Iowa school districts are subject to chapter 24 of Iowa Code regarding budgeting. The authorized expenditures of a school district shall not exceed the lesser of the budget for that year which was certified or amended under section 24.17 or the authorized budget. The authorized budget is the sum of the combined district cost for the year, the actual miscellaneous income received for the year, and the actual unspent balance of the authorized budget from the preceding year. The budget authority, with the exception of the miscellaneous income, is granted to the school district as of July 1 of the budget year. This is true without regard to whether property taxes that fund the authority are delinquent or state aid is reduced during the year. This provides stability to school districts that have negotiated salaries and certified budgets by April 15 prior to the start of the fiscal year, as required by law. This can cause some unique budgeting and reporting issues for districts that already have the full budgetary authority to expend when an across-the-board cut is ordered.
When state revenues fall short of the estimates used to create the state budget, an across the board cut may be necessary during the budget year after the budgets and appropriations have been set. The cut reduces revenues to a district but does not reduce the amount of money a district can expend within its authorized budget. This has occurred several times in the history of Iowa education funding during times of economic stress. The most recent was in FY10 when the Governor ordered a 10% across the board cut. The cut applied to all state General Fund expenditures without regard to need or priority. Districts had basically three options: cut expenditures where possible, use funds on hand, or levy for the cash reserve tax.
The ten percent across-the-board (ATB) reduction in FY10 raised many concerns and questions related to how districts and AEAs should address the fiscal issues. The Department created an FAQ section of questions it had received and the corresponding answers. The link to the FAQ is below. The procedures for handling accounting and financial report for such things as budgetary allocations, AEA controlled budget, AEA flow through, special education receipts and balances, categorical funding and grants, etc. have been handled consistently for each of the across the board cuts that have occurred in Iowa education funding history.