Public He Hearing f for Taxes Payable i in 2019 n 2019 Sara G - - PowerPoint PPT Presentation

Public He Hearing f for Taxes Payable i in 2019 n 2019

Sara G Girard, B Bus usiness Mana nager

December 11, 2018

Tax Hearing Presentation

 State Law Requirements

 Public Meeting

 Must be held between November 24th and December 28th  After 6:00 PM  May be part of regularly schedule board meeting  May adopt final levy at same meeting

 Presentation

 Current year budget  Prior year actual revenue and expenditures  Proposed property tax levy including % increase  Specific purposes and reasons taxes are being increased  Allow for public comment

Tax Hearing Agenda

 1. Background on School Funding, Property Tax Levies and

Budgets

 2. District’s Proposed Tax Levy for Taxes Payable in 2019  3. District’s Budget  4. Public Comment

School funding is highly regulated by the State

MN State Sets:

 Formulas which determine revenue; most revenue based on

specified amounts per pupil

 Tax policy for local schools  Maximum authorized property tax levy

 School districts can levy less but not more than amount

authorized by MN, unless approved by the voters

MN State also authorizes school boards to submit referendums for

• perating and capital needs to voters for approval

State Set Basic General Education Formula Lags Inflation

 Since 2002-03, State General Education revenue formula has

not kept pace with inflation

 For Fiscal Years 2017-18 and 2018-19, Legislature approved an

increase of 2% per year

 If the State kept with inflation since 2002-03, the formula

would still need to be increased by more than 9%

Underfunding of Special Education

 MN Dept of Education reports cost of providing special

education programs was underfunded by $697 million (an average of 40%)

 This translates to a statewide average funding shortfall of

$5,783 per special education student

 Underfunding of special education costs requires a transfer

from regular program resources to support an the underfunded program mandated by state and federal law

 In Lake Superior Schools, for each $1.00 we spend, we only

receive aid on $0.53

Dependence on Operating Referendum Revenue

 With these gaps, operating referendum is a growing

dependency on schools

 In 2017-18, all MN districts have referendum revenue and/or

local optional revenue authority averaging $1,296 per pupil

 Lake Superior’s referendum revenue equates to approximately

$724 per pupil

 $424 for Local Optional  $300 Board Approved

Change in Tax Levy does not determine change in Budget

 Tax levy is based on many state-determined formulas plus

voter approved referendums

 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

 An increase in school taxes does not always correlate to an

equal increase in budget

Local Levy Cycles and Property Taxes

 Each property tax statement has three entities that make up

the final proposed tax bill. Each provide own Taxes Hearing

 County  City  School District

 City and County 2019 Taxes Payables will provide revenue for

the 2019 calendar year

 School Districts 2019 Taxes Payables will provide revenue for

2019-20 school fiscal year

 This discussion is for the School District portion of proposed

property taxes only.

Property Tax Background

 Every owner of taxable property pays property taxes to various

taxing jurisdictions in which property is located

 Each taxing jurisdiction sets own tax levy, often based on limits

in state law

 County sends bills, collects taxes from property owners, and

distributes funds back to other taxing jurisdictions

School District Property Taxes

 Each school district may levy taxes in over 30 different

categories

 “Levy limits” or the maximum levy amounts for each category

are set by

 State Law  Voter Approval

 MN Dept of Education calculates detailed levy limits for each

district

The Levy Cycle - 2018 Payable 2019 Tax Levy

 Sep 7, 2018 – MN Dept of Education prepared and distributed

first draft of levy limit report, setting maximum authorized levy

 Sep 11, 2018 – School Board approved proposed levy amounts

at maximum

 Mid November – County mailed “Proposed Property Tax

Statements” to all property owners

 Dec 11, 2018 – Public Hearing on proposed levy and school

board will certify final levy amounts

 Property owners pay taxes in May 2019 and October 2019

based on the final levy certification

 Funding is recorded in Fiscal school year 2019-20

Referendum Market Value (RMV)



Primary Properties for those who live here and businesses



Tax base classifications excluded from RMV

 The remainder of the agricultural property after the

House, Garage, and 1 Acre.

 Non-homestead Agricultural Land  Managed Forest Land  Noncommercial Seasonal Residential Recreational  55% of the Taxable Market Value of a Blind/Disabled

Homestead up to $ 50,000

 50% of the first $600,000 of a Comm. Seasonal

Residential Rec. used less than 250 days per year and includes Homestead

 25% of Qualifying Low Income Rental Housing

Net Tax Capacity (NTC)

 Includes all parcels of property in the school district  NTC formula = Taxable Market Value x Class Rate based on

Property Class

 Taxable Market Value

 Assigned by County Assessors

 Property Classifications

 Homestead  Commercial/Industrial  Agriculture  Seasonal recreational  Etc.

Lake Superior #0381 Payable 2019 Proposed Levy by Taxing Classification (RMV/NTC) Payable 2019 Proposed (as of 11/26/18)

Levy Comparison by Category Payable 2018 Final Certified to Payable 2019 Proposed (as of 11/26/18)

Payable 2019 Proposed Levy by Category (as of 11/26/18)

Explanation of Levy Changes – General RMV-Other

Change: $3,525.53 Reasons:

 Adjustments were made due to projected 2019 enrollment and

actual 2017 enrollment

RMV OTHER Pay 18 Pay 19 Change Local Optional $424 642,792.48 634,012.41 (8,780.07) Equity 237,349.71 252,117.54 14,767.83 Transition 20,602.72 20,216.77 (385.95) Board Approved $300 336,976.34 334,900.06 (2,076.28) TOTAL 1,237,721.25 1,241,246.78 3,525.53

Explanation of Levy Changes – General NTC-Other

Change: $14,296.04 Reasons:



Operating Capital, changes in Adjusted Net Tax Capacity and enrollment data



Long Term Facilities increases in approved projects



Taconite Production Levy had legislative changes



More Taconite funds = Reduction in Levy

NTC OTHER Pay 18 Pay 19 Change Operating Capital 114,000.05 130,928.94 16,928.89 Reemployment 12,682.72 12,506.00 (176.72) Safe Schools 54,663.12 54,043.92 (619.20) Career Technical 48,869.44 48,134.36 (735.08) Long Term Facilities 564,666.48 575,744.78 11,078.30 Building Lease 40,000.00 42,222.09 2,222.09 Tree Growth 976.39 976.39

• Abatement

2,117.13 5,778.95 3,661.82 Alt Teacher Comp Adj

• 4,209.13

4,209.13 Health & Safety Adj (0.01)

• 0.01

Deferred Maintenance Adj 1,104.49

• (1,104.49)

Taconite (405,949.38) (427,118.09) (21,168.71) 433,130.43 447,426.47 14,296.04

Explanation of Changes – Debt Services & OPEB

Category: Debt Service - Voter Change: $(48,779.61) Reason: The legislative required reduction for debt excess was higher this year than in the prior year Category: Debt Service - Other Change: $(1,124.45) Reason: The legislative required reduction for debt excess was higher this year than in the prior year Category: OPEB Bonding Change: $12,780.05 Reasons: The abatement adjustment was greater and the debt excess reduction was lesser than they were with Taxes Payable 18

Debt Retirement Schedule

 Building Bond

 Scheduled to come off the Taxes Payable 2023

 OPEB Bonds

 Scheduled to come off Taxes Payable 2027

 Capital Facility & Alternative Facility Refunding Bond

 Scheduled to come off Taxes payable 2024

Budget Information

Because approval of school district budget lags certifications of tax levy by six months, state requires

• nly current year budget

information and prior year actual financial results be presented at this hearing All school districts’ divide the budget into separate funds based on purposes of revenue, as required by law Our District’s Funds

 General  Food Service  Community Service  Debit Service  Scholarships  Trust Services

Payable 2018 Final Levy as a Component of 2018-19 Revenue Budget

Payable 18 Levy $4,837,759.62 22% All Other Revenues $17,563,754.38 78%

Revenues and Expenditures Actual FY 2018, Budget FY 2019

Fund FY 2018 Beginning Fund Balances FY 2018 Actual Revenues and Transfers In FY 2018 Actual Expenditures and Transfers Out June 30, 2018 Actual Fund Balances FY 2019 Budget Revenues and Transfers In FY 2019 Budget Expenditures and Transfers Out June 30, 2019 Projected Fund Balances General Fund/Restricted

945,377 $ 1,149,430 $ 1,106,573 $ 988,234 $ 1,206,876 $ 1,142,907 $ 1,052,203 $

General Fund/Other

3,403,889 $ 16,188,775 $ 16,663,154 $ 2,929,510 $ 16,255,445 $ 16,381,194 $ 2,803,761 $

Food Service Fund

209,091 $ 525,008 $ 532,775 $ 201,324 $ 597,300 $ 613,722 $ 184,902 $

Community Service Fund

101,807 $ 773,636 $ 730,567 $ 144,875 $ 686,519 $ 663,728 $ 167,666 $

Building Construction Fund

• $
• $
• $
• $
• $
• $
• $

Debt Service Fund

786,114 $ 3,573,752 $ 3,681,825 $ 678,041 $ 2,846,604 $ 2,896,126 $ 628,519 $

Trust Fund

82,603 $ 16,732 $ 13,950 $ 85,385 $ 19,060 $ 19,900 $ 84,545 $

Internal Service Fund

• $
• $
• $

*OPEB Revocable Trust Fund

• $
• $
• $
• $
• $
• $
• $

*OPEB Irrevocable Trust Fund

5,290,357 $ 121,364 $ 311,116 $ 5,100,605 $ 112,000 $ 419,666 $ 4,792,939 $

*OPEB Debt Service Fund

5,328,489 $ 831,711 $ 5,954,150 $ 206,050 $ 677,710 $ 717,355 $ 166,405 $

Total - All Funds

16,147,727 $ 23,180,407 $ 28,994,111 $ 10,334,024 $ 22,401,514 $ 22,854,598 $ 9,880,940 $

Long-Term Debt

no data

no data Current Statutory Operating Debt per Minnesota Statutes, section 123B.81 no data no data Outstanding July 1, 2017

25,965,000 $

no data Amount of General Fund Deficit, if any, in excess of 2.5% of expenditures 06/30/2018 Plus: New Issues

• $ no data

no data no data no data Less: Redemeed Issues

• $ no data

Cost per student - Average Daily Membership (ADM) 06/30/2018 no data no data Outstanding June 30, 2018 25,965,000 $ no data no data no data no data no data no data Short-Term Debt

no data

no data Total Operating Expenditures Certificates of Indebtedness

• $

no data FY 2018 Total ADM Served + Tuitioned Out ADM + Adjusted Extended ADM Other Short-Term Indebtedness

• $

no data FY 2018 Operating Cost per ADM

• $

18,182,828.32 $ 1,364.17 13,328.86 $

Revenue – All Funds 2018-19 Budget - $22,401,514

General Fund $17,462,321.00 78% Food Service $597,300.00 3% Community Ed $686,519.00 3% Debt Service $2,846,604.00 13% Scholarships $19,060.00 0% OPEB $789,710.00 3%

Revenue – General Fund 2018-19 Budget - $17,462,321

Local Sources $3,615,825.00 21% State Sources $13,335,996.00 76% Federal Sources $510,500.00 3%

Expenses – All Funds 2018-19 Budget - $22,854,598

Salaries & Wages $11,643,808.00 49% Employee Benefits $4,628,018.00 20% Purchased Services $1,592,908.00 7% Supplies & Materials $1,016,875.00 4% Capital Expenditures $772,130.00 3% Debt Service $3,614,481.00 15% Other Expenditures $(413,622.00)

• 2%

Expenses – General Fund by Program 2018-19 Budget - $17,524,101

Administration & District Support $1,076,860.00 6%

• Elem. & Sec. Regular

Instruction $8,187,311.00 47% Vocational Education $371,788.00 2% Special Education Instruction $3,742,190.00 21% Pupil & Instructional Support $2,077,893.00 12% Sites & Buildings $2,057,581.00 12% Fiscal & Other Fixed Costs $10,478.00 0%

Lake Superior # 0381 2018-19 Expense & Revenue Budget Comparison

Fund REVENUE EXPENSE Projected Surplus/(Deficit)

01,03,05 General Fund (inc. Trans. & Op. Cap) 17,462,321.00 $ 17,524,101.00 $ ($61,780.00) 02 Food Service Fund 597,300.00 $ 613,722.00 $ ($16,422.00) 04 Community Service Fund 686,519.00 $ 663,728.00 $ $22,791.00 06 Building Construction Fund

• $
• $

$0.00 07 Debt Redemption Fund 2,846,604.00 $ 2,896,126.00 $ ($49,522.00) 08 Trust Fund 19,060.00 $ 500.00 $ $18,560.00 09 Agency Fund

• $
• $

$0.00 20 Internal Service Fund

• $
• $

$0.00 25 OPEB Revocable Trust Fund

• $
• $

$0.00 45 OPEB Irrevocable Trust Fund 112,000.00 $ 419,666.00 $ ($307,666.00) 47 OPEB Debt Service Fund 677,710.00 $ 717,355.00 $ ($39,645.00)

Total All Funds: 22,401,514.00 $ 22,835,198.00 $

($433,684.00)

01,03,05 02 04 06 07 08 09 20 25 45 47 By Fund Difference ($61,780.00) ($16,422.00) $22,791.00 $0.00 ($49,522.00) $18,560.00 $0.00 $0.00 $0.00 ($307,666.00) ($39,645.00)

($350,000) ($300,000) ($250,000) ($200,000) ($150,000) ($100,000) ($50,000) $0 $50,000

Public C Com

• mment

December 11, 2018