Transcript No Slide Title

Marshall Public
Schools #413
Truth in
Taxation
Hearing for
Taxes Payable in
2015
Welcome
December 1st, 2014
6:01 P.M.
Board Room-District Office
Presented by:
Bruce Lamprecht
Director of Business Services
ISD 413, Marshall
Tax Hearing Presentation
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State law requires that we present information on the current
year budget and actual revenue and expenses for the prior year
State law also requires that we present information on the
proposed property tax levy, including:
The percentage increase/decrease over the prior year
Specific purposes and reasons if taxes are being
increased/decreased
District must also allow for public comments
Agenda for Hearing
A. Background on School Funding,
Property Tax Levies, and Budgets
B. Information on District Budget
C. Information on the District’s Proposed
Tax Levy for Taxes Payable in 2015
D. Public Comments and Questions
Public Education is Strong in
Minnesota……
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In Minnesota, the most commonly taken standardized college
entrance exam is the ACT. 74% percent of Minnesota high
school graduates in 2014 took the assessment, compared with
54% nationally
Minnesota’s average composite score of 22.9 was the highest in
the nation of the 29 states in which more than half of the
college-bound students took the test in 2014
Minnesota has led the nation in average composite ACT scores
for nine consecutive years among states where more than half
of high school seniors took the test.
The national composite score was 21.0
Marshall’s composite score was 22.7
State of MN Constitution
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“ARTICLE XIII MISCELLANEOUS SUBJECTS
Section 1. UNIFORM SYSTEM OF PUBLIC
SCHOOLS. The stability of a republican form of
government depending mainly upon the intelligence
of the people, it is the duty of the legislature to
establish a general and uniform system of
public schools. The legislature shall make such
provisions by taxation or otherwise as will secure a
thorough and efficient system of public schools
throughout the state.”
As a result… School District Funding is Highly
Regulated by the State
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State sets formulas which determine revenue; most
revenue is based on specified amounts per pupil
State sets tax policy for local schools
State sets maximum authorized property tax levy
(districts can levy less but not more than amount
authorized by state, unless approved by the voters)
State authorizes school board to submit
referendums for operating and capital needs to
voters for approval
State Funding for Schools Has
Improved over the Past Few
Years
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Increases in basic general education revenue per
pupil have been less than the inflation rate over the
past ten years
There has been overall improvement the past four
years
Per-pupil revenue for fiscal year 2015-16 is projected
to be $343 below the 2004-05 inflation adjusted
amount
Most districts’ expenses will likely increase, by at
least 2-3% annually, unless budget cuts are made
Trends in General Education Formula
Allowance for Minnesota School Districts
FY 05 – FY 15
Trends in General Education Formula Allowance
for Minnesota School Districts, 2004-05 through 2014-15
Adjusted for Inflation
$6,000
$5,800
$5,750
$5,639
$5,600
$5,554
$5,462
$5,407
$5,400
$5,306
$5,200
$5,153
$5,074
$4,974
$5,000
$4,901
$4,783
$4,800
$5,124
$5,302
$5,174
$5,224
$5,124
$5,124
$5,081
* If the formula allowance had increased by the rate of inflation each
year since 2004-05 the 2014-15 allowance would be $5,750.
* The difference between the 14-15 formula allowance and the
inflation adjusted formula allowance is $343 or 6.3%
$4,776
$4,600
$5,201
$4,601
$4,601
$4,400
2004-05
2005-06
2006-07
2007-08
Formula Allowance
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
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Formula Allowance Adjusted for Annual Inflation
SOURCE: Formula Allowance and CPI-U are from Minnesota Department of Education,
Referendum Cap Inflation Estimate 2014
* Consumer Price Index for all urban consumers for the Minneapolis-St. Paul area.
** The real dollar increase in the Formula Allowance for 2014-15 is 2.0% or $105. The balance of the increase to $5,831 is
to adjust the Formula Allowance for the change in student weighting.
Prepared by Ehlers
Impact is budget cuts and
operating referendums…
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Even with these increases in state funding expected,
a third of districts continue to face projected budget
shortfalls for FY 2015 and anticipate the need to do
some budget cuts*
To meet local school budget shortfalls, voters in all
but 2 of Minnesota’s 332 districts, have approved at
least a penny of operating authority
The estimated state average amount for the 2016
fiscal year is $786 per pupil unit
Of thirty-nine questions proposed this year, twentyeight passed or 72%
*Survey by Minnesota Association of School Business Officials (MASBO)
ISD 413, Marshall
School District Levy
2014 Payable 2015
2015-2016 School Year
 Fiscal Year 2016
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Change in Tax Levy Does not
Determine Change in Budget
•Tax levy is based on many statedetermined formulas
•Some increases in tax levies are revenue
neutral, offset by reductions in state aid
•Expenditure budget is limited by state-
set revenue formulas, voter-approved
levies, and fund balance, not just by tax
levies
ISD 413, Marshall
School Levy vs. Budget Cycle
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Unlike cities and counties, a school district does not
set its budget when setting the tax levy
Property Tax Levy
Final levy set in December
Property taxes levied on calendar year basis
 Budget
 Preliminary budget approved in June, six months later
 School district fiscal year is July 1st through June 30th
Budget Information
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Because approval of the budget lags
certification of the tax levy by six
months, the state requires only current
year budget information and prior year
actual financial results to be presented
at this hearing
Budget Information
•All school districts’ budgets are divided
into separate funds, based on purposes
of revenue, as required by law
•For our district, 6 funds:
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•General
•Food Service
•Community Services
•Capital Outlay
•Debt Service
•Transportation
School District Budget
Comparison of 13-14 Actual and
14-15 Revised Budgets
MARSHALL PUBLIC SCHOOLS
2014 ACTUAL and 2015 BUDGET OVERVIEW
REVENUES
13-14 Actual
---------------$22,067,652
14-15 Budget
----------------$23,734,930
Foodservice
$1,365,737
$1,378,834
.9%
Transportation
$1,558,298
$1,419,984
-8.9%
Community Services
$2,124,584
$2,301,014
8.3%
$752,030
$843,483
12.2%
$3,215,944
$2,753,466
-14.4%
$31,084,245
$32,431,711
4.3%
General Fund
Capital Outlay
Debt Service
Total
% Change
------------7.6%
MARSHALL PUBLIC SCHOOLS
2014 ACTUAL and 2015 BUDGET OVERVIEW
EXPENDITURES
13-14 Actual
---------------$21,841,878
14-15 Budget
----------------$23,636,300
% Change
------------8.2%
Foodservice
$1,353,529
$1,377,293
1.8%
Transportation
$1,346,660
$1,430,000
6.2%
Community Services
$2,143,121
$2,175,200
1.5%
$722,882
$884,478
22.4%
$3,803,489
$2,726,738
-28.3%
$31,211,559
$32,230,009
3.3%
General Fund
Capital Outlay
Debt Service
Total
Revenue % All Funds 2014-2015
Budget
ISD #413 - MARSHALL GENERAL FUND
REVENUE 2014-2015 BUDGET
ISD #413 - MARSHALL - GENERAL FUND
2015 REVENUES BY SOURCE
Sales and Other
Conversions of Assets
0%
Revenue From Federal
Sources
4%
Local Property Tax Levies
10%
Other Local and County
Revenues
5%
Revenue From State
Sources
81%
ISD #413 14-15 General Fund
Expenditure Budget By Program Code
ISD 413, 14-15 General Fund
Expenditure Budget by Object
Code
Proposed 2015 Property Tax Levy
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•Determination of levy
•Comparison of 2013 to 2014 levies
•Specific reasons for changes in tax levy
•Impact on taxpayers
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
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
each category are set either by:
State law, or
Voter approval
Minnesota Department of Education (MDE)
calculates detailed levy limits for each district
Property Tax Background
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
Proposed Levy Payable in 2015
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Schedule of events in approval of district’s
2014 (Payable 2015) tax levy
•Mid-September: Dept. of Education prepared and distributed
first draft of levy limit worksheets setting maximum authorized
levy
•September 15th: School board approved proposed levy
amounts
•Mid-November: County mailed “Proposed Property Tax
Statements” to all property owners
•December 1st: Public hearing on proposed levy at regular
meeting
•Following hearing school board will certify final levy amounts at
the December 15th meeting
Overview of Proposed
Levy Payable in 2015
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•The total 2015 proposed property tax
levy will increase from 2014 by
$463,056.24 or 8.27%
•State law requires that we explain the
reasons for the major increases in the
levy
•We will also highlight any decreases, if
there are any of significant amount
Legislative Changes Do Affect
Tax Levy
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The 2013 and 2014 Legislatures approved significant
changes in school funding formulas which affect tax
levies payable in 2015
Local Optional Revenue was extended to all school districts
which affords them the opportunity to levy operating dollars up
to $424 per pupil unit
Increased safe schools levy by $5 per pupil unit
Increased Building Lease Levy authority by $50 per student
State added a new Student Achievement Levy which will fund
some of the basic general education revenue for all districts
Increased CTE Levy authority
Explanation of Levy Changes
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•Category: Local Optional Levy
•Change: +$86,992
•Use of funds: general operating expenses
•Reason for increase:
This is a new category of revenue created through
state legislation, for all district’s that opt in, to receive
additional general fund revenue
The district’s existing referendum revenue was
adjusted accordingly but the net amount does reflect
an increase in general fund levy
Explanation of Levy Changes
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•Category: Equity Levy and Adjustment
•Change: +$66,000
•Use of funds: general operating expenses
•Reason for increase:
Funding is based on a legislatively set formula for
each district’s “equity allowance” multiplied times
enrollment of students served in the district
Revenue is increasing because of an increase in
the state-determined equity allowance
Explanation of Levy Changes
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•Category: Student Achievement Levy
•Change: +$61,367
•Use of funds: general operating expenses
•Reason for increase:
New levy for 2015
Levy used to fund basic revenue allowance
Balance of basic allowance funded by state aid
Does not increase revenue, only replaces basic
allowance state aid
Explanation of Levy Changes
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•Category: Operating Capital
•Change: +$48,518
•Use of funds: Technology, facility maintenance,
other capital expenses
•Reason for increase:
Funding for this program is provided through a
combination of state aid and local tax levies
Levy ratio increased from .43351517 to .50567172
along with a larger base amount due to increased
enrollment
Explanation of Levy Changes
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Category: Career Technical Levy
•Change: +$31,353
•Use of funds: Provide additional revenue support for
the various career and technical programs
•Reason for increase:
The Legislature increased the per pupil funding for
this program in 2014
Funding for this program is provided through a
combination of state aid and local tax levies
Explanation of Levy Changes
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Category: Building/Land Lease Levy
•Change: +$93,718
•Use of funds: Provides funding for the annual
payment to SMSU for the Track and Field Complex
and for the MA-TEC rental agreement
•Reason for increase:
The District previously did not levy for the total
available amount but with the increased square
footage at MA-TEC compared to MECLA it needed to
access all available funding
The Legislature increased the per pupil funding, also
Explanation of Levy Changes
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Category: Reduction for Debt Service Excess
•Change: +$90,417
•Use of funds: To pay for debt service on all school
bonds financing
•Reason for increase:
In anticipation of paying the initial QZAB financing
payment
Impact on Taxpayers
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Actual tax impact on a particular,
individual property will vary from case
to case as many factors affect impact
Check your Truth-in Taxation statement
sent from the County to see preliminary
tax impacts in the different categories
ISD 413, Marshall
What are the main variables that
cause property tax increases and
decreases?
1.
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3.
4.
Changes in value of the individual property
Changes in class rates/history
Increases or decreases in levy amounts
caused by changes in state funding
formulas, local needs and costs, voterapproved referendums, and other factors
Changes in the total value of all property in
the district
School District Funds
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The school district has three revenue and expenditure funds that receive local
tax levies to help support the various programs included in the funds.
GENERAL FUND LEVY
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The lease levy to pay the rent for MA-TEC and the lease for the track complex
The local operating referendum is also part of this fund
Equity and Transition Levy are two more components of the total
Lost Interest, Safe Schools, Unemployment and Career & Technical Levy make
up part of thi
Provides funding for facilities maintenance and instructional equipment
Provides funds for Health and Safety code compliance, asbestos removal,
underground storage tank replacement and safety requirements
Achievement and Integration revenue and QComp Levy are also part of this
COMMUNITY SERVICE FUND LEVY
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Based on the adult population in the District
Early Childhood Levy is based on the number of children under 5 years of age
DEBT SERVICE FUND LEVY
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Based on annual debt retirement schedules. Annual levy is what is needed to
pay off bonds
OPEB (Implicit Rate Subsidy) funding is included in this category
How are the Proposed 2015 School Taxes
Spent?
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General Fund
Amount
Provides funding for the district instructional programs, alternative
compensation, integration program, also part of the costs for the maintenance
of technology infrastructure and for the purchase of instructional equipment ,
building maintenance and Health and Safety
$3,063,295.61
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Community Education Fund
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Levy for Community Education Programs such as ECFE
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Debt Service (Including OPEB)
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Levy for repayment of principal and interest on district debt
$2,806,481.95
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Total Levy
$6.062,525.42
$192,747.86
Pay 2014/Pay 2015 Levy Comparison
Fund
13 Pay 14
14 Pay 15
General
2,691,877.44
187,117.65
Community
Service
General Debt
Service
OPEB Debt
Service
Total
Increase or
Decrease
% Change
3,063,295.61
371,418.17
13.80%
192,747.86
5,630.21
3.01%
2,590,059.97 2,675,556.97
85,497.00
3.30%
130,924.98
510.86
.39%
5,599,469.18 6,062,525.42
463,056.24
8.27%
130,414.12
2015-2016 Tax Levy Spending
Debt Service
46%
General Education
51%
Community
Education
3%
ISD #413, Marshall
Proposed Property Tax Statement for
2015
Actual
2014
Property
Tax
Proposed
2015
Property
Tax
Voter
Approved
Levies
$3,287,674.87
$2,987,692.79
Other School
Levies
$2,311,794.31
$3,074,832.63
School
District Total
$5,599,469.18
$6,062,525.42
ISD 413, Marshall
The School District Levy is
increasing by:
$463,056.24
or
8.27%
Tax Levy History
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1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
Pay
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$5,149,862.38
$5,063,847.46
$1,780,058.97
$1,685,744.13
$3,568,330.76
$3,556,922.39
$4,253,869.00
$4,442,638.19
$5,427,675.70
$5,560,578.16
$5,489,763.14
$5,714,432.29
$5,880,186.24
$6,181,076.99
$5,599,469.18
$6,062,525.42
2.60% Decrease
1.67% Decrease
64.58% Decrease
5.30% Decrease
111.68% Increase
0.32% Decrease
19.59% Increase
4.44% Increase
22.17% Increase
2.40% Increase
1.27% Decrease
4.09% Increase
2.90% Increase
5.12% Increase
9.41% Decrease
8.27% Increase
ISD 413, Marshall
Changes in Market Value
The market values are final and are not a
subject for the upcoming budget hearings.
They were discussed at the local board of
review and county board of equalization
hearings held earlier this year. The final
taxable market values may reflect a reduction
under the limited value law. If this property is
a qualifying homestead, the final taxable
market values may exclude improvements
which you made to this property.
Net Tax Capacity Property
Comparison
Description
Residential
Homestead
Commercial
Industrial
Agricultural
Homestead
(Land &
Buildings)
Property Value
$200,000
$200,000
$200,000
Tax Rate Pay
2015
1.00 %
2.00%
.50%
Net Tax Capacity
Amount
$2,000.00
$4,000.00
$1,000.00
State Property Tax Refunds
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State of Minnesota has two tax refund programs and
one tax deferral program available for owners of
homestead property
These 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:
Consult your tax professional, or
Visit the Department of Revenue web site at www.taxes.state.mn.us
State Property Tax Refunds
Minnesota Property Tax Refund (aka
“Circuit Breaker” Refund)
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Has existed since the 1970’s
Available to all owners of homestead property
Annual income must be approx. $105,500 or less
(income limit is higher if you have dependents)
Refund is a sliding scale, based on total property
taxes and income
Maximum refund is $2,580
Especially helpful to those with lower incomes
Fill out state tax form M-1PR
State Property Tax Refunds
Special 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 the greater of 12% or $100, up
to a maximum of $1,000
No income limits
Fill out state tax form M-1PR
Minnesota Department of Revenue
(651) 296-3781
Senior Citizen Property Tax Deferral
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Allows people 65 years of age or older with a household income
of $60,000 or less to defer a portion of the property taxes on
their home
Taxes paid in any year limited to 3% of household income for
year before entering deferral program; this amount does not
change in future years
Additional taxes are deferred, but not forgiven
State charges interest up to 5% per year on deferred taxes and
attaches a lien to the property
The deferred property taxes plus accrued interest must be paid
when the home is sold or the homeowner(s) dies
ISD 413, Marshall
Whereas, Pursuant to Minnesota Statutes the School Board of Independent
School District No. 413, Marshall, Minnesota, is authorized to make the
following proposed tax levies for general purposes:
General Fund
Community Service
Debt Service
Total Proposed School Tax Levy
$3,063,295.61
$192,747.86
$2,806,481.95
$6,062,525.42
Now Therefore, Be it resolved by the School Board of Independent School
District No. 413, Marshall, Minnesota, that the amount to be levied in 2014
to be collected in 2015 is set at $6,062,525.42. The clerk of the Marshall
School Board is authorized to certify the proposed levy to the County
Auditor of Lyon County, Minnesota.
Next Steps
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Tonight-Board will accept public
comments and questions on proposed
levy
December 15th-Board will conduct a
subsequent hearing (if necessary) and
certify the 2015 property tax levy
ISD 413, Marshall
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Public Comments and
Questions
THE END
THANK YOU FOR
ATTENDING!