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New Iowa education law redirects millions for AEAs, teaching salaries. Where the money will go:

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April 02, 2024

How much money will shift from Area Education Agencies to Iowa school districts?

How much new money will Iowa schools receive to increase teacher pay?

And how much money is the state expected to spend on private school education savings accounts next year?

The wide-ranging education law Gov. Kim Reynolds signed March 27 contains the answers to all of those questions. The legislation makes changes to AEA funding, provides new state money for schools to increase pay for teachers and gives K-12 schools a 2.5% funding increase for the upcoming school year.

Here’s a breakdown of where the dollars will go.

Nearly $90 million will shift from AEAs to Iowa school districts

The new law keeps the bulk of special education funding with the AEAs, while shifting funding for general education services and media services to school districts over two years.

Statewide, the AEAs took in about $449.7 million in revenue in fiscal year 2024, which ends June 30. Including a fund balance of $76.9 million at the beginning of the year, the AEAs have control of about $526.5 million, according to an analysis from the nonpartisan Legislative Services Agency.

More: Kim Reynolds signs AEA overhaul, teacher pay raise into law. Here’s how it will work:

That money includes state and federal funding and property tax revenue.

Beginning in the 2025-26 school year, the AEAs will keep 90% of the state money they currently receive for special education, and school districts will gain control of the remaining 10%.

Iowa’s school funding formula allocated about $185.3 million to the AEAs for special education funding in fiscal year 2024, but the agencies actually received closer to $155.7 million after lawmakers cut the AEAs’ budget last year.

Ten percent of that funding amounts to about $18.5 million that would go to school districts to pay for special education services instead of the AEAs. It’s not clear whether school districts will choose to spend that money with the AEAs.

Federal funding that goes to the agencies is untouched by the new law — about $138.5 million in the current fiscal year.

More: Which Iowa lawmakers voted to overhaul AEAs, raise teacher pay? Here’s the rundown:

When the law is fully in effect in the 2025-26 school year, the AEAs will lose all the money they receive from the state for media services and general education services, amounting to $68 million.

The AEAs currently receive about $35.7 million for general education services and $32.3 million for media services, according to an LSA bill analysis.

Schools could choose to continue spending that money with the AEAs under a “fee for service” model, but the money is no longer guaranteed. Under this model, the AEAs would be required to charge reasonable fees that are consistent with market rates.

Iowa will spend $160 million over the next 2 years to raise teacher pay — and that money is ongoing

Minimum pay for beginning teachers will increase to $47,500 in the coming school year and to $50,000 the following year, up from a minimum of $33,500.

And the law sets a minimum salary of $60,000 for teachers with at least 12 years of experience in the coming school year, before raising that minimum to $62,000 the next year.

To pay for the salary increases, Iowa will allocate $67.6 million for the coming school year and $96.1 million for the 2025-26 school year.

In the first year, the $67.6 million includes:

  • $27.4 million for beginning teacher salaries.

  • $17.9 million to raise salaries for teachers with 12 years of experience.

  • $22.4 million to raise pay for other teachers.

In the second year, the $96.1 million breaks down to:

  • $47.1 million for beginning teachers.

  • $25.8 million for teachers with 12 years of experience.

  • $23.1 million for other teachers.

The state will continue providing schools with money to pay the higher teacher salaries in the coming years as part of Iowa’s education funding formula.

The law includes another $14 million to increase pay for nonsalaried school staff, including paraeducators.

Unlike the higher pay for teachers, Iowa’s state supplemental aid for schools will not automatically include new money for paraeducator pay each year. Instead, lawmakers will have to choose each year how much funding — if any — they will provide.

The money for teacher and school staff pay increases will go only to public schools in Iowa, not private schools.

Iowa will spend about $3.8 billion on K-12 education next year

The law also increases state per-pupil aid to schools by 2.5%, an increase of $191 per pupil, bringing total state funding for public K-12 schools to $3.8 billion.

That means the state will spend $7,826 per student, up from $7,635 during the current school year.

Iowa will spend nearly $180 million on education savings accounts for private schools

The state also is expected to spend $179.2 million in the coming year on private school education savings accounts.

That’s an increase of $51.3 million over the $127.9 million Iowa spent on education savings accounts during the current school year.

The Legislative Services Agency expects about 6,100 additional students to use education savings accounts in the upcoming year, which it predicts would bring total enrollment in the program to 22,900 students.

In the current school year, 16,757 students used the education savings accounts to pay for expenses at accredited private schools in Iowa.

The state approved nearly 19,000 students to receive education savings accounts, but the money returns to the state if it is not spent.

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.

This article originally appeared on Des Moines Register: Iowa spending breakdown on AEAs, teacher pay, K-12 schools in new law

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