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Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2015

Learn about Minnesota school funding, budget, and tax levies. Understand state regulations and funding trends affecting school districts.

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Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2015

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  1. Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2015

  2. Welcome December 1st, 2014 6:01 P.M. Board Room-District Office Presented by: Bruce Lamprecht Director of Business Services

  3. ISD 413, Marshall Tax Hearing Presentation • 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 increase/decrease over the prior year • Specific purposes and reasons if taxes are being increased/decreased • District must also allow for public comments

  4. Agenda for Hearing A. Background on School Funding, Property Tax Levies, and Budgets B. Information on District Budget C. Information on the District’s Proposed Tax Levy for Taxes Payable in 2015 D. Public Comments and Questions

  5. Public Education is Strong in Minnesota…… • In Minnesota, the most commonly taken standardized college entrance exam is the ACT. 74% percent of Minnesota high school graduates in 2014 took the assessment, compared with 54% nationally • Minnesota’s average composite score of 22.9 was the highest in the nation of the 29 states in which more than half of the college-bound students took the test in 2014 • Minnesota has led the nation in average composite ACT scores for nine consecutive years among states where more than half of high school seniors took the test. • The national composite score was 21.0 • Marshall’s composite score was 22.7

  6. 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.”

  7. 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

  8. State Funding for Schools Has Improved over the Past Few Years • Increases in basic general education revenue per pupil have been less than the inflation rate over the past ten years • There has been overall improvement the past four years • Per-pupil revenue for fiscal year 2015-16 is projected to be $343 below the 2004-05 inflation adjusted amount • Most districts’ expenses will likely increase, by at least 2-3% annually, unless budget cuts are made

  9. Trends in General Education Formula Allowance for Minnesota School Districts FY 05 – FY 15

  10. Impact is budget cuts and operating referendums… • Even with these increases in state funding expected, a third of districts continue to face projected budget shortfalls for FY 2015 and anticipate the need to do some budget cuts* • To meet local school budget shortfalls, voters in all but 2 of Minnesota’s 332 districts, have approved at least a penny of operating authority • The estimated state average amount for the 2016 fiscal year is $786 per pupil unit • Of thirty-nine questions proposed this year, twenty-eight passed or 72% *Survey by Minnesota Association of School Business Officials (MASBO)

  11. ISD 413, Marshall School District Levy • 2014 Payable 2015 • 2015-2016 School Year • Fiscal Year 2016

  12. Change in Tax Levy Does not Determine Change in Budget •Tax levy is based on many state-determined formulas •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, not just by tax levies

  13. ISD 413, MarshallSchool Levy vs. Budget Cycle • Unlike cities and counties, a school district does not set its budget when setting the tax levy • Property Tax Levy • Final levy set in December • Property taxes levied on calendar year basis • Budget • Preliminary budget approved in June, six months later • School district fiscal year is July 1st through June 30th

  14. 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

  15. 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

  16. School District Budget Comparison of 13-14 Actual and 14-15 Revised Budgets

  17. MARSHALL PUBLIC SCHOOLS2014 ACTUAL and 2015 BUDGET OVERVIEWREVENUES 13-14 Actual 14-15 Budget % Change ---------------- ----------------- ------------- General Fund $22,067,652$23,734,930 7.6% Foodservice $1,365,737 $1,378,834 .9% Transportation $1,558,298 $1,419,984 -8.9% Community Services $2,124,584 $2,301,014 8.3% Capital Outlay $752,030$843,483 12.2% Debt Service $3,215,944$2,753,466 -14.4% Total $31,084,245$32,431,711 4.3%

  18. MARSHALL PUBLIC SCHOOLS2014 ACTUAL and 2015 BUDGET OVERVIEWEXPENDITURES 13-14 Actual 14-15 Budget % Change ---------------- ----------------- ------------- General Fund $21,841,878$23,636,300 8.2% Foodservice $1,353,529 $1,377,293 1.8% Transportation $1,346,660 $1,430,000 6.2% Community Services $2,143,121 $2,175,200 1.5% Capital Outlay $722,882$884,478 22.4% Debt Service $3,803,489$2,726,738 -28.3% Total $31,211,559 $32,230,009 3.3%

  19. Revenue % All Funds 2014-2015 Budget

  20. ISD #413 - MARSHALL GENERAL FUND REVENUE 2014-2015 BUDGET

  21. ISD #413 14-15 General Fund Expenditure Budget By Program Code

  22. ISD 413, 14-15 General Fund Expenditure Budget by Object Code

  23. Proposed 2015 Property Tax Levy • •Determination of levy • •Comparison of 2013 to 2014 levies • •Specific reasons for changes in tax levy • •Impact on taxpayers

  24. 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

  25. School District Property Taxes • Each school district may levy taxes in up to 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

  26. 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

  27. Proposed Levy Payable in 2015 • Schedule of events in approval of district’s 2014 (Payable 2015) tax levy • •Mid-September: Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy • •September 15th: School board approved proposed levy amounts • •Mid-November: County mailed “Proposed Property Tax Statements” to all property owners • •December 1st: Public hearing on proposed levy at regular meeting • •Following hearing school board will certify final levy amounts at the December 15th meeting

  28. Overview of Proposed Levy Payable in 2015 • •The total 2015 proposed property tax levy will increase from 2014 by $463,056.24 or 8.27% • •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

  29. Legislative Changes Do Affect Tax Levy • The 2013 and 2014 Legislatures approved significant changes in school funding formulas which affect tax levies payable in 2015 • Local Optional Revenue was extended to all school districts which affords them the opportunity to levy operating dollars up to $424 per pupil unit • Increased safe schools levy by $5 per pupil unit • Increased Building Lease Levy authority by $50 per student • State added a new Student Achievement Levy which will fund some of the basic general education revenue for all districts • Increased CTE Levy authority

  30. Explanation of Levy Changes • •Category: Local Optional Levy • •Change: +$86,992 • •Use of funds: general operating expenses • •Reason for increase: • This is a new category of revenue created through state legislation, for all district’s that opt in, to receive additional general fund revenue • The district’s existing referendum revenue was adjusted accordingly but the net amount does reflect an increase in general fund levy

  31. Explanation of Levy Changes • •Category: Equity Levy and Adjustment • •Change: +$66,000 • •Use of funds: general operating expenses • •Reason for increase: • Funding is based on a legislatively set formula for each district’s “equity allowance” multiplied times enrollment of students served in the district • Revenue is increasing because of an increase in the state-determined equity allowance

  32. Explanation of Levy Changes • •Category: Student Achievement Levy • •Change: +$61,367 • •Use of funds: general operating expenses • •Reason for increase: • New levy for 2015 • Levy used to fund basic revenue allowance • Balance of basic allowance funded by state aid • Does not increase revenue, only replaces basic allowance state aid

  33. Explanation of Levy Changes • •Category: Operating Capital • •Change: +$48,518 • •Use of funds: Technology, facility maintenance, other capital expenses • •Reason for increase: • Funding for this program is provided through a combination of state aid and local tax levies • Levy ratio increased from .43351517 to .50567172 along with a larger base amount due to increased enrollment

  34. Explanation of Levy Changes • Category: Career Technical Levy • •Change: +$31,353 • •Use of funds: Provide additional revenue support for the various career and technical programs • •Reason for increase: • The Legislature increased the per pupil funding for this program in 2014 • Funding for this program is provided through a combination of state aid and local tax levies

  35. Explanation of Levy Changes • Category: Building/Land Lease Levy • •Change: +$93,718 • •Use of funds: Provides funding for the annual payment to SMSU for the Track and Field Complex and for the MA-TEC rental agreement • •Reason for increase: • The District previously did not levy for the total available amount but with the increased square footage at MA-TEC compared to MECLA it needed to access all available funding • The Legislature increased the per pupil funding, also

  36. Explanation of Levy Changes • Category: Reduction for Debt Service Excess • •Change: +$90,417 • •Use of funds: To pay for debt service on all school bonds financing • •Reason for increase: • In anticipation of paying the initial QZAB financing payment

  37. 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

  38. ISD 413, Marshall What are the main variables that cause property tax increases and decreases? • Changes in value of the individual property • Changes in class rates/history • Increases or decreases in levy amounts caused by changes in state funding formulas, local needs and costs, voter-approved referendums, and other factors • Changes in the total value of all property in the district

  39. 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 local 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 thi • Provides funding for facilities maintenance and instructional equipment • Provides funds for Health and Safety code compliance, asbestos removal, underground storage tank replacement and safety requirements • 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

  40. How are the Proposed 2015 School Taxes Spent? • General FundAmount • Provides funding for the district instructional programs, alternative compensation, integration program, also part of the costs for the maintenance of technology infrastructure and for the purchase of instructional equipment , building maintenance and Health and Safety $3,063,295.61 • Community Education Fund • Levy for Community Education Programs such as ECFE $192,747.86 • Debt Service (Including OPEB) • Levy for repayment of principal and interest on district debt $2,806,481.95 • Total Levy$6.062,525.42

  41. Pay 2014/Pay 2015 Levy Comparison

  42. ISD #413, MarshallProposed Property Tax Statement for 2015

  43. ISD 413, Marshall The School District Levy is increasing by: $463,056.24 or 8.27%

  44. Tax Levy History • 1999 Pay 2000 $5,149,862.38 2.60% Decrease • 2000 Pay 2001 $5,063,847.46 1.67% Decrease • 2001 Pay 2002 $1,780,058.97 64.58% Decrease • 2002 Pay 2003 $1,685,744.13 5.30% Decrease • 2003 Pay 2004 $3,568,330.76 111.68% Increase • 2004 Pay 2005 $3,556,922.39 0.32% Decrease • 2005 Pay 2006 $4,253,869.00 19.59% Increase • 2006 Pay 2007 $4,442,638.19 4.44% Increase • 2007 Pay 2008 $5,427,675.70 22.17% Increase • 2008 Pay 2009 $5,560,578.16 2.40% Increase • 2009 Pay 2010 $5,489,763.14 1.27% Decrease • 2010 Pay 2011 $5,714,432.29 4.09% Increase • 2011 Pay 2012 $5,880,186.24 2.90% Increase • 2012 Pay 2013 $6,181,076.99 5.12% Increase • 2013 Pay 2014 $5,599,469.18 9.41% Decrease • 2014 Pay 2015 $6,062,525.42 8.27% Increase

  45. ISD 413, Marshall Changes in Market Value The market values are final and are not a subject for the upcoming budget hearings. They were discussed at the local board of review and county board of equalization hearings held earlier this year. The final taxable market values may reflect a reduction under the limited value law. If this property is a qualifying homestead, the final taxable market values may exclude improvements which you made to this property.

  46. Net Tax Capacity Property Comparison

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