[PPT] - Austin Public Schools, ISD 492 Taxes Payable in 2013 WELCOME PowerPoint Presentation

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Public Hearing for Austin Public Schools, ISD 492 Taxes Payable in 2013

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WELCOME

December 10, 2012 Presented by: Mark Stotts Director of Finance and Operations

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Tax Hearing Presentation

State law requires that we present information on the

current year budget and actual revenue and expenditures for the prior year

State law also requires that we present information on the

proposed property tax levy, including:

The percentage increase over the prior year
Specific purposes and reasons for which taxes are being increased
District cannot increase proposed levy unless an increase

was approved by voters or the levy limitation calculations were updated by the Commissioner of Education

District must also allow for public comments

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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 2013

D. Public Comments and Questions

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Public Education is Strong in Minnesota…

In Minnesota, the most commonly taken

standardized college entrance exam is the ACT. Seventy-four percent of Minnesota high school graduates in 2012 took the assessment.

Minnesota’s average composite score of 22.8

was the highest in the nation among the 28 states in which more than half the college-bound students took the test in 2012. Minnesota has led the nation in average composite ACT scores for seven consecutive years. The national composite score was 21.1.

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Public Schools Established by Minnesota Constitution

“ARTICLE XIII

MISCELLANEOUS SUBJECTS

Section 1. UNIFORM SYSTEM OF PUBLIC
SCHOOLS. The stability of a republican form of

government depending mainly upon the intelligence

f 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.”

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As a result…

School funding is highly regulated by the state

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

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State Funding for Schools Has Not Kept Pace with Inflation

Increases in basic general education revenue

per pupil have been less than inflation

Per-pupil revenue for fiscal year 2013-14 without

increase is $401 below the 2004-05 inflation adjusted amount

Basic per-pupil funding for FY 2014 and 2015

will be set by the 2013 legislature

Most districts’ expenses will likely increase

(without budget cuts) by at least 2-3% annually

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Formula Change Formula Allow. Annual Formula CPI-U Allowance Since if Adjusted for Funding Fiscal Year Allowance (2009=1.0) * in 2013 $s 2004-05 Annual Inflation Shortfall 2004-05 4,601 0.8929 5,625 4,601 2005-06 4,783 0.9268 5,633 8 4,776

7

2006-07 4,974 0.9511 5,708 84 4,901

73

2007-08 5,074 0.9860 5,617

8

5,081 7 2008-09 5,124 1.0000 5,593

32

5,153 29 2009-10 5,124 1.0093 5,542

83

5,201 77 2010-11 5,124 1.0298 5,431

194

5,307 183 2011-12 5,174 1.0601 5,328

297

5,463 289 2012-13 5,224 1.0699 5,330

295

5,513 289 2013-14 5,224 1.0915 5,224

401

5,625 401 SOURCE: Formula Allowance and CPI-U are from Minnesota Department of Education, Referendum Cap Inflation Estimate 2012 * Consumer Price Index for all urban consumers for the Minneapolis-St. Paul area. Prepared by Ehlers & Associates, Inc.

Trends in General Education Formula Allowance for Minnesota School Districts, 2004-05 through 2013-14

Adjusted for Inflation

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Impact is budget cuts and operating referendums…

With minimal or no increase in state funding or a

voter approved referendum, many districts are facing projected budget shortfalls for FY 2014 and FY 2015, and anticipate the need for budget cuts

To meet local school budget shortfalls voters in

297 districts (or 88% of all Minnesota districts) have approved an operating referendum levy

The state average amount is $899 per pupil

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Change in Tax Levy Does not Determine Change in Budget

Tax levy is based on many state-determined

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

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Contrast of City/County to School District Levy Cycle

City/County - Budget Year is same as calendar
year. The 2013 tax levy provides revenue for

the calendar year 2013 budget.

Schools - Budget year begins July 1st and

coincides with school year. The 2013 tax levy provides revenue for the 2013-2014 school fiscal

year. Budget will be adopted in June 2013.

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Budget Information

Because approval of the budget lags certification
f the tax levy by six months, the state requires
nly current year budget information and prior

year actual financial results to be presented at this hearing

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Budget Information

All school districts’ budgets are divided into

separate funds, based on purposes of revenue, as required by law

For our district, 7 funds:
General
Food Service
Community Service
Capital Projects (Building Construction)
Debt Service
Trust
Internal Service

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FISCAL 2012 2011-12 ACTUAL 2011-12 ACTUAL JUNE 30,2012 2012-13 BUDGET 2012-13 BUDGET JUNE 30,2013

FUND

BEGINNING REVENUES AND EXPENDITURES & ACTUAL FUND REVENUES AND EXPENDITURES & PROJECTED FUND BALANCES TRANSFERS IN TRANSFERS OUT BALANCE TRANSFERS IN TRANSFERS OUT FUND BALANCE

General Fund/Restricted $572,663 $7,842,969 $7,580,918 $834,714 $8,112,667 $8,356,898 590,483 General Fund/Other 7,203,678 40,795,663 40,117,060 7,882,281 40,847,693 42,618,044 6,111,930 Food Service Fund 674,335 2,559,488 2,362,777 871,046 2,478,819 2,445,290 904,575 Community Service Fund 313,445 1,418,955 1,498,918 233,482 1,506,767 1,541,471 198,778 Building Construction Fund 5,166,190 29,001,834 7,309,803 26,858,221

21,972,693

4,885,528 Debt Service Fund 1,775,725 2,814,595 2,174,388 2,415,932 3,071,646 3,226,472 2,261,106 Trust Fund 241,403 103,037 92,635 251,805 80,000 80,000 251,805 Internal Service Fund 2,939,372 2,212,187 $2,212,187 Total All Funds $18,886,811 $84,536,541 $61,136,499 $41,559,668 $56,097,592 $80,240,868 $17,416,392

Austin Public Schools, ISD 492 District Revenues and Expenditures Actual for FY 12, Budget for FY 13

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Proposed 2013 Property Tax Levy

Determination of levy
“Homestead Credit Shift” (elimination of

homestead credit and replacement with homestead market value exclusion)

Comparison 2012 to 2013 levies
Specific reasons for changes in tax levy
Impact on taxpayers

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Property Tax Background

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,
ften based on limits in state law
County sends out bills, collects taxes from

property owners, and distributes funds back to

ther taxing jurisdictions

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School District Property Taxes

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

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The Homestead Credit Shift

The 2011 Legislature repealed the Homestead

Market Value Credit

In its place, the Legislature implemented a

Homestead Market Value Exclusion

This caused significant shifts in tax burdens in

some communities between 2011 and 2012

2013 is the second year of this change; it will not

cause significant shifts in the tax burdens from 2012 to 2013

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Property Tax Background

School District Property Taxes

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

ver only 1 of the 7 steps

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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 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 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 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.

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Schedule of Events in Approval of District’s 2012 (Payable 2013) Tax Levy

Mid-September: Department of Education prepared and

distributed first draft of levy limit report, setting maximum authorized levy

September 25: School board approved proposed levy amounts
Mid-November: County mailed “Proposed Property Tax

Statements” to all property owners

December 10: Public hearing on proposed levy at regular

meeting

December 10: Following hearing, school board will certify final

levy amounts

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Austin Public Schools, ISD 492

Comparison of Proposed Tax Levy Payable in 2013 to Actual Levy Payable in 2012

Actual Levy - FY 13 Proposed Levy - FY 14 FY 14 FY 14 Fund Levy Category Payable in 2012 Payable in 2013 $ Change % Change General Fund Voter Approved Referendum $1,964,059 $1,963,944

$115

Equity 269,832 269,156 (677) Operating Capital 321,049 313,365 (7,685) Career & Technical Education 90,680 77,765 (12,914) Integration 198,580 198,580 Safe Schools 153,938 157,379 3,441 Other Post Employment Benefits 68,600 84,887 16,287 Health & Safety/Deferred Maintenance 529,330 477,576 (51,753) Instructional Lease Levy 319,065 317,730 (1,336) Other 153,921 113,540 (40,382) Adjustments for Prior Years (107,686) (109,361) (1,675) Total, General Fund $3,961,369 $3,864,560

$96,809
2.4%

Community Service Fund Basic Community Education $141,498 $138,008 ($3,490) Early Childhood Family Education 59,154 58,998 (156) School-Age Child Care 20,000 20,000 Other 26,014 26,167 154 Adjustments for Prior Years (107,319) (67,478) 39,841 Total, Community Service Fund $139,347 $175,695 $36,348 26.1% Debt Service Fund Voter Approved Debt Service $1,972,875 $1,823,097 ($149,778) Other Debt Service 955,838 935,483 (20,355) Adjustments for Prior Years 3,761 3,761 Reduction for Excess Fund Balance (10,639) (8,936) 1,703 Total, Debt Service Fund $2,918,074 $2,753,405 ($164,669)

5.6%

Total Levy, All Funds $7,018,790 $6,793,660

$225,130
3.2%

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Overview of Proposed Levy Payable in 2013

The total 2013 proposed property tax levy will

decrease from 2012, by 3.2% or $225,130

Law requires that we explain the reasons for

major increases in the levy

There are no major increases, but we will

explain some of the decreases in specific levies

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Explanation of Levy Changes

Category: Health & Safety/Deferred Maintenance
Change: - $51,753
Use of funds: State-approved capital projects

related to facility maintenance and health & safety projects

Reason for decrease:
The amount of this levy is based on the estimated cost
f qualifying state-approved projects; health and safety

project costs have decreased

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Explanation of Levy Changes

Category: Voter Approved Debt Service
Change: - $149,778
Use of funds: Payments on bonds
Reason for decrease:
Payments made by the district for total debt obligations

declined between taxes payable in 2012 and taxes payable in 2013

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Impact on Taxpayers

Following are a table and graphs showing

examples of changes in the school district portion of property taxes from 2010 to 2013

Examples include school district taxes only
All examples are based on a 2.0% increase in property

value over this period

Actual increases in value may be more or less than this for any

parcel of property

These figures are intended to provide a fair representation of

what has happened to school district property taxes over this period for typical properties

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Impact on Taxpayers

Examples are for property in the City of Austin
School taxes in other parts of the district may be

slightly higher or lower, due to variations in the impact

f the state homestead and agricultural credits
Figures for 2013 are preliminary estimates,

based on the best data available now – final figures could change slightly

Estimates were prepared by Ehlers, the District’s

financial advisors

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Austin School District No 492

Estimated Changes in School Property Taxes, 2010 to 2013 Based on 2.0% Cumulative Changes in Property Value from 2010 to 2013Taxes Taxable Actual Taxable Actual Estimated Actual Estimated Estimated Change Change Market Taxes Market Taxes Market Taxes Market Taxes in Taxes in Taxes Value for Payable Value for Payable Value for Payable Value for Payable 2010 to 2012 to Type of Property 2010 Taxes in 2010 2011 Taxes in 2011 2012 Taxes in 2012 2013 Taxes in 2013 2013 2013 $88,235 $292 $90,000 $298 $90,000 $359 $90,000 $344 $52

$15

98,039 333 100,000 339 100,000 412 100,000 394 61

18

Residential 122,549 436 125,000 443 125,000 544 125,000 520 84

24

Homestead 147,059 539 150,000 546 150,000 677 150,000 645 106

32

171,569 643 175,000 650 175,000 809 175,000 771 128

38

196,078 746 200,000 754 200,000 942 200,000 897 151

45

245,098 952 250,000 961 250,000 1,207 250,000 1,149 197

58

294,118 1,159 300,000 1,168 300,000 1,471 300,000 1,400 241

71

367,647 1,469 375,000 1,479 375,000 1,869 375,000 1,777 308

92

441,176 1,773 450,000 1,784 450,000 2,256 450,000 2,145 372

111

$196,078 $1,056 $200,000 $1,059 $200,000 $1,399 $200,000 $1,320 $264

$79

Commercial/ 318,627 1,820 325,000 1,820 325,000 2,422 325,000 2,283 463

139

Industrial # 441,176 2,584 450,000 2,581 450,000 3,445 450,000 3,245 661

200

686,275 4,112 700,000 4,104 700,000 5,490 700,000 5,170 1,058

320

931,373 5,640 950,000 5,626 950,000 7,536 950,000 7,096 1,456

440

$245,098 $617 $250,000 $612 $250,000 $785 $250,000 $745 $128

$40

Agricultural 490,196 908 500,000 872 500,000 1,173 500,000 1,105 197

68

Homestead 735,294 1,207 750,000 1,138 750,000 1,570 750,000 1,472 265

98

980,392 1,505 1,000,000 1,404 1,000,000 1,966 1,000,000 1,838 333

128

1,470,588 2,415 1,500,000 2,159 1,500,000 2,980 1,500,000 2,660 245

320

Agricultural $1,471 $3.26 $1,500 $3.19 $1,500 $4.75 $1,500 $4.40 $1.14

$0.35

Non-Homestead 1,961 4.34 2,000 4.25 2,000 6.34 2,000 5.87 1.53

0.47

(dollars per acre) 2,451 5.43 2,500 5.32 2,500 7.92 2,500 7.33 1.90

0.59

3,235 7.17 3,300 7.02 3,300 10.46 3,300 9.68 2.51

0.78

Apartments $225,490 $1,031 $230,000 $1,034 $230,000 $1,335 $230,000 $1,265 $234

$70

(4 or more units) 490,196 2,242 500,000 2,248 500,000 2,903 500,000 2,750 508

153

931,373 4,259 950,000 4,270 950,000 5,515 950,000 5,225 966

290

Tax Rates Tax Capacity Rate 22.150 21.266 31.698 29.336 Referendum Market Value Rate 0.18040 0.18369 0.18432 0.18335 + Figures above are for property in the City of Austin. Since the portion of the homestead credit deducted from school district taxes in 2010 and 2011 varied across municipalities, school taxes for those years may be slightly different than shown above for homestead property in other portions of the school district. General Notes

1. The figures in the table are based on school district taxes only, and do not include taxes for the city or township, county, state, or other taxing jurisdictions.
2. All estimates for 2013 taxes are preliminary estimates, based on the best data available as of the date above.
3. For all examples of properties, taxes are based on changes in taxable market value of 2.0% from 2010 to 2011 taxes, 0.0% from 2011 to 2012, and 0.0% from 2012 to 2013.
4. For agricultural homestead property, the value assumed for the house, garage, and one acre was $147,059 for 2010 taxes and $150,000 for 2013 taxes.

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Austin School District No 492

Estimated Changes in School Property Taxes, 2010 to 2013 Based on 2.0% Cumulative Changes in Property Value from 2010 to 2013Taxes

* For all four examples of properties, the value shown in the title of the chart is the estimated market value for taxes payable in 2013. Taxes are calculated based on changes in market value of 2.0% from 2010 to 2011 taxes, 0.0% from 2011 to 2012, and 0.0% from 2012 to 2013.

Example 1: $150,000* Residential Homestead Property Example 2: $450,000* Commercial-Industrial Property Example 3: $500,000* Agricultural Homestead Property Example 4: $500,000* Apartment Property $539 $546 $677 $645

$0 $100 $200 $300 $400 $500 $600 $700 $800 2010 2011 2012 2013 est. School Property Taxes

Year Taxes are Payable

$2,584 $2,581 $3,445 $3,245

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2010 2011 2012 2013 est. School Property Taxes

Year Taxes are Payable

$2,242 $2,248 $2,903 $2,750 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2010 2011 2012 2013 est. School Property Taxes

Year Taxes are Payable

$908 $872 $1,173 $1,105

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2010 2011 2012 2013 est. School Property Taxes

Year Taxes are Payable

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Factors Causing Changes from 2012 to 2013

Many factors can cause the tax bill for an

individual property to increase or decrease from year to year:

Changes in value of the individual property
Changes in the total value of all property in the district
Increases or decreases in levy amounts caused by

changes in state funding formulas, local needs and costs, voter-approved referendums, and other factors

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State Property Tax Refunds

State of Minnesota has two tax refund programs

and one tax deferral program available for

wners 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

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State Property Tax Refunds

Minnesota Property Tax Refund (aka “Circuit

Breaker” Refund)

Has existed since 1970s
Available to all owners of homestead property
Annual income must be approximately $100,780 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 $2,460
Especially helpful to those with lower incomes
Fill out state tax form M-1PR

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State Property Tax Refunds

Special Property Tax Refund
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

f $1,000
No income limits
Fill out state tax form M-1PR

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Senior Citizen Property Tax Deferral

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

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Next Steps

Board will accept public comments and

questions on proposed levy

Board action to certify the 2013 school tax levy

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