Changes to ESAs, AEAs, and teacher pay complicate budgeting process for school districts

DES MOINES, Iowa — Educational savings accounts enter year two in Iowa as the window for students and families to apply opened up on April 16.

ESA’s, changes to the state’s area education agencies, and increases to the starting teacher salary have made the budgeting process complicated for school districts.

Des Moines Public Schools announced a $641 million fiscal year 2025 budget just last week. The district’s chief financial officer discussed several budgeting changes with WHO 13 News on Monday.

“So the number that we have is a cumulative number of all the students in our district who are studying in a nonpublic school, which is 1,381,” said Shashank Aurora, CFO of Des Moines Public Schools.

1,381 is the number of students in the district’s boundaries who received an educational savings account this last school year, a lot of those were awarded to students already in private school. Des Moines Public Schools, and a vast majority of districts, are not positive on how many students were enrolled in 2022, but switched to private in 2023.

The state kicks over around $1,200 per student who received an ESA in a district’s boundaries. For DMPS, that will total around $1.6 million.

“We will be receiving $1.6 million, that equates to the district cost per pupil for approximately 200 students. The loss of students just for last year should be less than 200 students,” said Aurora. “Based on our internal preliminary estimates, there should be somewhere between 110-125 students. The bigger challenge is coming because now the threshold has been raised.”

The ESA window this year allows for families to apply for an account if they are at or below 400% of the federal poverty line. Next year accounts will be available to everyone. So, for the time being, DMPS stays above the money lost in state per-pupil funding – $7,864 per student – but eventually the district could be losing dollars if the number of students enrolled in the district and then go to a private school increases.

Aurora also highlighted a couple concerns about the teacher wage increase that was in the AEA reform bill .

“So teacher salaries, all of us are in favor of giving more money to the teachers. But the devil is always in the details and we don’t know when we are seeing first year teachers. Are these teachers who are working with us today as first year, or are these teachers who we will be hiring next year? Who will truly be the first year teachers?,” said Aurora.

Lawmakers earmarked the funding for teacher pay increases for the next two years. After that, it would be up to those elected to keep those dollars in the state’s education budget year-to-year.

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