Marshalltown School Board warned of possible property tax increase as enrollment falls; $2 million in cuts targeted

Marshalltown Community School District officials told the board on Feb. 16 that the district faces a tighter FY27 budget, driven by declining enrollment and uncertainty about state supplemental aid (SSA).

Randy Denham, the district's business officer, said the Iowa Senate's proposal (Senate File 2201) recommended setting SSA at 1.75 percent, below the governor's 2 percent proposal and a House draft still under consideration. "The Senate recommendation is setting SSA at 1.75%," Denham said, adding that the district would still be on the state's budget-guarantee with the likely numbers.

Why it matters: Denham said the combination of falling enrollment and a low SSA projection would trigger the budget guarantee mechanism, which is funded by property tax and effectively limits the district's new state dollars to roughly a 1 percent increase while shifting more cost pressure to local levies. He said the district's preliminary calculation shows a maximum FY27 levy of about 18.23 (an increase of roughly $2.27 from the district's current levy figure of 15.95), based on an SSA assumption of 1.75 percent. The district will publish formal property-tax statements and hold required hearings after statutory deadlines in March.

Denham reviewed the timeline: information must be submitted to the county auditor by March 5, the auditor must mail the statements by March 15, and the district's first certified-budget public hearing must be scheduled no earlier than March 20. He said the district can lower a proposed levy after publication but cannot increase it.

Planned cuts, for now: The administration is targeting $2 million in general-fund reductions and has identified about $1.5 million so far. Denham listed measures under consideration that prioritize non-personnel reductions where possible: participation in a break-fix insurance program to shift maintenance costs ($~500,000 estimated), early-retirement savings ($265,000), shifting non-instructional software to PPEL/PPEL-like funds ($268,000), scaling back summer-school and after-school Ladders programming ($212,000), eliminating some software contracts ($73,000), ending sign-on bonuses ($65,000), ending a contracted Community Support Advocates service ($40,000), and eliminating a recently vacant security-officer position through attrition ($40,000), among smaller adjustments.

Denham said administrators were trying to preserve classroom positions where possible and that many of the savings identified to date can be implemented without cutting staff: "We have found a way to identify reductions without having to reduce people at this point in time." He also noted the district is planning bond issuances this spring to finance construction projects; those financings have separate levy implications and will be handled as the board adopts resolutions in coming meetings.

Next steps: The board will set the certified-budget public hearing date and the property-tax statements in March and revisit estimates as the legislature finalizes SSA and other tax-policy changes.

The presentation did not include final levy language; the board will receive a formal property-tax notice and adopt a certified budget before the April 30 statutory deadline.