Operating Referendum: Background Information and Trends

1. Operating Referendum:Background Information and Trends Albert Lea School District ISD No. 241

2. What is an Operating Referendum? • An election ballot question that allows Districts to generate additional general education revenue • Revenue is provided through a combination of local property tax levies, and for most Districts, state aid • Referendum revenue may be used for any operating or capital expenses, the same as basic general education revenue

3. Current Referendum Provisions • Districts can conduct only one operating referendum election per year • Exception for districts in statutory operating debt • Vote can only occur on the November general election day, unless held by mail ballot • Election can be held either one year or two years prior to the initial tax year • Notices must be sent to all taxpayers • By first class mail • Content is specified by law

4. Current Referendum Provisions • Operating referendum property tax levies are spread on “referendum market value” (RMV) • Referendum property taxes are not levied on: • seasonal recreational property (cabins) • agricultural land and buildings (only house, garage and 1 acre) • Most property in a district pays the same tax per dollar of market value • Operating referendum revenue levies can qualify for state equalization aid • The state aid portion of referendum revenue is dependent on the District’s referendum market value per pupil

5. 2013 Legislative Changes The 2013 Legislature made significant changes to Referendum Revenue, effective for FY 2015 • New pupil count for referendum (Adjusted Pupil Units (APU) instead of Resident Marginal Cost Pupil Units) • APU is based on pupils served, with new grade weightings and no declining enrollment factor • Fiscal 2015 existing referendum authority is recalculated based on change in pupil units • Maintain the same level of revenue, including alternative attendance • Old district authority was $1,062.34/pupil, new is estimated to be $1,165.74/pupil

6. Referendum Authority Conversion

7. 2013 Legislative Changes • 2 tier equalization state aid system is now a 3 tier system • For Albert Lea, this will result in an increase in the share of the referendum revenue paid by the state from 23% to 38% • The levy reduction based solely on legislative changes

8. District Revenue, Current Authority

9. District Revenue, Current Authority

10. Tax Impact – Renewal of Levy for Pay 2015

11. Referendum Ballot Language • The District’s bond attorney has drafted the resolution and ballot language • Renew (existing authority): “By voting “Yes” on this ballot question, you are voting to extend an existing property tax referendum that is scheduled to expire”

12. Greg Crowe Financial Advisor, Ehlers 651-697-8522 gcrowe@ehlers-inc.com