T-R PHOTO BY LANA BRADSTREAM Director of Business Operations Randy Denham tells the Marshalltown Community School Board about the solvency ratio during his presentation of the certified budget process at the regular meeting on Monday night.

The day before the special Physical Plant and Equipment Levy (PPEL) Tuesday election, held jointly with the city’s LOSST election, the Marshalltown Community School District Board of Education members approved the proposed 2025 $17 million tax levy during the certified budget process. The levy decreased from $17.1 million in 2024.

Director of Business Operations Randy Denham said the $17 million is the proposed maximum property tax dollars to levy. Adjustments may be made after the legislature approves supplemental aid.

“State law only allows you to make adjustments downward, not upward,” he said. “We have built a little bit of a cushion in there based off of what we know at this time. We will be able to adjust our levies down as needed.”

Denham said the biggest driver of the decrease in tax dollars collected is that the district will pay off the GO bond in May. The proposed tax rate is $14.75 in 2025, which is a decrease from the current $15.99.

The actions for the certified budget process are two parts, and the second occurred during the regular meeting on Monday. The first occurred at the Feb. 19 meeting.

There are two primary drivers for the budget — the certified enrollment and the state supplemental aid, which has not been approved by the legislature.

“We are anticipating 2.5 to 3 percent, but we will see what happens with the folks in Des Moines,” Denham said.

He said the majority of the tax rate is generated by the school finance formula and is not subject to local discretion. Tax rates are a function of the district’s taxable property valuations. A district with lower valuation per student will have higher rates than a district with greater property value.

“Our tax dollars have to work harder to get the funding that is needed,” Denham said. ” . . In Okoboji, they can have a lower tax rate because they are generating more tax dollars than what we have here in Marshalltown.”

Denham talked about budget projections including the certified enrollment. The projected enrollment is 5,352, which has been a steady number of students. He said there have been some significant increases and decreases in enrollment, primarily due to the 2018 tornado and the 2020 derecho. However, MCSD has managed to maintain a steady number of students, Denham said.

One slide Denham presented was a summary of property tax rates, and it assumed the passage of the PPEL election, and would increase the levy from 67 cents to $1.34 per $1,000 assessed valuation. He said it also assumed the passage of the proposed bond referendum for the potential Miller Middle School project.

“A couple things to keep in mind there, if the vote of PPEL does pass, and we were to get a bond referendum passed, those wouldn’t take effect until fiscal year 2026,” Denham said. “Heading into next year, we’re still at 67 cents for PPEL. If things fall into place, then we will be looking at that $1.34 taking effect in the following fiscal year.”

Similar to PPEL, if a bond passes in November, there would be a forecasted MCSD max levy of $2.70. However, Denham said they believe they will utilize sales tax dollars to offset the property tax burden. If the referendum does pass, he said they allocate $1 million to $1.5 million per year in state funds to abate the debt service levy to keep the tax rate down to the projected $14.90 to $15 tax rate.

Denham said there is a healthy cash reserve in the general fund, as well as a reserve in the management fund. The projections on staffing will mean they will not have to utilize the cash reserve levy during the next few years. He added that will also keep the tax rate down.

“There were a lot of good things that have happened over the last few years to get us in a position to where we could have a lower tax rate than we had in the last few years,” Denham said.

Denham’s favorite slide in the presentation was the solvency ratio — which provides a picture of cash ratios on hand — just knowing where the MCSD started a few years ago. He said it has been a steady drop to levels recommended by state associations. The Iowa Association of School Boards (IASB) recommends a ratio between 7 and 17 percent and not to exceed 25 percent, and MCSD board policy wants to maintain 8 to 10 percent. Even though the district is above those metrics — 25 percent — Denham said they can bring it down to a reasonable level.

Board Member Sara Faltys asked about the solvency ratio and the IASB recommendation of 17 percent. She asked why it is negative when it gets too high. Denham told her the main negative would be the ability to levy a cash reserve, which causes instability.

“It also gives the impression you are not investing back into your students and your staff,” he said. “It just looks like you’re hoarding cash, and we’re not a bank at the end of the day. We are an educational institution, here to educate kids. So, we need to make sure that we’re maximizing and putting our resources into kids.”

Denham said one of the MCSD challenges are the extra funding categories.

“It almost becomes a point where we have too much money to really feasibly spend in one year,” he said. “There’s been a snowball effect over the last few years. That’s a challenge we are trying to manage through.”

Superintendent Theron Schutte said he could not remember the last time the education tax rate was as low as it is now. Board member Sean Heitmann said when he started, the rate was pushing $20.

“You’re projections, you’re below $15,” Heitmann said. “You’ve included in that the voted PPEL and the potential bond for the Miller project. That’s really impressive.”

“At the same time, it only takes one bad year to blow it all up,” Denham responded. “That’s my disclaimer.”

Contact Lana Bradstream at 641-753-6611 ext. 210 or lbradstream@timesrepublican.com.