Some Idaho school districts are ‘scrambling’ for maintenance money after House Bill 521

A bus arrives at Morley Nelson Elementary in Boise on May 6, 2021. (Otto Kitsinger for Idaho Capital Sun)

This story was originally posted on IdahoEdNews.org on Sept. 11, 2024.

Some school districts are struggling to cover routine maintenance costs — even as the state is delivering the largest single investment in school facilities in Idaho history. 

House Bill 521, enacted this year by Idaho Gov. Brad Little and the Idaho Legislature, directed an additional $1.5 billion in state funding to schools over the next decade. The biggest slice is a $1 billion state bond, which will soon be divided between school districts for capital projects. 

But HB 521 had some give and some take. The legislation eliminated August elections for school districts, and it created new rules governing minimum instructional hours and days. The bill also altered the way school districts receive lottery funding — in a way that’s leaving districts cash-strapped in the short term. 

The facilities bill rerouted about $50 million in annual lottery dividends to a restrictive property tax relief fund that must be used to pay off local bonds and levies. Many districts used the lottery money for routine upkeep, from asphalt repairs to new light bulbs, as well as maintenance staff salaries. Those funds can now only be used for debt repayment, and that’s left a potential $30 million gap in funding for day-to-day upkeep.

The Ririe School District, for instance, is short about $100,000, according to superintendent Jeff Gee. That’s a significant chunk for the 700-student, eastern Idaho district with a total budget around $2.7 million.

“We’re kind of scrambling, honestly, to figure out how we’re going to move forward with that,” Gee told Idaho Education News.

Idaho Lottery money shifted to property tax relief fund

For decades, state lottery revenue has benefitted the public school system. And it will continue to go to schools, except it will now fund property tax relief rather than more immediate maintenance needs. 

Since its inception in 1988, Idaho Lottery revenue has had two beneficiaries: K-12 public schools and the state’s permanent building fund. The latter account finances state-owned buildings, including those at colleges and universities. 

In 2009, state lawmakers divided the public school dividends between two accounts: the public school building fund and the bond levy equalization fund. Districts primarily used the building fund for facility upkeep, like installing new carpeting or filling potholes, and to pay maintenance staff. The bond levy equalization fund, on the other hand, covered a portion of bond payments for economically disadvantaged school districts. 

The state issues roughly $80 million in lottery dividends each year. Previously, the money was divided this way: 

37.5%, or about $30 million, to the permanent building fund  
37.5%, or about $30 million, to the school district building fund 
25%, or about $20 million, to the bond levy equalization fund

HB 521 eliminated the building fund and bond levy equalization fund, reorganizing the lottery distribution this way: 

62.5%, or about $50 million, to the school district facilities fund
37.5% or about $30 million, to the permanent building fund 

The school district facilities fund is a creation of House Bill 292 from the 2023 legislative session. Designed to relieve local property taxes, the facilities fund directs a percentage of state sales tax revenue — and now lottery revenue, as well — to school districts for debt repayment. The state last fiscal year distributed $106.6 million through the facilities fund, and the money worked as intended, reducing property tax bills.

Districts are required to use the money to pay down bonds, supplemental levies and plant facilities levies — in that order. Proceeds from HB 521’s $1 billion bond are also restrictive. They can only go toward capital projects, not routine maintenance.

In July, the governor and state superintendent Debbie Critchfield sent a letter to school leaders, clarifying that the lottery funds were rolled into the facilities fund and are now governed by its order of uses — bonds and levies followed by maintenance. 

“The priority of that allocation is to lower local tax burdens and then allow districts to use remaining funding for routine facilities needs,” Little and Critchfield wrote. 

Facilities money will pay off bonds, levies

Most of the lottery money will now be gobbled up by bonds and levies, leaving little for maintenance. 

Statewide, school districts owed $329.2 million in outstanding bonds, supplemental levies and plant facilities levies at the end of fiscal year 2024, which wrapped-up in June. That total was calculated after the $106.6 million from the facilities fund went out. 

Ririe School District superintendent Jeff Gee

HB 521, and a follow-up bill, promised school districts that they’ll get what they expected to receive through the bond levy equalization fund in the next two fiscal years. That money was going to bond payments either way, but moving the lottery money from the building fund to the facilities fund has blown holes in local budgets. About $30 million statewide must now be spent on debt payments rather than routine maintenance.

For Ririe, the $100,000 in lottery funds financed half of its maintenance supervisor’s salary. It also paid for sidewalk repairs, new carpeting and heating and air conditioning filters, among other things. But the district in May secured a $1.5 million bond, and all of its lottery funds will go toward paying that off, leaving nothing for maintenance costs, according to the superintendent.

“I think the heart was in the right place when they were trying to figure out ways to help us with our buildings,” Gee said. “But I do think there were a lot of unintended consequences that hit the small school districts.”

School district trustees call for restoring lottery funds

Some school trustees have called on state leaders to take a step back from the HB 521 funding shifts.

Trustees from the Twin Falls School District crafted a brief resolution urging the Idaho School Boards Association to work with lawmakers on a plan that would restore funding for “necessary, routine and ongoing maintenance” using lottery dollars or another source.

“Districts have lost an important revenue stream used for general maintenance,” the resolution says.

ISBA members are scheduled to vote on the resolution at their annual meeting in November. Adopting it would make the resolution part of the advocacy group’s official platform heading into the 2025 legislative session. ISBA’s executive board recommended that it pass.

Idaho Superintendent of Public Instruction Debbie Critchfield (Courtesy of the State Department of Education)

That position won’t be backed by the state superintendent, at least next session. Critchfield recently told Idaho Education News that she doesn’t support making changes to HB 521 before the scope of its impact is better understood.

“We haven’t even distributed $1 of that money,” she said by phone. “I don’t want to jump the gun and say, ‘We’ve got 10 problems we need to fix.’ That’s hard for me to support before we’ve even actually given districts any of their money…Let’s see what this first year looks like and where those gaps are.”

Little, meanwhile, is aware of the concerns and discussing them with school leaders and policymakers, according to Emily Callihan, communications director for the governor’s office. Callihan touted the $1.5 billion in new spending through the facilities bill, calling it the “first big step” in addressing facilities needs as school bond measures become more difficult to pass.

“Gov. Little is aware of the school districts’ input and is engaged in ongoing conversations with school leaders, legislators and other stakeholders to address the needs in future legislative sessions,” she said by email.