The Real Debt for the State
by Jennifer L. Crull
The September Iowa Transparency Newsletter brought you information about the true debt load of the state of Iowa. This month we are taking a look at the debt load of all public entities in our state, which is a staggering debt load of $14.4 billion.1 This debt load, that is from cities to school districts, really speaks to how all levels of government are functioning in our state and what debt we as taxpayers are working to pay for.
State Treasurer Mike L. Fitzgerald is required by Iowa code to have all political subdivisions report on outstanding obligations, which are “bonds, notes, certificates of participation, leases, and anticipatory warrants as defined by Iowa Code 74.1.”2 This report is published on the State Treasurer’s Website, along with debt information for the last seven years.
The table below shows the amount of Debt Obligation for the last fiscal year, which closed on June 30, 2012. Additionally the pie chart shows the percentage each entity has of the total debt load. As you can see, Cities make up the bulk of the debt with $5.1 billion in debt, while last year the Cities’ debt load was $4.8 billion. There are 946 cities in Iowa that are listed in the report. This means in the last year Cities have seen an increase of 5.72 percent in the debt load, which directly impacts the property taxes that the citizens of these towns pay.3
The next largest sector is School Districts and Area Education Agencies (AEAs) with outstanding obligations of over $3.0 billion. For Iowa we have 364 school districts and AEAs reporting on debt load. For FY11 the debt load was $2.7 billion. So we have seen education debt increase 10.3 percent in the last fiscal year.4 That is an alarming rate for the taxpayers, when we continue to see our schools test scores and performances slip.
You may be wondering what constitutes State Authorities, which makes up 17 percent of all debt reported. The big chunk of the debt is Iowa Finance Authority with $1.6 billion, Tobacco Settlement Authority with $756.5 million, and finally Honey Creek Park Authority with $32.5 million. State Authorities include:
• Honey Creek Park Authority
• Iowa Agricultural Development Authority
• Iowa Department of Transportation
• Iowa Finance Authority
• Iowa Higher Education Loan Authority
• Iowa Lottery Authority
• Iowa State Fair Authority
• Tobacco Settlement Authority5
The fourth largest section is the Board of Regents. This includes the three state universities, Iowa Braille & Sight Saving School, Iowa School for the Deaf, and the office of the Board of Regents. The bulk of the debt belongs to the University of Iowa with $798.3 million, Iowa State University with $459.6 million, and the University of Northern Iowa with $154.7 million.6 The next seven percent of the total debt belongs to state agencies. These include the judicial districts of Iowa, state agencies such as Transportation, and Commerce, and bonds for prison construction, school infrastructure, Vision Iowa, and IJOBS.7 The largest debt for state agencies is the IJOB project, which Iowans will be paying for throughout many years to come at $745.5 million.8
Surprising for the 99 counties of Iowa is that they have a total debt of only $798.3 million. Plus counties have decreased their debt load from FY11 to FY12 by 3.66 percent.9 Counties are followed by the community colleges of Iowa. We have fifteen community colleges in Iowa, and they make up 6 percent of the total debt reported. The school with the largest debt is Kirkwood Community College with $116 million. It is followed by Des Moines Area Community College with $74.4 million. Since these are the two largest community colleges, it does make sense that they have the largest amount of debt.
The last section of debt is listed as Others on the table. The Others is made up of municipal waterworks, utilities, fire departments, and waste agencies. Spencer Municipal Utilities has the largest debt with $12.5 million. The Others has also seen a large growth over the last fiscal year by increasing 9.31 percent from FY11 to FY12.10
So why should we care about this? Because every entity, except for Counties and State Agencies, has seen their debt load steadily increase over the last five years. The graphic included in the newsletter shows how each of the areas has seen its debt load increase from fiscal year to fiscal year. Every year the taxpayers have struggled with their property taxes increases from these different entities and by the time you have added it all up, the taxpayers see their buying power shrink and more public debt being accumulated.
If we go back to the September Newsletter, you will recall that we were discussing Iowa being $500 million short of paying its obligations.11 So now that we know there is another $14.4 billion in public debt, the taxpayer burden is much higher than we realized. I would encourage you to attend meetings being held right now on the coming year’s budget for these public entities. Ask questions about the debt and how long it will take to pay off and how to slow down the accumulation of more debt. For if you don’t ask questions, who will?
1 State Treasurer of Iowa Mike L. Fitzgerald, Outstanding Obligation Report, <http://www.treasurer.state.ia.us/for_governments/outstanding_obligation_report/> accessed on December 5, 2012.
5 State Treasurer of Iowa Mike L. Fitzgerald, Outstanding Obligation Report File, <http://www.treasurer.state.ia.us/media/cms/2012_Outstanding_Obligation_Report__ 6FAA76D509E07.pdf> accessed on December 5, 2012. 6 Ibid.
9 Outstanding Obligation Report.
11 Jennifer L. Crull, “Truth in Our Accounting and Budgeting,” Public Interest Institute’s Iowa Transparency Newsletter, September 2012, <http://www.iowatransparency.org/sep12newsletter.html> accessed on December 5, 2012.
IOWA TRANSPARENCY NEWSLETTER is a monthly newsletter reporting on government transparency in our state.
IOWA TRANSPARENCY NEWSLETTER is published by Public Interest Institute at Iowa Wesleyan College, a nonpartisan, nonprofit, research and educational institute whose activities are supported by contributions from private individuals, corporations, companies, and foundations. The Institute does not accept government grants.
Contributions are tax-deductible under sections 501(c)(3) and 170 of the Internal Revenue Code.
Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used: “Reprinted by permission from
NEWSLETTER, a monthly
newsletter of Public Interest Institute.”
The views expressed in this publication are those of the authors and not necessarily those of Public Interest Institute.
If you have an article you believe is worth sharing, please send it to us. All or a portion of your article may be used. The articles in this
publication are brought to you in the interest of a better-informed citizenry, because IDEAS DO MATTER.