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Truth in Taxation Law

St. Michael-Albertville Independent School District #885 Truth in Taxation Hearing for Taxes Payable in 2013. Truth in Taxation Law. State law initially approved in 1988 The 2009 legislature made several changes:

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Truth in Taxation Law

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  1. St. Michael-AlbertvilleIndependent School District #885Truth in Taxation Hearing forTaxes Payable in 2013

  2. Truth in Taxation Law • State law initially approved in 1988 • The 2009 legislature made several changes: • Property tax hearing can now be held at regular meeting. Hearing must be at 6:00 PM or later. Levy may be adopted at same meeting. • Requirement to publish meeting notice was deleted. • All school districts must now hold a hearing. Previously some districts were exempted from the requirement to hold a hearing.

  3. Tax Hearing Presentation • State law requiresthat 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 over the prior year • Specific purposes and reasons for which taxes are being increased • District must also allow for public comments

  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 2013 • Public Comments and Questions

  5. 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.”

  6. As a result…School District Revenues and Taxes Are 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

  7. Basic General EducationAdjusted for Inflation

  8. State Funding for Schools Has Not Kept Pace with Inflation • Increases in basic general education revenue per pupil have been less than inflation • Per-pupil revenue for fiscal year 2012-13 is $426 below the 2002-03 CPI inflation adjusted amount and $859 below IPD inflation adjusted amount • Per-pupil funding increased $50 for fiscal 2012 and $50 for fiscal 2013.

  9. STMA general education revenue per student is $5,631, ranking 336 out of 338

  10. STMA referendum is $695

  11. State Share of Revenue for MajorEqualized Levies Source: MDE

  12. School Shift SummaryFebruary 2012 Forecast Aid Payment Shift @ 64.3 – 35.7 (vs 90-10) $1.873 Billion Property Tax Shift (@ 48.6% of Gross Levy) $563 Million _____________ Total School Shift (as of 6/30/2013) $2.436 Billion

  13. Contrast of City/County to School District Levy Cycle • City/County - Budget Year is same as calendar year. The 2012 taxes provide revenue for the calendar year 2012 budget. • Schools - Budget year begins July 1st and coincides with school year. The 2013 taxes provide revenue for the 2013-2014 school fiscal year. Budget will be adopted in June 2013.

  14. 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

  15. 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.

  16. 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 Service • Building Construction • Debt Service • Trust

  17. St. Michael-Albertville School District No. 885 District Revenues and Expenditures Actual for FY 2012, Budget for FY 2013

  18. Revenue - All Funds $64,618,467 2012-2013 Budget Building Const., Debt Service, Community Service, $100, 0.0% $13,336,105 20.6% Trust, $16,100 0.0% $4,326,796 6.7% Food Service, $2,382,273 3.7% General, $44,557,093 69.0%

  19. 2012-2013 General Fund Budget $44,557,093 Revenues by Major Source Other $723,867 Federal $119,855 1.6% Property Tax Levies 0.3% $3,781,571 8.5% State Aid $39,932,517 89.6% General Fund Budget Highlights 2011-12 Federal $730,560 State $37,172,449 Levies $3,554,745

  20. 2012-2013 General Fund Budget Expenditures by Program Area - Budget $43,979,201 Pupil Support Dist. Support $3,009,874 Sites and Services 6.9% Buildings $889,866 $5,599,738 2.0% District & School 12.7% Admin. $1,517,709 3.5% Other $190,000 0.4% Instructional Support $3,905,798 8.9% Special Educ. Instruction Regular Vocational $4,711,876 Instruction Instruction 10.7% $755,370 $23,398,970 53.2% 1.7% General Fund Budget Highlights

  21. 2012-2013 General Fund Budget Expenditures by Object Category $43,979,201 Capital Supplies and Expenditures, Materials, $1,224,6387 2.8% Other, $115,762 $2,063,025 4.7% 0.3% Purchased Services, $6,044,341 13.7% Employee Benefits $8,434,81119.2% Salaries and Wages, $26,096,624 59.3% General Fund Budget Highlights

  22. Proposed 2013 Property Tax Levy • Determination of levy • Comparison 2012 to 2013 levies • Specific reasons for changes in tax levy • Impact on taxpayers

  23. 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

  24. 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

  25. 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

  26. Minnesota School District Property Taxes - Key Steps in the Process Step 1. City or County Assessor Step 4. Legislature The The sets the formulas determines the estimated market value for each which determine school district levy limits. These parcel of property in the county. are the maximum amounts of taxes that school districts can levy in every category. Step 2. Legislature Step 5. Minnesota Department of The sets the formulas for The tax capacity. (E.g., for homestead residential Education calculates detailed levy limits for property, tax capacity = 1% of first $500,000 in each school district, based on the formulas value + 1.25% of value over $500,000.) These approved by the Legislature in step 4. These formulas determine how much of the tax burden limits tell districts the exact amounts that can be will fall on different types of property. levied in every category. Step 3. County Auditor Step 6. School Board The calculates the tax The adopts a proposed capacity for each parcel of property in the county levy in September, based on the limits set in step (based on values from step 1 and tax capacity 5. After a public hearing, the board adopts a formulas from step 2), as well as the total tax final levy in December. Final levy cannot be capacity for each school district. more than the preliminary levy, except for amounts approved by voters. * For certain levy categories Step 7. County Auditor The divides the final levy (determined by the (referendum, equity and school board in step 6) by the district's total tax capacity (determined in transition levies), tax rates and step 3) to determine the tax rate needed to raise the proper levy amount. levy amounts are based on The auditor multiplies this tax rate times each property's tax capacity, to referendum market value , determine the school tax for that property.* tax capacity. rather than

  27. Proposed Levy Payable in 2012 Schedule of events in approval of district’s 2012 (Payable 2013) tax levy • September 12 – Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy • Sept 17: School board approved proposed levy amounts • Mid-November: County mailed “Proposed Property Tax Statements” to all property owners • December 3: Public hearing on proposed levy at regular meeting • Following hearing school board will certify final levy amounts

  28. St. Michael-Albertville School District No. 885 Comparison of Proposed Tax Levy Payable in 2013 to Actual Levy Payable in 2012 Actual Levy Proposed Levy Fund Payable in 2012 Payable in 2013 $ Change % Change General Fund ($91,387) Voter Approved Referendum $2,424,707 $2,333,320 Equity 386,912 390,527 3,615 (7,664) Operating Capital 309,459 301,795 Health and Safety 158,733 229,034 70,301 55,406 1,462 Instructional Lease Levy 56,868 Safe Schools 197,296 192,228 5,068 Other 184,926 181,078 (3,848) (21,022) Adjustments for Prior Years (30,801) (51,823) Total, General Fund $3,681,570 $3,638,095 ($43,475) (1.18%) Community Service Fund ($4,771) Basic Community Education $159,908 $155,137 (529) Early Childhood Family Education 66,850 66,321 $15,000 School-Age Child Care 15,000 30,000 Other 2,977 3,552 575 6,753 18,095 11,342 Adjustments for Prior Years Total, Community Service Fund $251,488 $273,105 $21,617 8.60% Debt Service Fund $243,966 Voter Approved Debt Service $7,674,585 $7,918,551 Adjustments for Prior Years (4,556) (402,923) (398,367) Total, Debt Service Fund $7,670,029 $7,515,628 ($154,401) (2.01%) ($176,261) Total Levy, All Funds $11,603,089 $11,426,827 (1.52%)

  29. Overview of Proposed Levy Payable in 2013 • The total proposed levy for 2013 is lower than the 2012 levy by $176,261, or 1.52% • Law requires that we explain the reasons for the major changes in the levy

  30. Explanation of Levy Changes • Category: Voter Approved Referendum • Change: -$91,387 • Use of funds: general operating expenses • Reason for decrease: • Referendum Revenue is based upon the voter approved per pupil amount multiplied times resident pupil units. • For taxes payable in 2013 resident pupil units were estimated to slightly decrease (open enrollment and tuition in students not included) • Referendum Aid (state equalization) will increase

  31. Explanation of Levy Changes • Category: Operating Capital Levy • Change: -$7,664) • Use of funds: Equipment, Technology, Software, Textbooks • Reason for decrease: • Adjusted cost pupil unit increased (all students) • Operating Capital Aid (state equalization) will increase

  32. Explanation of Levy Changes • Category: Equity and Safe Schools • Change: +$3,615 and $5,068 • Use of funds: Equity for general fund use and Safe Schools for SRO’s, counselors, social workers, nurses, psychologists, drug and suicide prevention programs • Reason for increase: • Based upon $46 and $30 multiplied by adjusted cost pupil unit; pupil units are expected to increase by approximately 170, leading to an increase in revenue

  33. Explanation of Levy Changes • Category: Health and Safety • Change: +$70,301 • Use of funds: Building and grounds maintenance and repair for health and safety • Reason for increase: • Approval of projects by state • Prior year’s request was lower than usual

  34. Explanation of Levy Changes • Category: School-Age Child Care • Change: +$15,000 • Use of funds: Children who require extra staff support in the Kids Play program • Reason for increase: • Increased costs associated with serving students requiring extra staff support

  35. Explanation of Levy Changes • Category: Community Service Adjustments from Prior Years • Change: +$11,342 • Use of funds: Children who require extra staff support in the Kids Play program • Reason for increase: • Under reported costs in prior years associated with serving students requiring extra staff support

  36. Explanation of Levy Changes • Category: Debt Service • Change: +$243,966 • Use of funds: Payment of voter approved bonds for buildings • Reason for increase: • Increase required to service bond repayment

  37. Explanation of Levy Changes • Category: Adjustment for Prior Year Debt Service • Change: -$398,367 • Use of funds: Payment of voter approved bonds for buildings • Reason for decrease: • Repayment of capital loan no longer required levy for debt excess repayment

  38. STMA Levy History

  39. Public Comments and Questions

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