Fridley Public Schools ISD #14 Public Hearing for Taxes Payable in 2012

1. Fridley Public Schools ISD #14Public Hearing for Taxes Payable in 2012

2. Welcome December 20, 2011 Presented by: RochelManders Director of Finance

3. Agenda for Hearing • State Funding of Schools • Current District Budget and Prior Year Actual Financial Results • Homestead Credit vs Exclusion Programs • District’s Proposed 2012 Tax Levy • Public Comments and Questions

4. School Funding is Highly Regulated by the State • State sets formulas which determine revenue • mostly driven by pupil counts • State sets property tax levy caps • State requires school boards to submit referendums for operating and capital needs to voters for approval

5. State Funding for Schools Has Not Kept Pace with Inflation • Increases in basic general education revenue per pupil have been less than inflation • For Fiscal 2012 and 2013, basic per-pupil funding is projected to increase by 1% per year, while district expenses will likely increase (without budget cuts) by at least 2-3% annually

7. Impact is Budget Cuts and Levy Referendums • With minimal increases in state funding expected, many districts are facing projected budget shortfalls for FY 2013 and FY 2014, and anticipate the need for budget cuts • To meet local school budget shortfalls, on Nov. 8, 2011, Fridley school district submitted two questions on the ballot seeking renewals of a referendum and capital projects levy • Both questions passed with approximately 73% voter approval

8. Budget Information • All school districts’ budgets are divided into separate funds, based on purposes of revenue, as required by law • For our district, 8 funds: • General • Food Service • Community Service • Building Construction • General Debt Service • OPEB Debt Service • Internal Service • OPEB Trust

14. The Homestead Credit Change • The 2011 legislature • Repealed the Homestead Market Value Credit • Created the Homestead Market Value Exclusion • Effective with calendar year 2012

15. The Homestead MV Credit (old law) • Affected only homestead properties with market values less than $413,000 • Maximum credit of $304 on a $76,000 home • Credit declined as market value increased

16. The Homestead MV Exclusion (new law) • Excludes a portion of the market value on residential homesteads with a market value of less than $413,000 • Formula is similar to homestead credit • maximum exclusion is for a $76,000 home • declining to $0 for homes with a value of $413,000 or more

17. Overall Impact of The Change • Increases in property taxes for almost all taxpayers due to the uneven exchange in programs • Tax increases will be largest in communities where a large share of the tax base is lower-valued homes (exclusion causes a larger reduction in tax base increasing tax rates)

19. Overview of Proposed Levy Payable in 2012 • The total 2012 proposed property tax levy will decrease from 2011 by 4.8% or $435,769 • Total proposed levy includes the operating referendum and capital projects levy approved by voters that was not included in the proposed levy in September 2011

20. Explanation of Levy Changes • Category: Voter Approved Operating Referendum • Change: ($161,108) • Use of funds: general operating expenses • Reason for decrease: • Funding is based on the voter-approved allowance of $412.52 multiplied times resident pupils in the district and is provided through a combination of local tax levies and state aid • Voters approved the operating referendum renewal included on the November 8 ballot • Because the district’s total property value decreased the share of funding provided through the tax levy is decreasing • State aid will increase by a similar amount so there will be little net change in revenue

21. Explanation of Levy Changes • Category: Capital Projects • Change: ($79,454) • Use of funds: facility maintenance projects and technology • Reason for decrease: • Funding is based the voter-approved rate of 5.47% multiplied times the district’s net tax capacity • Voters approved the capital projects levy renewal included on the November 8 ballot • Because the district’s total property value (net tax capacity) decreased the funding provided through the tax levy is decreasing

22. Explanation of Levy Changes • Category: Deferred Maintenance/Health & Safety • Change: ($596,718) • Use of funds: State-approved capital projects related to deferred maintenance and health & safety projects • Reason for decrease: • The levy is based on the estimated cost of qualifying state-approved projects • The estimated cost of approved projects is lower than the previous year

23. Explanation of Levy Changes • Category: Adjustments for Prior Years • Change: $301,482 • Use of funds: various purposes • Reason for increase: • Each year the amounts for many levy categories are based on estimates of values and expenses for future years • In later years the estimates are updated and levy amounts are changed through adjustments to the current levy • A negative TIF (tax increment financing) adjustment of $442,780 was included in the prior year levies and no such adjustment in included in the 2012 levies

24. Explanation of Levy Changes • Category: Other Debt Service • Change: $128,520 • Use of funds: Payments on bonds • Reason for increase: • Alternative facilities bonds were issued in 2007 to provide funds for health and safety projects which were approved by the Commissioner of Education • Planned increase in payments on alternative facilities bonds per the amortization schedule

25. Impact on Taxpayers • Following is a table and graphs showing examples of changes in the school district portion of property taxes from 2009 to 2012 • Examples include school district taxes only • All examples are based on a 14.8% decrease in property value over this period

28. Public Comments and Questions