Basics of School Finance—Why is Now the Time for a School Bond?

As a vote on the school bond for a new elementary school for Oneida county draws nearer, the Enterprise is running a series of articles covering come of the major issues that have so far been raised about the new project.  Last week, we covered the stated reasons for the need for a new school building.  In coming weeks, we plan to cover the reason for an auditorium not being included in this bond, the proposed building layout and safety features, the choice of location, and other issues that should inform voter decisions.  This week, we will take a look at why this specific year is a rare opportunity to take advantage of available state funding for the project, which may not soon be repeated. 

Combined with funds from a large enrollment at IHLA and the state bond equalization process, the Oneida School District has the chance to fund a new school without increasing taxes to anyone in the county.  Recent publications about the current proposed school bond state that a bond must be passed in order for the District to qualify for partial funding of the new school under the State Bond Equalization program.

What Is the State Bond Equalization Program?

From the time Idaho became a state in 1890, education has been important to its citizens and the State Legislature.  The State Constitution states in Article IX Section 1: “The stability of a republican form of government depending mainly upon the intelligence of the people, it shall be the duty of the legislature of Idaho, to establish and maintain a general, uniform and thorough system of public, free common schools.”

Property taxes became the state’s method for financing schools. Over time, the difference in property values among Idaho’s 117 school districts resulted in vast differences in the ability of communities to finance the building of new schools. Property-rich districts easily passed bonds to finance the building of new schools.  Property-poor districts attempted and often failed to get the required 2/3 of voters to approve increasing property taxes, even when the need for new schools was obvious.

In 2007 property taxes were merged with the General Fund instead of being designated only for schools. Therefore, schools are now funded by appropriations from the General Fund by the State Legislature.  For a few years, education in Idaho suffered from competing in the budget process with all other state-funded areas (roads and bridges, welfare, justice, to name just a few). Last year, education benefitted from Idaho’s tax surplus when Governor Little designated schools to receive some of those surplus funds. 

In 2002 the State Legislature passed the Bond Levy Equalization Support Program (Idaho Statute 33-906) that established a formula by which a school district that passes a bond qualifies for partial funding from the State. School districts are assigned a value index based on the district’s market value, average annual unemployment rate, and per capita income in the county. School districts with a value index below “1” are eligible to receive state financial assistance to pay annual bond interest and bond payments.

The amount of state funding available to school districts through the Bond Levy Equalization Support Program varies each year, depending on the amount of money allocated to the program by the State Legislature and school district student enrollment. The current bond equalization rate for Oneida School District is 38.08%, which means that if a bond is passed, the state would pay 38.08% of the cost of building the new school. That rate will vary every year. In the past five years, Oneida School District’s percentage has been between 35% and 41% with a five-year average of 36.30%.

The Bond Levy Equalization Support Program is the major way the State is fulfilling its constitutional responsibility to provide a “general, uniform and thorough system of public, free common schools.”

How Are Schools Funded in Idaho?

School funding depends on the number of students in a school district. Prior to the COVID pandemic, the formula for determining the amount of money a school district would get from the State for operating and maintaining schools was based on Average Daily Attendance.  Schools had to keep track of the number of students in attendance each day, which meant that districts (like Oneida School District) where students generally attended school in large numbers received more funding per student than did districts where students skipped school in large numbers. 

Because of COVID and the necessity of schools going to online platforms, such as Zoom, for teaching and learning, keeping track of attendance became impossible. School districts were handling the crisis in many different ways, and the lack of consistency made funding schools according to student attendance unfair. The State Legislature changed the formula from Average Daily Attendance to Average Daily Enrollment, which meant that funding depended on the number of students enrolled in a district, regardless of the number of students in attendance.

Where did Oneida School District Get the Funds for Its Share of the Cost of Building a New School?

The school funding formula based on attendance benefitted Oneida School District, which has always had 85%-90+% attendance. Basing the funding formula on student enrollment would have been a disadvantage to small districts like Oneida School District.

Approximately six years ago, Oneida School District became the home district for the Idaho Home Learning Academy (IHLA), an online school with students throughout the state of Idaho. The District partners with two corporate entities – TechTrep Academy and Harmony Education Services – which provide the curricula and general operating procedures for the IHLA. Oneida School District hires the online teachers, administrators, and staff, oversees registration and enrollment of students, and organizes grading and testing procedures in accordance with the stipulations of the partners.

With fewer than 1000 brick-and-mortar students, Oneida School District was one of the smaller districts in the State.  However, COVID led many parents to seek alternative educational opportunities for their children, including online schools like IHLA, which was already set up to teach students with an established curriculum and procedures in place long before the pandemic. The result was an explosion of growth for IHLA, which went from several hundred students in grades K-8 to over 7000 students in grades K-12 in 2023.

With a total enrollment of approximately 8000 students, Oneida School District benefits from the change in the funding formula being based on attendance to being based on enrollment. The District receives state funding for 8000 students instead of 1000, which has resulted in the District being able to save enough money to pay its share of a new school without relying on increasing property taxes.

The District has a contract with its IHLA partners, which concerns people who believe the contract could end at any time, leaving the District without the funding for the new school.  Superintendent Jon Abrams assures patrons that the money for the District’s share of the new school (61.92% if the bond passes so that the state pays 38.08%) is already in hand and does not rely on the IHLA contract situation. The money on hand is sufficient to pay off the bond in three years instead of the normal 20 years.

However, the District does not have funding for the full cost of a new school.  The State determines the maximum size of a bond, depending on property values in the District. That bond capacity for Oneida School District is $29,000,000. Therefore, the District needs the State’s share of funding. Oneida County voters must pass a bond in order to qualify for the State’s share under the Bond Equalization program. 

A YES vote on the bond will not increase property taxes as a result, and a NO vote on the bond will not decrease property taxes.

A public meeting about the bond and the new school is scheduled for 6:30 on Monday, January 30, in the Malad Elementary School Auditorium.  Superintendent Abrams and members of the Oneida School Board will be present to address concerns and answer questions.  For more information, see www.oneidaschooldistrict.com or call Mr. Abrams at 208-534-6050 ext. 412 to schedule a one-to-one or small group meeting with him.

The Enterprise believes that the more the community is involved in and informed about the upcoming bond vote, the better.