School and Community: Partners in Success

1. School and Community: Partners in Success 2009 Operating Referendum Montevideo Public Schools

2. District Overview: • Enrollment: Approximately 1,400 PK–12 Students • Employees: Approximately 300+ • Budget: $16.5 million (across all funds) • General Fund - $13.4 million • Food Service - $0.7 million • Community Ed - $0.6 million • Capital Outlay - $0.4 million • Debt Redemption - $1.4 million

3. District Overview (cont.): • Comprehensive Pk-12 Program • Regular Education • Special Education • Vocational Programs • Community Education • ECFE and School Readiness • Year-round School-age Child Care • Adult & Youth Recreation and Enrichment • Adult basic Education

4. The Challenges: The cost of maintaining our current educational programs has been increasing at a rate approaching 3.5% annually State per pupil finding has not kept pace with increasing costs In 3 of the past 7 years there has been no increase in formula aid funding During the same 7 year period, there were 2 years with a formula aid increase of 2.0% and 1.0% respectively

5. The Challenges (continued): State formula aid funding is tied directly to enrollment A decline of 77 students since 2004 has resulted in an annual revenue loss of approximately $395,000 The projected enrollment decline of 44 students in the fall of 2010, will result in an additional annual revenue loss of approximately $225,000

6. The Challenges (continued): New federal and state mandates for improving student performance and inadequate educational funding have had a significant fiscal impact on the district Annual program and personnel reductions An 11 year trend of spending down the fund balance; 1999 - 23.62% 2009 – 5.9%

7. The Challenges (continued): Projected impact of no increase in either state funding or operating levy Maintaining the current level of programs and service on the existing budget will place the district in statutory operating debt (SOD) by 2014 It will be increasingly difficult to maintain the level and quality of educational programs, services and opportunities for students

8. The Proposal: Revoke the current operating levy Current levy amount - $505.35 per pupil unit Levy set to expire in June 2013 Authorize a new 10 year levy of $975 per pupil unit Generate an estimated $722,605 in new referendum levy revenue for students beginning in 2010-2011

9. The Proposal (continued): Of the total $1.525 million in referendum revenue, 48.5% ($740,379) will be paid by the state The new revenues will help maintain reasonable class sizes and current educational programs and opportunities for students while minimizing the need for budget reductions over the next several years

10. The Tax Impact: For a home with a taxable market value of $75,000, the tax increase in 2010 would be $104 per year--$8.67 per month or $0.29 per day For a home with a taxable market value of $100,000, the tax increase in 2010 would be $139 per year--$11.58 per month or $0.38 per day

11. The Tax Impact (continued): For a home with a taxable market value of $200,000, the tax increase in 2010 would be $277 per year--$23.08 per month or $0.63 per day For Agricultural Landowners: Farmland is exempt. Only the house, garage and one acre are taxed for operating levies

12. Approval of the Referendum: Help maintain reasonable class size Help maintain current student programs, opportunities and services The district will live within its means, making reductions or other staffing and program adjustments that reflect enrollment trends and educational needs

13. Approval of the Referendum (continued): Approval does not mean that any program or staff that had been previously eliminated or reduced will be reinstated The district will be able to consider program and staffing needs that focus on improving student achievement

14. Defeat of the Referendum: Based upon enrollment projections and the uncertainty of state funding, the district will experience a decline in general education funding of $1.1 million over the next 5 years Without additional state funding and without additional operating levy authority, additional budget reductions will occur next year and each year in the foreseeable future

15. Defeat of the Referendum (continued): All areas and/or programs within the district will be impacted There will be fewer programs and staff, larger class sizes, fewer electives, increased school fees and fewer non-required district services

16. 2009 OPERATING REFERENDUM Frequently Asked Questions

17. What is an operating levy? • Locally approved levy (tax) that raises additional funds from district property owners to support student programs and services • Once called “excess levies” because they provided funding for “extra” programs, they are now used by 92% of the state’s districts to support basic student programs and services

18. Why do districts depend upon operating levies? • State funding has not kept pace with increases in student needs, operational costs and mandates from state and federal levels • Inflation • Declining Enrollment • Increased Student Needs • Mandated Program Increases

19. How does enrollment affect school funding? • Between 67% and 75% of school funding comes from the state “formula” which provides funding to districts based upon enrollment. • As enrollment increases or decreases, funding from the state increases or decreases • Like most districts in Minnesota, enrollment in ISD #129 is projected to continue to decline

20. If enrollment is declining, why is there a need for more money? • There is not a direct correlation between a district’s decline in enrollment and its ability to make budget cuts • Many expenses are not directly related to enrollment figures • Most staff positions cannot be reduced at a rate matching the loss of students • There has been an increase in the number of students with special needs

21. What is the current and projected enrollment trend for ISD 129? • Over the past 7 years enrollment has declined by 77 students (1,460 to 1,383) • We will lose an additional 44 students following the current school year (1,339) • From September 2011 through May 2015, we are projecting that enrollment will fluctuate, with a 2 year increase of approximately 18 students followed by a 2 year decrease of approximately 24 students

22. How does our current levy compare to other districts? • Current Levy - $505.35 per pupil • State Average for Operating Levies - $826 • MRVED Districts - $817.05 • Area Districts: Lac qui Parle - $1,100 Dawson-Boyd - $756.55 Lakeview - $500.01 KMS - $600 ACGC - $1,075 MACCRAY - $1,061.03 Benson - $549 Ortonville - $900

23. How does our current levy compare to other districts? (continued) • Area Districts: YME - $1,021.58 Canby – $700.25 RCW - $1,203.97 • Compared to districts throughout SW Minnesota, our levy is one of the lowest in the region. • With the proposed increase, our levy will remain lower than that in many neighboring districts

24. What operating referenda questions are being run in other districts this fall? • The MSBA has a link, listed below, that carries a complete listing of the ballot questions being brought forward regarding operating referendums • http://www.mnmsba.org/Public/MSBA_Docs/2009OperatingLevies.pdf?CFID=2731220&CFTOKEN=82605721

25. Is the district asking for the maximum allowable levy? • No, Maximum allowable levy is $1,332.24 with equalization aid or $1,522.78 without equalization aid • District voters are being asked to consider a levy that is somewhat higher than the current state average

26. What is equalization aid? • State equalization of operating levies means that the state helps qualifying districts by sharing the costs of these levies • Students benefit from the new revenues and taxpayers benefit by only paying taxes on a portion of the new revenues • Equalization revenue comes from income and sale taxes collected across the state

27. What is equalization aid? (continued) • Equalization aid is paid on a two tier formula and equalization rates vary from district to district • On the proposed levy, the state’s share would be 48.5% • The bottom line--For every $51.50 of commitment by local taxpayers, the district will receive $100 in referendum revenue

28. Is agricultural farmland taxed as a part of the operating levy? • No, since 2001, agricultural farmland has been exempted from being included in the operating referendum • Agricultural homestead taxes are based upon the house, garage and one acre of land

29. Are all properties taxed at the same rate? • Yes.For operating levies, all properties are taxed at the same rate. A $100,000 residential property and a $100,000 commercial property pay the same amount of taxes • The exception to the “all taxed the same” rule is that farmland and seasonal recreational properties are exempt from paying any tax on operating levies

30. Will an increase in property valuation mean that the district gets more revenue? • No. The operating referendum is based upon $975 per student. Fluctuations in property values will affect the amount the taxpayer pays but will not affect district revenues • District revenues, under the operating referendum, are strictly driven by student numbers

31. What is the tax impact of the proposed operating levy? Market Proposed Net Monthly Value Taxes Increase Increase $50,000 $121 $69 $5.75 $75,000 $181 $104 $8.67 $100,000 $242 $139 $11.58 $150,000 $362 $207 $17.25 $250,000 $604 $346 $28.83 $500,000 $1,028 $693 $57.75

32. Why do districts need a fund balance? • A fund balance of 30% to 45% of operational expenses is recommended to assure fiscal stability • The state delays its aid payments to the school districts as a means of balancing the state budget, so a fund balance is needed to maintain cash flow

33. How large is the district’s fund balance? • Currently, the district’s fund balance is at 5.9%, which is less than one month’s operational expenses • Over the next several months, the district will be establishing a fund balance goal as a part of its financial planning. The fund balance goal will probably be about 1.5 month’s liabilities or 12.5% and it is estimated that it will take several years to attain that goal

34. What is the district’s financial responsibility? • The school board and administration are committed to being proactive in managing the district’s finances. This commitment includes: • Operating on a balanced budget • Using realistic financial projections • Maintaining an appropriate fund balance • Managing expenditures

35. How does our district’s spending pattern compare with other districts? • District administrative expenditures are at the state average but lower than the average expenditures for districts throughout the region or for districts across the state that are of a comparable size

36. How does our district’s spending pattern compare with other districts? (continued) • District Administration • Montevideo 3.9% • State Average 3.9% • MRVED 5.1% • Sampling of 31 SW MN Districts 4.5% • Comparably sized districts 4.6% (enrollment 1,150 to 1,499) ** % of Budgeted Expenditures

37. How does our district’s spending pattern compare with other districts? (continued) • Total administrative expenditures are slightly higher than the state average but lower than the average expenditures for districts throughout the region or for districts across the state that are of a comparable size • With recent administrative changes, there will be a further reduction in these expenditures

38. How does our district’s spending pattern compare with other districts? (continued) • Total Administrative Costs • Montevideo 8.3% • State Average 8.0% • MRVED 9.1% • Sampling of 31 SW MN Districts 8.6% • Comparably sized districts 9.2% (enrollment 1,150 to 1,499) ** % of Budgeted Expenditures

39. How does our district’s spending pattern compare with other districts? (continued) • District pupil expenditures are slightly lower than the state average but higher than the average expenditures for districts throughout the region or for districts across the state that are of a comparable size

40. How does our district’s spending pattern compare with other districts? (continued) • Total Pupil Expenditures • Montevideo 72.2% • State Average 73.3% • MRVED 70.2% • Sampling of 31 SW MN Districts 71.0% • Comparably sized districts 69.4% (enrollment 1,150 to 1,499) ** % of Budgeted Expenditures

41. What if the levy is approved and, later, the district doesn’t really need it? • Given Minnesota’s educational funding trends, it seems unlikely that the district couldn’t use the revenues to maintain and improve student performance and opportunities • The board, however, does not have to levy the maximum authority approved by the voters

42. If the operating levy is adopted, will there still be budget reductions? • The district will continue to make “living within our means” reductions that reflect decreasing enrollment. • Enrollment-driven “natural reductions” are an important part of responsible financial management.

43. What if I have more questions or would like to schedule a presentation? • Contact the Superintendent of Schools or call the Superintendent’s Office: • Dr. Luther Heller, Superintendent • (320) 269-8833 • lheller@monte.k12.mn.us • We will be happy to answer your questions or to schedule a time to meet with you or your organization to provide information on the operating referendum.