OTTUMWA — Proposed changes to the way the Ottumwa school district collects funds for a couple of different levies could end up in reduced property taxes for Ottumwans.

The Instructional Support Levy Program and Physical Plant and Equipment Levy (PPEL) are two tax programs the Ottumwa School District already have, the district’s chief financial officer John Berg said. However, he’s asking the school board to look at changes in how the funds are collected.

Instructional Support Levy

The Instructional Support Levy generates funds for the general fund, and it is set to expire at the end of the year. “Continuation in the program will not increase property taxes. Discontinuation would result in pretty significant cuts to general fund expenses,” Berg told the school board Monday night. It’s generated more than $8.1 million for the district over the past five years, he said.

Only two districts in the state don’t participate in the program, he said.

It’s a state program that can be collected one of two ways: through property tax only or through a mix of property tax and income tax surtax.

Ottumwa’s support levy currently comes entirely from property taxes but the district can make the switch to fund it with the second option of mixing those with the income surtax. Berg said Ottumwa is the only district in the area that doesn’t utilize the income surtax.

“Ottumwa is one of the few districts that does not have this,” he said. “Most districts, especially our size, rely on some of that surtax so there’s not such a significant ask on the property tax side.”

Currently, the levy adds about $1.80 the total property tax levy in the Ottumwa Community School District, Berg said. “What we would like to do is reduce that by asking for a portion of this through the income tax surtax.”

That, he said, would lead to a reduction in the property tax rate.

“We understand that Ottumwa has a good property tax ask, and if there’s anything we can do to reduce that, we’d like to go down that road.”

Those property tax funds in the levy would be made up with funds collected from the surtax. The surtax would be assessed annually at tax time. “At the bottom of the state income tax return, when it gets to the line on how much state tax you owe, a surtax adds a surtax to that, determined by the board each year,” Berg explained. “We can do this and generate the same level of funding to continue operations.”

So, for example, if someone owed $300 to the state at tax time, a 3 percent surtax would add $9 to the bill. Initial figures show Ottumwa’s surtax would be 3-6 percent with the number reviewed each year during the budgeting process.

“People who don’t make enough to owe state income tax would not be affected,” Berg said.

The next steps on the proposal would be for the board to come up with a resolution for the Sept. 28 meeting showing intent to continue with the levy and then set and publish a time for a public hearing, which would likely happen in October. The board would then be able to take action to pass a final resolution to continue participating in the resolution with the language changed to “a mix of property tax and income tax surtax.”

The proposed change would go into effect in fiscal 2021 with the district collecting the first surtax funds in fiscal 2022. The property tax reduction would take place right away.


That brought Berg to the proposal on implementing a voted PPEL.

“We have several buildings that are older that require a lot of repairs and maintenance. How we fund that is through the Physical Plant and Equipment Levy. That’s what’s designed to fund those repairs,” he said. It also allows for technology upgrades.

Currently, Ottumwa’s PPEL is at 33 cents per $1,000. “All schools in Iowa have that. That’s an automatic that the board is allowed to pass,” he said.

That amounts to about $278,000 per year, or $58.29 per student. “This is the lowest amount per student in the state of PPEL dollars,” Berg said. The closest in the list of 10 districts up and down in size similarities was Marshalltown at $215 per student. “It’s not even close. Most of those districts are generating $500-$600 per student.

“That $58 per student just does not generate anywhere near enough money to fund the facilities that are required to educate in today’s time.”

Berg said that results in limitations for Ottumwa to maintain the buildings because the funds aren’t readily available, leaving the district to dip into the general fund and capital projects fund, “taking resources away that are designed for the instructional programs or designed to fund additional capital improvements.

He said last year, $700,000 was taken from the general fund for building and grounds maintenance, services and repairs. An additional $700,000 was used from the capital projects fund (SAVE) for technology purposes, building projects and repair maintenance.

“You’re taking away resources from the SAVE funds that would normally be used for [additions and new facilities in the future] and having to do it just to keep the buildings operational.”

Berg pointed to the ages of facilities in Ottumwa, with many 60 to 70 years old. The high school is nearly 100 years old. “We could probably spend our entire $278,000 just doing the routine and annual maintenance at the high school, and we still have several elementary buildings, the middle school — it’s just not sufficient,” he said.

His proposal of a voter-approved PPEL at $1.34 per $1,000 valuation would generate about $1.4 million annually and an estimated $12 million over 10 years reserved for building repairs, maintenance and technology purchases. The PPEL would not exceed 10 years with the district able to ask for up to $1.34.

Berg said the board would need to pass a resolution to put the question to the voters, develop a question and how much they want to ask for and put the question to the voters. “We would have to have the question and the text sent to the county auditor no later than January 15, and the vote for this, the next one is scheduled for March 2, 2021,” Berg said. A simple majority is needed to pass.

Net outcome

The combined effect of the changes, if approved, could be an approximate 50-cent reduction in property tax.

“The combination of these two, by having the instructional support program funded in part by a surtax, that reduces the levy down, let’s say $1.80, $1.85,” Berg said.

Then on the other end, you’re looking at an increase of possibly $1.34.

“It would be a reduction, in total, between these two, we would see a 50-cent reduction overall,” Berg said. “We anticipate that at the end, when we have to come certify the budget next year, that we could see the property tax levy in Ottumwa drop from about $14.70 to $14.20.

“By doing this we’re able to reduce the property tax rate and make room for us to approve a voted PPEL or ask for a voted PPEL and have it be property tax neutral,” Berg said. “The whole goal is that the district needs additional funds for our physical plant and equipment, our buildings, repairs and maintenance. The way we’re able to do this without having an additional property tax burden on taxpayers is by the change in the Instructional Support Program. We would be able to generate the funds that we need fro those facility projects without negatively affecting property tax rates in Ottumwa.”

Berg’s suggestion was to first begin the process on the Instructional Support Levy at the next board meeting and then take a closer look at the PPEL after that process was complete.

Board members stressed that to implement this, the district would have to work hard at informing the public about the moves and the reasons behind them.

Board member Christina Schark said if it were to go to a public vote, she would like to see a clear plan from the facilities committee prior to the vote showing specifically what the money would be going for.

“If you’re telling me my taxes are going to change to fund what we already have, I’m not interested,” she said. “I don’t think it would pass as opposed to if we said, ‘Hey, we want to build this, so we need you to vote for this.’”

Member Morgan Brown said he thought saying the money was going toward maintaining the buildings would be sufficient. “We don’t raise the money now to do that, and that’s kind of the point of shifting this,” he said. “Right now we rob the general fund $700,000 per year.”

“It’s going to be a lot of education to the public, exactly what we’re doing and how it’s going to affect them to get them on board,” said Jeremy Weller, board vice president.

“If they understand why we’re doing it, it’s easier to vote for,” Brown said.

“A large part of it is, just like some other things, we’re behind what the other districts [are doing],” said board member Brian Jones. “We probably should have done something a long time ago.”

“It’s the whole education of the public so everyone knows what they’re going to vote for,” David Weilbrenner, board president, said. “There’s numerous things on ballots over the years that you look at and you have no idea what they are, so I think that’s where it’s going to be our job as a district to explain that.”

Features Editor Tracy Goldizen can be reached via email at or followed on Twitter @CourierTracy.

Features Editor Tracy Goldizen can be reached via email at or followed on Twitter @CourierTracy.


Tracy Goldizen is the Courier's features and magazine editor, leading production of the award-winning "Ottumwa Life" and the Courier's other magazine offerings. She began work with the Courier on the copy desk.

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