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 24 th and December 28 th 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 operating 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 Our District’s Funds district budget lags General certifications of tax levy by Food Service six months, state requires only current year budget Community Service information and prior year Debit Service actual financial results be presented at this hearing Scholarships Trust Services All school districts’ divide the budget into separate funds based on purposes of revenue, as required by law
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%
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