthly basis. The State of Iowa disburses SAVE dollars to school districts monthly, based on an estimate of the annual SAVE tax collections statewide for the year, and the quarterly retail SAVE tax collections statewide. Ninety-five percent of the money is sent to the school districts, with the balance, or “reconciliation,” paid in November following the fiscal year ending the prior June 30. It should be noted, all schools receive the same dollar amount per pupil when it comes to SAVE funds.
Oswald explained to the board, whereas SILO was based on a county-by-county calculation, statewide enrollment is the only factor in effect for SAVE. He noted CCA’s enrollment has averaged an increase of 104 students annually for the past five years, and that the state’s formula is: statewide total SAVE revenue divided by total enrollment equals Statewide Revenue Per Student. The Statewide Revenue Per Student is then multiplied by the number of resident students (as of the prior October official count day) for the monthly payments.
CCA had 1,225.2 students in calendar year 2001 (Fiscal Year or FY 2002-03) and had grown to 2,191.7 in 2017 (FY 2018-19). With the increase in enrollment has come an increase in SAVE dollars. Oswald showed the board how, in 2010, CCA’s total district enrollment of 1,440 students led to an average of $1,019 per student, or $1,466,269 in total. As of June 30 of this year, the district’s total enrollment sits at 2,005, and while the average revenue per pupil declined to $959, the total district revenue increases to $1,923,274.
Oswald cautioned the bond to carefully consider any use of SAVE bonding capacity, pointing out the higher the amount of debt payments, the less surplus SAVE funds, which can be available for other “pay-as-you-go” projects. The district should consider its PPEL and SAVE resources in aggregate required into the future to maintain and operate the district before committing additional SAVE dollars to bond payments; and reminded the board that money spent on a particular project means less money available in the future for other projects. “Make sure this project (whatever it may be) is essential and worth committing SAVE to at this time,” Oswald urged the board.
One use, which will likely not be considered by the district, is property tax relief.
“Districts have the discretion to use SAVE funds to reduce local property tax,” Kuehl said. But in CCA, the demand for SAVE-funded projects has prevented them from doing so. “CCA’s property tax rate is going down $.18/$1,000 in FY19 (starting July 1),” Kuehl pointed out. “But, that is not SAVE related.”