Transcript Mora School District No. 332 Truth in Taxation Hearing for

Forest Lake Area Schools
Truth in Taxation Hearing for
Taxes Payable in 2010
December 3, 2009
Presented by:
Larry Martini
Director of Business Services
Truth in Taxation Law
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
State law initially approved in 1988 and
modified for 2009
Two major requirements
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Counties must send out “proposed property tax
statements” in November, based on preliminary
tax levies set by all taxing jurisdictions
Taxing jurisdictions must hold a hearing
You are here for the school district’s
annual required hearing
Truth in Taxation Hearings
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School district is required by law to
present information on:
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The budget for the current school year,
including sources of revenue and
expenditures by program area
The proposed property tax levy, including:
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The percentage increase over the prior year
Specific purposes and reasons for which taxes
are being increased
District must allow for public comments
Agenda for Hearing
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A. Information on District Budget
B. General Background Information
on School District Property Taxes
C. Information on the District’s Levy
for 2010 Property Taxes
D. Public Comments
A. 2009-10 Budget
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All school districts’ budgets are divided
into separate funds, as required by law
For our district, 5 funds:
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General Fund
Food Service Fund
Community Education Fund
Debt Service Fund
Trust Fund
A. Overview of Funds
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General Fund
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Accounts for most daily operating expenses of
district - everything not included in other funds;
84% of revenues for 2009-10
 Salaries, benefits, supplies, other costs for
instruction, administration, transportation,
custodial services, etc.
 Insurance, utilities, other purchased services
 Also includes annual capital expenditures
A. Overview of Funds
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Food Service Fund
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Accounts for all expenses of the National School
Lunch and Breakfast Programs
Community Education Fund
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Accounts for expenses of educational and
recreational programs that are not part of the
“regular” K-12 and special education programs
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Early childhood family education
Programs for adults
Classes & Recreational programs
A. Overview of Funds
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Debt Service Fund
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Accounts for principal and interest payments on
the district’s voter-approved building bonds
as well as the district’s OPEB bonds
Trust Fund
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Accounts for revenues and expenses of our
Employee Cafeteria Plan and vending machine
program
A. 2009-10 Budget by Fund
Forest Lake Area Schools
2009-10 Budget by Fund
Fund
General
Food
Service
Community
Service
Debt
Service
Trust &
Agency
Revenues
Expenditures
63,657,820
63,657,820
3,795,911
3,749,050
3,837,527
3,948,079
3,863,870
4,000,000
405,000
397,822
Fund Balance
5,393,743
1,158,673
414,479
942,863
156,391
A. 2009-10 Revenues by Fund
2009-10 Revenue Budget by Fund
5.0%
5.2%
5.3%
83.9%
0.6%
General
Food Svc.
Comm. Svc.
Debt Svc.
Trust
A. General Fund Budget Highlights
2009-10 General Fund Budget
Revenues by Major Source
Property Taxes
State Aid
Federal Aid
Other Local Revenue
Total
77.2%
Property
Taxes
10,426,700
49,139,314
2,604,406
1,487,400
63,657,820
State Aid
Federal Aid
4.1%
2.3%
16.4%
Other Local
Revenue
A. General Fund Budget Highlights
2009-10 General Fund Budget
Expenditures by Major Program Area
Administration
District Support Svcs.
Regular Instruction
Vocational Instruction
Exceptional Instruction
Instr./Pupil Support Svcs.
Sites & Buildings
Other Operating Programs
Total
Administration
1.5%
District Support Svcs.
14.8%
3,120,968
2,657,648
28,526,505
935,884 44.8%
9,405,510
10,613,992
7,356,373
1,040,940
63,657,820
Regular Instruction
Vocational Instruction
16.7%
Exceptional Instruction
Instr./Pupil Support
Svcs.
Sites & Buildings
11.6%
4.2% 4.9%1.6%
78 % of our funds are spend on direct services to students
Other Operating
Programs
A. General Fund Budget Highlights
2009-10 General Fund Budget
Expenditures by Object Category
Salaries and Wages
Employee Benefits
Purchased Services
Supplies & Materials
Capital Expenditures
Other
Total
39,924,045
12,448,317
6,756,030
3,083,852
1,281,261
164,315
63,657,820
4.8%
2.0%
0.3%
Salaries and Wages
10.6%
Employee Benefits
Purchased Services
Supplies & Materials
19.6%
62.7%
Capital Expenditures
Other
B. Property Tax Background
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Every owner of taxable property pays
property taxes for the various “taxing
jurisdictions” (county, city or township,
school district, special districts) in which
the property is located
Each taxing jurisdiction sets its own tax levy,
often based on limits in state law
County sends out bills, collects taxes from
property owners, and distributes funds back
to other taxing jurisdictions
B. Property Tax Background
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School District Property Taxes
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Each school district may levy taxes in up to
30 different categories
“Levy limits” (maximum levy amounts) for all
categories are set either by:
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State law, or
Voter approval
Minnesota Department of Education (MDE)
calculates detailed levy limits for each district
B. Property Tax Background
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School District Property Taxes
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Key steps in the process are summarized on
the next slide
Any of these steps may affect the taxes on a
parcel of property, but the district has
control over only 1 of the 7 steps
Minnesota School District Property Taxes - Key Steps in the Process
Step 1. The City or County Assessor
determines the estimated market value for each
parcel of property in the county.
Step 4. The Legislature sets the formulas
which determine school district levy limits. These
are the maximum amounts of taxes that school
districts can levy in every category.
Step 2. The Legislature sets the formulas for
tax capacity. (E.g., for homestead residential
property, tax capacity = 1% of first $500,000 in
value + 1.25% of value over $500,000.) These
formulas determine how much of the tax burden
will fall on different types of property.
Step 5. The Minnesota Department of
Education calculates detailed levy limits for
each school district, based on the formulas
approved by the Legislature in step 4. These
limits tell districts the exact amounts that can be
levied in every category.
Step 3. The County Auditor calculates the tax
capacity for each parcel of property in the county
(based on values from step 1 and tax capacity
formulas from step 2), as well as the total tax
capacity for each school district.
Step 6. The School Board adopts a proposed
levy in September, based on the limits set in step
5. After a public hearing, the board adopts a
final levy in December. Final levy cannot be
more than the preliminary levy, except for
amounts approved by voters.
Step 7. The County Auditor divides the final levy (determined by the
school board in step 6) by the district's total tax capacity (determined in
step 3) to determine the tax rate needed to raise the proper levy amount.
The auditor multiplies this tax rate times each property's tax capacity, to
determine the school tax for that property.*
* For certain levy categories
(referendum, equity and
transition levies), tax rates and
levy amounts are based on
referendum market value,
rather than tax capacity.
QUOTE: Senator Randy Peterson
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When Senator Peterson was chair of the
Senate’s Education Committee he stated:
“as a practical matter, school districts really don’t
have very much authority, any meaningful authority
anyway, over their local taxing decisions. With the
exception of decisions to build school buildings and
the excess-levy referendums…school district taxing
decisions are pretty much a matter of state law…”
QUOTE: Dr. Tom Melcher
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Dr. Melcher is the leader of Program Finance
for the Minnesota Department of Education:
“For most levy categories, if a school district reduces
the amount of the levy, there is a proportionate,
corresponding reduction in state aid…”
C. Proposed Levy Payable in 2010
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Schedule of events in approval of district’s
2009 (Payable 2010) tax levy
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Early September – MDE prepared and distributed
first draft of levy limit worksheets
September 10 – School Board approved proposed
levy amounts
Mid-End of November – County sent out
“Proposed Property Tax Statements”
December 3 – Public hearing on proposed levy
December 3 – School Board can certify final levy
amounts (Alternate is December 10)
Forest Lake Area Schools
Comparison of Levy Payable in 2010 to Actual Levy Payable in 2009
X = Has Corresponding State Aid
Fund
Levy Category
Actual Levy
Payable in 2009
Proposed Levy
Payable in 2010
Percent
Change
Change
6,399,445
911,677
158,506
644,442
1,216,597
801,941
249,092
289,850
424,026
106,874
50,000
-244,222
11,008,228
6,313,307
940,183
155,529
0
1,184,117
528,208
244,415
286,426
443,997
106,874
80,000
-636,136
9,646,921
-86,138
28,506
-2,977
-644,442
-32,480
-273,733
-4,677
-3,424
19,971
0
30,000
-391,914
-1,361,307
-12.4%
348,460
216,357
150,000
5,128
8,500
83,342
811,787
349,288
208,854
150,000
5,160
8,500
67,015
788,817
828
-7,503
0
32
0
-16,327
-22,970
-2.8%
4,194,489
0
10,691
-341,302
3,863,878
4,304,213
535,623
6,352
-295,803
4,550,384
109,724
535,623
-4,339
45,499
686,506
17.8%
15,683,893
14,986,122
-697,771
-4.4%
General Fund
X
X
X
X
X
X
X
Voter Approved Referendum
Equity
Transition
Alternative Compensation
Operating Capital
Health and Safety
Crime/Safe Schools
Building Lease
Deferred Maintenance
Career & Technical
Re-Employment
Adjustments for Prior Years
Total, General Fund
Community Service Fund
X
X
X
Basic Community Education
Early Childhood Family Education
School-Age Care
Home Visiting
Adults with Disabilities
Adjustments for Prior Years
Total, Community Service Fund
Debt Service Fund
X
Voter Approved Debt Service
OPEB based Debt Service
Adjustments for Prior Years
Reduction for Excess Fund Balance
Total, Debt Service Fund
Total Levy, All Funds
Business Services / Decemb er 3, 2009
C. Proposed 2010 Levy - Overview
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Total levy decreased by $697,771 or 4.4%,
from 2009 to 2010
The decrease is due to two major items:
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Elimination of the Qcomp Program
Fewer Health & Safety Projects
Law requires that we explain the reasons for
the major increases in the levy
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We will also discuss major decreases in the levy
C. Explanation of Levy Changes
(Items +or- $75,000)
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Category: Voter Approved Referendum
Change: -86,138
Use of funds: general operating
expenses
Reason for Decrease:
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Decrease in pupils
C. Explanation of Levy Changes
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Category: Alternative Compensation
Change: -$644,442
Use of funds: restricted to Qcomp plan
approved by MDE
Reason for Decrease:
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Teachers voted against Qcomp Program
C. Explanation of Levy Changes
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Category: Health and Safety Levy
Change: -$273,733
Use of funds: Capital projects related to
health and safety
Reason for Decrease:
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Decreased number of projects
Legislature continues to limit categories
allowed for health & safety funding and
fewer projects qualify for program
C. Explanation of Levy Changes
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Category: Prior Year Adjustments
Change: -$391,914
Use of funds: Operating Capital /
Deferred Maintenance / Health & Safety
Reason for Decrease:
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Declining pupils in formula for Operating
Capital and Deferred Maintenance
Health and safety projects denied by MDE
during prior year
C. Explanation of Levy Changes
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Category: Voter Approved Debt Service
Change: +$109,724
Use of funds: Retirement of Principal
and Interest on Bonds
Reason for increase:
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MDE determines this category by formula
( +2.6% change)
C. Explanation of Levy Changes
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Category: OPEB Debt Service
Change: +$535,623
Use of funds: Retirement of Principal
and Interest on OPEB Bonds
Reason for increase:
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New Legislation allowed OPEB bonds to
be issued
C. Property Taxes - Going Down Again
$16,366,468.57
$15,683,893.40
$14,986,122.12
Pay 2008
Pay 2009
Pay 2010
C. State Property Tax Refunds
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State of Minnesota has two tax refund
programs available for owners of homestead
property
Both programs may reduce the net tax
burden for local taxpayers, but only if you
take time to complete and send in the forms
For help with the forms and instructions:
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
Consult your tax professional, or
Visit the Department of Revenue web site at
www.taxes.state.mn.us
C. State Property Tax Refunds
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Minnesota Property Tax Refund (aka “Circuit
Breaker” Refund)
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Has existed since 1970s, but amounts increasing
since 2001 property taxes
Available to all owners of homestead property
Annual income must be $96,940 or less
Refund is a sliding scale, based on total property
taxes and income
Maximum refund is $2,310
Especially helpful to those with lower incomes
Fill out state tax form M-1PR
C. State Property Tax Refunds
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Targeted Homeowners Property Tax Refund
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Available for all homestead properties with a gross
tax increase of at least 12% and $100 over the
prior year
Refund is 60% of the amount by which the tax
increase exceeds 12%, up to a $1,000 maximum
No income limits
Fill out state tax form M-1PR
D. Public Comments