Survey: Penny sales tax funds athletic, extra school projects

Copyright 2017, Register & Tribune Company

In December, a rural school district in northern Iowa opened a $3.1 million gym complete with indoor track, weight room, treadmills and elliptical machines. Plans call for adding televisions and weekend yoga classes.

West Fork Schools fashioned its facility after a community YMCA. It hired a full-time attendant to oversee gym memberships, which families can purchase for $300 a year, and classes such as Zumba and aerobics. During school hours, it's closed to the public.

The project was largely paid for with revenue generated by a statewide penny sales tax originally intended to finance school infrastructure upgrades such as replacing aging roofs and windows.

It's among dozens of athletic or extracurricular spending projects The Des Moines Register found after surveying more than 50 of Iowa's 333 school districts. The sample represented various sizes and geographies, and asked how the schools spent tax revenue.

Lawmakers, who return for the 2017 legislative session Monday, may soon debate whether to extend the tax, which benefits all districts and is scheduled to expire in 2029.

What the records show are a wide array of projects that not only revitalized schoolhouses but also modernized classroom equipment and funded extracurricular and sports facilities. Of the 50-plus districts contacted by the Register, more than 30 had recently completed or planned to complete at least one athletic or gym project.

Such facilities have frustrated many lawmakers who believe athletic projects may be a sign that districts have caught up with a backlog of schoolhouse infrastructure needs — and that the penny tax should be revisited.

But educators counter that such spending is allowed by law and helps improve the overall education experience. They say students are more engaged in classes because of their involvement in the arts or sport and typically a certain GPA is required to participate. In addition, purchases like laptops or iPads benefit classroom lessons, educators say.

“Part of offering programs for students means that you have to offer the appropriate facilities,” said Tom Narak, government relations director for School Administrators of Iowa, which lobbies state lawmakers.

If the penny tax, which raised Iowa's sales tax from 5 percent to 6 percent, is extended another 20 years, it will bring in an estimated $18.1 billion from 2029 to 2049. And while both Democrats and Republicans say the extension may be warranted, they differ on whether to restrict how the money can be spent.

DATABASE:Sales tax dollars for every school district

Proposals range from allowing non-infrastructure purchases, such as textbooks, to using the revenue to offset property taxes or fund water quality projects. Other recommendations call for restricting athletic spending or sending costly projects to voters for approval.

"I don’t think voters intended (the tax) to be used for AstroTurf in a football stadium or a treadmill in a gym," said Rep. Matt Windschitl, a Missouri Valley Republican who spearheaded a series of subcommittee meetings discussing the tax during the 2016 legislative session. "They expected it to be used for brick and mortar, windows, things of that nature."

But others want to move with caution. Sen. Herman Quirmbach, D-Ames, said lawmakers should ask school districts about their needs before "tinkering" with the way dollars are distributed.

"It’s always difficult to predict the future," Quirmbach said. "But we should have at least some effort made there to inform the debate. If we’re going to be bringing in $450 million a year and our schools only need, you know, $200 million a year for infrastructure improvements, well then that could either free up dollars to be diverted elsewhere or we might not need a whole 1 percent."

In the 700-student district of West Fork, for example, building repairs were already done or had been budgeted for, so officials looked at other district priorities, said Superintendent Darrin Strike.

Given the district's small and aging gym — wrestlers practiced in a repurposed classroom — officials decided to build a 30,000-square-foot athletic center that also serves a broader purpose: community health. Tax revenue was supplemented with local grants and a $250,000 donation from a manufacturer in town. The facility also opened to rural communities, which lacked a private fitness center.

"Kids in metro areas have access to facilities such as the YMCA," Strike said. "If you look at some of these small towns, there's not much for kids to do."

$3.4 billion in work needed

Lawmakers first allowed individual counties to approve their own sales tax after a backlog of school projects was cataloged in a 1995 Iowa State University study. It found more than $3.4 billion worth of repairs and upgrades were needed to schools statewide, and that 89 percent of school facilities — a combined 64 million square feet — was deficient in some way.

Voters in Woodbury County, which includes Sioux City, were the first to go to the polls in 1998. A sales tax seemed more politically palatable than a general obligation bond, which raises property taxes, said district spokeswoman Allison Benson.

At the time, Sioux City schools were thought to have some of the oldest buildings in Iowa, including Irving Elementary, built in 1886. Officials held it up as an archetype.

“Geronimo surrendered in 1886,” Benson said of the Apache chief. “That was our rallying cry.”

The tax passed with 61 percent approval that year, and again in 2005 with 75 percent. In that time, Sioux City closed 24 buildings, opened or remodeled 11 schools, and built three additions. The district now serves more than 14,000 students.

But even after 30 years of revenue — now about $13.7 million a year — there won’t be enough money to complete necessary work if the tax sunsets in 2029. It could leave an elementary school without air conditioning and the three high schools, which by then will be nearing 60 years old, without major upgrades.

“It has been such a blessing for our community that it would be a shame to end it now,” Benson said.

As more counties passed the tax, however, rural lawmakers complained that their districts couldn't generate similar revenue because they lacked the shopping hubs of larger cities. Tensions culminated in a lawsuit brought against the state by 160 districts in 2002, which was settled out of court by changing how money was distributed.

After every county adopted the tax, lawmakers in 2008 created a statewide tax called SAVE, or Secure an Advanced Vision for Education. In 2016, the $453 million it took in meant $943 per student, an amount expected to rise to $1,339 per student by the time it sunsets in 2029.

The tax has helped offset general obligation bonds, which raise property taxes. In 1998, for example, 55 districts sought construction bonds. But in 2008, after SAVE passed, only 24 districts did.

Replacing Iowa's school facilities with new ones could cost $16.4 billion, according to a 2014 state estimate, and the penny tax currently provides about 2.5 percent toward facilities and equipment — a "reasonable" amount, said education lobbyist Margaret Buckton, who represents both urban and rural schools.

"Infrastructure needs will never be caught up," she said. "We'll always be running bond issues or using sales tax. The best analogy of this is, are you ever done fixing your house?"

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Sports facilities go up

Funding sports facilities has drawn particular ire from certain lawmakers, some of whom have called for prohibiting such spending. But district officials defend the projects.

Johnston Schools is building an $8.9 million, 5,300-seat stadium largely paid for by sales tax money. It includes larger restrooms, concession stands and locker rooms, and it could also include a training space for the marching band and cheerleaders.

It will be built near the district's new high school, and is needed to accommodate a growing population, officials said. In the last 10 years, the district grew from 5,100 students to more than 6,700 in 2015-16.

"We’re really outgrowing the one we have," school board President Mark Toebben has said.

Ottumwa Schools is also finalizing the design of a football field that calls for new press boxes, a concession stand, bleacher repairs and landscaping. The current one hasn't been upgraded since the 1950s. But when bids came in at nearly $8 million, 28 percent higher than expected, officials now are scaling back.

Like other school leaders, Ottumwa Schools Chief Financial Officer Alex Barr said the district, which serves 4,300 students, keeps athletic projects proportional to academic ones. The southeast Iowa district also spent $17 million to build a new elementary school and $6 million to refurbish an existing school.

"We've tried to keep our athletic or non-academic SAVE spending to less than 10 percent; it's probably closer to 5 percent," he said.

Such projects can include support facilities. The 2,100-student district of Le Mars built a $735,000 concession stand with restrooms, a booster club store and tailgate service area, Superintendent Todd Wendt said.

In the smaller, older building, bathrooms were in poor condition, and there was no room to sell merchandise or serve food. A mobile cart and folding tables were used instead.

While the building is used only during sporting events, money raised through concessions and merchandise sales helps pay for other school activities and athletic programs. Using a phrase commonly said by leaders the Register talked to, Wendt said the old building was "no longer adequate to meet our needs."

“We know that extracurricular activities encourage kids to like school,” said Melissa Pederson, a government relations specialist with Iowa's teachers union. She reiterated that such spending is currently allowed by law: "There's nothing to prohibit that from happening."

Money used for laptops, greenhouses

Use of the sales tax money has evolved in other ways. School officials said they're also directing money toward technology such as laptops and iPads for "1-to-1" initiatives, where each student receives a device to use throughout the school year.

Once rare across the United States, technology initiatives were pioneered by private schools or wealthy parent-teacher groups in public schools before being adopted by districts seeking to equalize student opportunity. The Register found examples of students as young as fourth grade having their own, district-purchased Google Chrome Books to use.

But such efforts can be costly to start and maintain. Indianola Schools, which serves 3,500 students, recently purchased more than 1,100 MacBook Air laptops for students in grades 9-12 at a cost of more than $2.5 million, which includes expenses for networking and server upgrades as well as other related costs.

Superintendent Art Sathoff dismissed critics who say such technology doesn't increase student learning.

"That may be true when you're talking about standardized test scores," he said. "When you're talking about engagement, there's nothing more engaging than incorporating technology."

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The Register's survey unearthed spending that some consider extraneous, though others say it creates world-class schools. Those projects include outfitting administrative conference rooms with interactive whiteboards and televisions, which are similar to ones used on television news shows, and constructing greenhouses for agriculture programs.

Such facilities can take clubs and classes to a new level. The 2,800-student district of Newton, for example, built a $106,000 industrial-style greenhouse that's used by agriculture classes as well as the FFA program, which sells plants it grows for an annual fundraiser.

With temperature controls and more window space than the regular classroom used before, four times more students are participating, growing petunias and geraniums as well as tomatoes, peppers and potatoes.

"We're able to experiment with different planting rates, temperatures, changing the water pH," said teacher James Horn of the 1,100-square-foot building. "It's a great facility for the kids to understand the basics of agronomy, horticulture, plant science, and explore an area they're unfamiliar with."

How districts spend

Iowa's school districts have approached penny sales tax revenue differently, The Des Moines Register found during its survey of more than 50 districts.

In some communities, money was put toward property tax relief, or paid for previously approved construction bonds but little else. In 2015, the Iowa Department of Education estimated that 5 percent of funds helped reduce property taxes.

Other districts spent money as it came in, spacing construction or renovation over the years. Still others borrowed against future earnings to complete projects up front, and now revenue is paying off that debt. That is a common reason cited for extending the penny tax: so schools can continue borrowing. In selected cases, such as Sioux City Schools, the penny tax is the only revenue specifically for construction.

Many districts, however, also use a physical plant and equipment levy, a local tax used for building improvements. In addition, since 2008, more than 150 bond elections have gone to voters — raising local taxes even further. In some, but not all, cases, that helped fund schoolhouse projects in addition to football stadiums or laptop purchases.