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Marshall Schools Tax Public Hearing Presentation

Join us on December 4th, 2017 at 6:01 P.M. for a public hearing on the tax levy for 2018 presented by Bruce Lamprecht. Learn about school funding, tax levies, and budget proposals. Understand the impact of special education funding on regular classroom programs.

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Marshall Schools Tax Public Hearing Presentation

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  1. Marshall Public Schools #413Public Hearing for Taxes Payable in 2018

  2. Welcome December 4th, 2017 6:01 P.M. Board Room-District Office Presented by: Bruce Lamprecht Director of Business Services

  3. ISD 413, Marshall Tax Hearing Presentation • Public Meeting • Must be held after Nov. 24th and no later than Dec. 28th at 6:00 P.M. or later • May be part of a regularly scheduled meeting and may adopt final levy at this meeting • Must adopt final levy by December 28th • 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 change over the prior year • Specific purposes and reasons if taxes are being increased • And offer the public an opportunity to comment and ask questions

  4. Agenda for Hearing • Background on School Funding, Property Tax Levies, and Budgets • Information on District Budget • Information on the District’s Proposed Tax Levy for Taxes Payable in 2018 • Public Comments and Questions

  5. Public Education is Strong in Minnesota…… • In Minnesota, state law now requires 100% of juniors and seniors be offered the ACT at no cost • In 2017 90% of Minnesota graduates took the ACT with an average composite score of 21.5 • The national composite score for 2017 is 21.0 based on 60% of 2017 graduating seniors taking the ACT • Marshall’s composite score is 22.2

  6. Success Story-Academics

  7. State of MN 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 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.”

  8. As a result… School District 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 • State authorizes school board to levy up to $724 per pupil unit ($300 board referendum and $424 in local optional revenue)

  9. Basic General Education Formula Lags Inflation • Since 2003, the state General Education Revenue formula has not kept pace with inflation • For FY 2017 and 2018, Legislature approved an increase of 2% per year: • $121 per pupil unit in FY 2018 • An additional $124 for FY 2019 • Per-pupil allowance for Fiscal Year 2019 would need to increase by another $596 (9.4%) to have kept pace with inflation

  10. Comparing The General Education Formula Against Inflation

  11. Under funding of special education causes a drain on funding for regular classroom programs • MDE FY 2015 reports the cost of providing special education programs on average was 40% underfunded, necessitating a transfer of $766 per pupil from regular program resources to support an underfunded program mandated by state and federal law • The 2015 Legislature increased special education funding for the 16-17 Biennium by approximately $180 million reducing the regular program subsidy from $679 to $507 per pupil • Primary options for districts to bridge the special education funding gap are to cut regular program budgets or increase referendum revenue; most districts have done both

  12. Result: Growing dependence on referendum revenue Average referendum authority per pupil is increasing: • In 1993, 65% of districts had referendum revenue averaging $332 per pupil • For 2017-2018, 331 of 331 Minnesota districts have referendum revenue and/or local optional revenue authority averaging $1,296 per pupil • 20.5% of general education formula allowance • Of this amount, $879 is board approved or voter approved operating referendum, and $417 is Local Optional Revenue

  13. ISD 413, Marshall School District Levy • 2017 Payable 2018 • 2018-2019 School Year • Fiscal Year 2019

  14. 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 the budget

  15. Contrast of City/County to School District Levy Cycle • City/County - Budget Year is same as calendar year. The 2018 tax levy provides revenue for the calendar year 2018 budget • Schools - Budget year begins July 1st and coincides with school year. The 2018 tax levy provides revenue for the 2018-2019 school fiscal year. FY 2018-2019 budget will be adopted in June 2018

  16. Budget Information 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

  17. 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: • General • Food Service • Community Services • Capital Outlay • Debt Service • Transportation

  18. School District Budget Comparison of 16-17 Actual and 17-18 Revised Budgets

  19. MARSHALL PUBLIC SCHOOLS2017 ACTUAL and 2018 BUDGET OVERVIEWREVENUES 16-17 Actual 17-18 Budget % Change ---------------- ----------------- ------------- General Fund $27,098,937$28,775,864 6.18% Foodservice $1,721,107$1,828,601 6.25% Transportation $1,575,698$1,675,343 6.32% Community Services $2,378,076 $2,174,059 -8.58% Capital Outlay $1,160,609 $1,382,183 19.09% Debt Service $2,990,090$2,963,256 -.90% Total $36,924,517$38,799,306 5.08%

  20. MARSHALL PUBLIC SCHOOLS2017 ACTUAL and 2018 BUDGET OVERVIEWEXPENDITURES 16-17 Actual 17-18 Budget % Change ---------------- ----------------- ------------- General Fund $26,740,992$28,678,359 7.24% Foodservice $1,692,029 $1,718,950 1.59% Transportation $1,589,426 $1,613,000 1.48% Community Services $2,361,398 $2,310,429 -2.16% Capital Outlay $853,966$1,628,425 90.69% Debt Service $2,806,731$2,999,000 6.85% Total $36,044,542 $38,948,163 8.06%

  21. Revenue % All Funds 2017-2018 Budget

  22. Independent School District #413 District Revenues and Expenditures Actual for FY 2017, Budget for FY 2018

  23. General Fund Revenues by Source

  24. General Fund Expenditures by Program

  25. General Fund Expenditures by Object

  26. Proposed 2018 Property Tax Levy • Determination of levy • Comparison of 2017 to 2018 levies • Specific reasons for changes in tax levy • Impact on taxpayers

  27. 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, often based on limits in state law • County sends out bills, collects taxes from property owners, and distributes funds back to other taxing jurisdictions

  28. Truth In Taxation Notice

  29. School District Property Taxes • Each school district may levy taxes in over 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

  30. 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 over only 1 of the 7 steps

  31. Proposed Levy Payable in 2018 • Schedule of events in approval of district’s 2017 (Payable 2018) tax levy • September 8th: Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy • September 18th: School board approved proposed levy amounts • Mid-November: County mailed “Proposed Property Tax Statements” to all property owners • December 4th: Public hearing on proposed levy at regular meeting • Following hearing school board will certify final levy amounts at the December 18th meeting

  32. Factors Causing Changes from 2017 to 2018 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, enrollment changes, voter-approved referendums, and other factors • Changes in class rates/history

  33. Overview of Proposed Levy Payable in 2018 • The total 2018 proposed property tax levy will increase from 2017 by $128,458.35 or 1.94% • 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

  34. Referendum Authority • All districts are now authorized up to $724 per pupil unit in referendum revenue without requiring voter approval • $424 from Local Optional Revenue • $300 from a board approved levy • Voter approval required to exceed $724 per pupil unit • Of 331 Minnesota School Districts, there are 216 with voter referendum authority in excess of $724 per pupil

  35. Long Term Facilities Maintenance Revenue • The Long Term Facilities Maintenance (LTFM) program gives districts that did not qualify for the previous ‘alternative facilities revenue’ access to substantial additional revenue for facility maintenance • For FY18, LTFM revenue for most districts increased from $292 to $380 per pupil unit • If the average age of the district’s facilities is less than 35 years, this revenue per pupil unit may be reduced • Additional revenue is available to some districts for specific purposes • Replaces the previous health and safety, deferred maintenance, and alternative facilities revenue programs.

  36. Long Term Facilities Maintenance Revenue • Revenue is provided through an equalized combination of property tax levies and state aid. • For many districts, this program provides substantially more state aid than they received under the previous funding formulas • Revenue may be used to pay for health and safety projects, accessibility projects, or any type of facility and site maintenance • Revenue may be used as follows: • To fund project costs on an annual basis (“Pay-as-you go”) • District may issue bonds to fund larger projects, and use the LTFMR to may payments on the bonds • District may reserve funds to pay for larger projects in future years

  37. Explanation of Levy Changes • Category: Local Optional Levy • Change: +$29,981 • Use of funds: general operating expenses • Reason for increase: • This is the ongoing category of revenue created through state legislation, for all district’s that remain opted in, to receive additional general fund revenue based on increasing enrollment • The district’s existing referendum revenue was adjusted accordingly but the net amount does reflect an increase in general fund levy

  38. Explanation of Levy Changes • Category: 1st Tier Board Approved Referendum • Change: +$373,994 • Use of funds: for general fund expenses • Reason for increase: • This is because the previous voter approved referendum amount has been phased out up to $300, through legislative action, and replaced by the school board approved amount of $300

  39. Explanation of Levy Changes • Category: 1st Tier Voter Approved RMV Referendum • Change: -$361,700 • Use of funds: for general fund expenses • Reason for decrease: • Elimination of the first $300 of voter approved referendum funding, replaced by board approved referendum funding • The companion piece is $424 of Local Optional Revenue

  40. Explanation of Levy Changes • Category: Student Achievement Levy • Change: -$27,293 • Use of funds: general operating expenses • Reason for decrease: • This special levy has now been phased out beginning with the 2018-2019 fiscal year

  41. Explanation of Levy Changes • Category: Long Term Facilities Maintenance Revenue Equalized and Un-equalized • Change: +$160,298 • Use of funds: general fund maintenance expenditures • Reason for increase: • New levy in 2016 • Levy used to fund basic deferred maintenance items • This reflects the increasing per pupil amount for LTFM over a three year period with much of the additional funding un-equalized and strictly levy

  42. Explanation of Levy Changes • Category: Operating Capital • Change: -$40,952 • Use of funds: Technology, facility maintenance, other capital expenditures • Reason for decrease: • Levy ratio reduced from 35% in 2017 to 28% in 2018 • This change was made to partially offset increase in the Long Term Facilities Maintenance Levy

  43. Explanation of Levy Changes • Category: Judgement Levy • Change: -$137,500 • Use of funds: Provide reimbursement for costs of previous 504 accommodation legal settlement • Reason for decrease: • This was a new, one-time levy which helped defray settlement costs paid previously and now has been completed

  44. Explanation of Levy Changes • Category: Voter Approved Debt Service Excess • Change: +$154,936 • Use of funds: For annual required payments of principal and interest on voter approved bonds • Reasons for increase: • State changed formula on this typical reduction of debt service levy from 7.06% to 19.56% • This is also associated with our QZAB Alternative and Capital Facilities Bonds escrow amounts

  45. Impact on Taxpayers • 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 • Figures for 2018 are preliminary estimates, based on the best data available now-final figures could change slightly

  46. School District Funds 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 • The lease levy to pay the rent for MA-TEC and the lease for the track complex • The school board approved 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 this • Provides funding for facilities maintenance and instructional equipment • Provides funds for Long Term Facilities Maintenance • Achievement and Integration revenue and QComp Levy are also part of this COMMUNITY SERVICE FUND LEVY • 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 • 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

  47. How are the Proposed 2018 School Taxes Spent? General FundAmount Provides funding for the district instructional programs, $3,548,425.70 alternative compensation, integration program, also part of the costs for the maintenance of technology infrastructure and for the purchase of instructional equipment , building maintenance, Q-comp, lease/rental payments and LTFM spending Community Service Fund Levy for Community Education Programs such as ECFE $183,348.76 Debt Service (Including OPEB) Levy for repayment of principal and interest on district debt $3,029,734.59 Total Levy$6,761,509.05

  48. Pay 2017/Pay 2018 Levy Comparison

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