1. Marshall Public Schools #413 Public Hearing for Taxes Payable in 2017

2. Welcome
December 5th, :01 P.M. Board Room-District Office Presented by: Bruce Lamprecht Director of Business Services

3. ISD 413, Marshall Tax Hearing Presentation Public Meeting
Must be held after Nov. 25th and no later than Dec. 28th at 6:00 P.M. or later
May be part of a regularly scheduled meeting and may adopt final levy at this meeting
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 change over the prior year
Specific purposes and reasons if taxes are being increased
And offer the public an opportunity to comment and ask questions

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 2017
Public Comments and Questions

5. Public Education is Strong in Minnesota……
In Minnesota, state law now requires 100% of juniors take the ACT as a requirement for graduation
Minnesota’s average composite score of 21.1 is the highest in the nation of the 18 states in which 100% high school graduates took the test in 2016
The national composite score for 2016 is 20.8 based on 64% of 2016 graduating seniors taking the ACT
Marshall’s composite score is 21.0

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
State authorizes school board to levy up to $724 per pupil unit ($300 board referendum and $424 in local optional revenue)

8. Basic General Education Formula Lags Inflation
Since 2003, the state General Education Revenue formula has not kept pace with inflation
For FY 2016 and 2017, Legislature approved an increase of 2% per year:
$117 per pupil unit in FY 2016
An additional $119 for FY 2017
Per-pupil allowance for Fiscal Year 2017 would need to increase by another $550 (9.1%) to have kept pace with inflation

9. Comparing The General Education Formula Against Inflation

10. Under funding of special education causes a drain on funding for regular classroom programs
MDE reports the cost of providing special education programs on average was 40% underfunded, necessitating a transfer of $679 per pupil from regular program resources to support an underfunded program mandated by state and federal law
The 2015 Legislature increased special education funding for the Biennium by approximately $180 million reducing the regular program subsidy from $679 to $507 per pupil
Primary options for districts to bridge the special education funding gap are to cut regular program budgets or increase referendum revenue; most districts have done both

11. Result: Growing dependence on referendum revenue
Average referendum authority per pupil is increasing:
In 1993, 65% of districts had referendum revenue averaging $332 per pupil
For , 99.4% of districts have referendum revenue plus local optional revenue authority averaging $1,262 per pupil
20.8% of general education formula allowance
Of this amount, $853 is board approved or voter approved operating referendum, and $409 is Local Optional Revenue

12. ISD 413, Marshall School District Levy 2016 Payable 2017
School Year
Fiscal Year 2018

13. Change in Tax Levy Does not Determine Change in Budget
Tax levy is based on many state-determined formulas plus voter approved referendums
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
An increase in school taxes does not always correlate to an equal increase in the budget

14. Contrast of City/County to School District Levy Cycle
City/County - Budget Year is same as calendar year. The 2017 tax levy provides revenue for the calendar year 2017 budget
Schools - Budget year begins July 1st and coincides with school year. The 2017 tax levy provides revenue for the school fiscal year. Budget will be adopted in June 2017

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 Services
Capital Outlay
Debt Service
Transportation

17. School District Budget
Comparison of Actual and Revised Budgets

18. MARSHALL PUBLIC SCHOOLS 2016 ACTUAL and 2017 BUDGET OVERVIEW REVENUES
15-16 Actual Budget % Change
General Fund $26,279,121 $26,899, %
Foodservice $1,578,050 $1,604, %
Transportation $1,459,282 $1,642, %
Community Services $2,303,729 $2,270, %
Capital Outlay $1,331,575 $1,147, %
Debt Service $2,813,968 $3,041, %
Total $35,765,725 $36,605, %

19. MARSHALL PUBLIC SCHOOLS 2016 ACTUAL and 2017 BUDGET OVERVIEW EXPENDITURES
15-16 Actual Budget % Change
General Fund $25,645,185 $27,179, %
Foodservice $1,,564, $1,599, %
Transportation $1,460,335 $1,545, %
Community Services $2,267,522 $2,251, %
Capital Outlay $1,350,776 $1,456, %
Debt Service $2,802,931 $2,996, %
Total $35,091,123 $37,028, %

20. Revenue % All Funds 2016-2017 Budget

22. General Fund Revenues by Source

23. General Fund Expenditures by Program

24. General Fund Expenditures by Object

25. Proposed 2016 Property Tax Levy
Determination of levy
Comparison of 2016 to 2017 levies
Specific reasons for changes in tax levy
Impact on taxpayers

26. 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

27. Truth In Taxation Notice

28. School District Property Taxes
Each school district may levy taxes in over 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

29. 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

31. Proposed Levy Payable in 2017
Schedule of events in approval of district’s 2016 (Payable 2017) tax levy
September 8th: Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy
September 19th: School board approved proposed levy amounts
Mid-November: County mailed “Proposed Property Tax Statements” to all property owners
December 5th: Public hearing on proposed levy at regular meeting
Following hearing school board will certify final levy amounts at the December 19th meeting

32. Factors Causing Changes from 2016 to 2017
Many factors can cause the tax bill for an individual property to increase or decrease from year to year:
Changes in value of the individual property
Changes in the total value of all property in the district
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 class rates/history

33. Overview of Proposed Levy Payable in 2017
The total 2017 proposed property tax levy will increase from 2016 by $203, or 3.16%
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

34. Referendum Authority
All districts are now authorized up to $724 per pupil unit in referendum revenue without requiring voter approval
$424 from Local Optional Revenue
$300 from a board approved levy
Voter approval required to exceed $724 per pupil unit
There are 221 Minnesota school districts with voter referendum authority in excess of $724 per pupil

35. Long Term Facilities Maintenance Revenue
The Long Term Facilities Maintenance (LTFM) program gives districts that did not qualify for the previous ‘alternative facilities revenue’ access to substantial additional revenue for facility maintenance
For FY18, LTFM revenue for most districts will increase from $193 to $292 per pupil unit
If the average age of the district’s facilities is less than 35 years, this revenue per pupil unit may be reduced
Additional revenue is available to some districts for specific purposes
Replaces the previous health and safety, deferred maintenance, and alternative facilities revenue programs.

36. Long Term Facilities Maintenance Revenue
Revenue is provided through an equalized combination of property tax levies and state aid.
For many districts, this program provides substantially more state aid than they received under the previous funding formulas
Revenue may be used to pay for health and safety projects, accessibility projects, or any type of facility and site maintenance
Revenue may be used as follows:
To fund project costs on an annual basis (“Pay-as-you go”)
District may issue bonds to fund larger projects, and use the LTFMR to may payments on the bonds
District may reserve funds to pay for larger projects in future years

37. Explanation of Levy Changes
Category: Local Optional Levy
Change: +$28,527
Use of funds: general operating expenses
Reason for increase:
This is the ongoing 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

38. Explanation of Levy Changes
Category: Voter approved debt service
Change: -$50,689
Use of funds: for payment of debt service
Reason for decrease:
This is a reduction in our debt service levy because of a MDE mandated computation for debt service fund excess

39. Explanation of Levy Changes
Category: Long Term Facilities Maintenance Revenue
Change: +$202,996
Use of funds: general fund maintenance expenditures
Reason for increase:
New levy in 2016
Levy used to fund basic deferred maintenance items
This reflects the increasing per pupil amount for LTFM over a three year period

40. Explanation of Levy Changes
Category: Operating Capital
Change: -$77,251
Use of funds: For general fund capital expenditures
Reason for decrease:
Levy ratio reduced from 50% in 2016 to 35% in 2017

41. Explanation of Levy Changes
Category: Judgement Levy
Change: +$137,500
Use of funds: Provide reimbursement for costs of previous 504 accommodation legal settlement
Reasons for increase:
This is a new, one-time levy which helps defray settlement costs paid previously

42. Explanation of Levy Changes
Category: Referendum/Equity Levies
Change: +$118,596
Use of funds: For general operating fund obligations
Reasons for increase:
More adjusted pupil units helps drive this increase
Aid/Levy calculation is more weighted this year in the direction of increased levy, less aid

43. 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
Figures for 2017 are preliminary estimates, based on the best data available now-final figures could change slightly

44. 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 this
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

45. How are the Proposed 2017 School Taxes Spent?
General Fund Amount
Provides funding for the district instructional programs, $3,578,262.45
alternative compensation, integration program, also part
of the costs for the maintenance of technology infrastructure
and for the purchase of instructional equipment , building maintenance,
lease/rental payments and LTFM spending
Community Service Fund
Levy for Community Education Programs such as ECFE $187,307.40
Debt Service (Including OPEB)
Levy for repayment of principal and interest on district debt $2,867,480.85
Total Levy $6,633,050.70

46. Pay 2016/Pay 2017 Levy Comparison
Fund
15 Pay 16
16 Pay 17
Increase or Decrease
% Change
General
3,313,622.01
3,578,262.45
264,640.44
7.99%
Community Service
190,190.94
187,307.40
-2,883.54
-1.52%
General Debt Service
2,794,760.01
2,736,122.83
-58,637.18
-2.10%
OPEB Debt Service
131,346.46
131,358.02
11.56
.01%
Total
6,429,919.42
6,633,050.70
203,131.28
3.16%

47. ISD #413, Marshall Proposed Property Tax Statement for 2017
Actual 2016 Property Tax
Proposed 2017 Property Tax
Voter Approved Levies
$2,888,827.47
$2,920,044.96
Other School Levies
$3,541,091.95
$3,713,005.74
School District Total
$6,429,919.42
$6,633,050.70

48. ISD 413, Marshall
The School District Levy is proposed to increase by:
$203,131.28 or
3.16%

49. Tax Levy History 2001 Pay 2002 $1,780,058.97 64.58% Decrease
2003 Pay 2004 $3,568, % Increase
2004 Pay 2005 $3,556, % Decrease
2005 Pay 2006 $4,253, % Increase
2006 Pay 2007 $4,442, % Increase
2007 Pay 2008 $5,427, % Increase
2008 Pay 2009 $5,560, % Increase
2009 Pay 2010 $5,489, % Decrease
2010 Pay 2011 $5,714, % Increase
2011 Pay 2012 $5,880, % Increase
2012 Pay 2013 $6,181, % Increase
2013 Pay 2014 $5,599, % Decrease
2014 Pay 2015 $6,062, % Increase
2015 Pay 2016 $6,429, % Increase
2016 Pay 2017 $6,633, % Increase

50. 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.

52. Net Tax Capacity Property Comparison
Description
Residential Homestead
Commercial Industrial-Over $150K
Agricultural Homestead (Land & Buildings)
Property Value
$200,000
Tax Rate Pay 2016
1.00 %
2.00%
.50%
Net Tax Capacity Amount
$2,000.00
$4,000.00
$1,000.00

57. State Property Tax Refunds
State of Minnesota has two tax refund programs and one tax deferral program available for owners of homestead property
These programs may reduce the net tax burden for local taxpayers, but only if you take time to complete and send in the forms
For help with the forms and instructions:
Consult your tax professional, or
Visit the Department of Revenue web site at

58. State Property Tax Refunds
Minnesota Property Tax Refund (aka “Circuit Breaker” Refund)
Has existed since the 1970’s
Available to all owners of homestead property
Annual income must be approx. $107,930 or less (income limit is higher if you have dependents)
Refund is a sliding scale, based on total property taxes and income
Maximum refund is $2,640
Especially helpful to those with lower incomes
Fill out state tax form M-1PR

59. State Property Tax Refunds
Special Property Tax Refund
Available for all homestead properties with a gross tax increase of at least 12% and $100 over the prior year
Refund is 60% of the amount by which the tax increase exceeds the greater of 12% or $100, up to a maximum of $1,000
No income limits
Fill out state tax form M-1PR
Minnesota Department of Revenue
(651)

60. Senior Citizen Property Tax Deferral
Allows people 65 years of age or older with a household income of $60,000 or less to defer a portion of the property taxes on their home
Taxes paid in any year limited to 3% of household income for year before entering deferral program; this amount does not change in future years
Additional taxes are deferred, but not forgiven
State charges interest up to 5% per year on deferred taxes and attaches a lien to the property
The deferred property taxes plus accrued interest must be paid when the home is sold or the homeowner(s) dies

61. ISD 413, Marshall General Fund $3,578,262.45 Community Service
Whereas, Pursuant to Minnesota Statutes the School Board of Independent School District No. 413, Marshall, Minnesota, is authorized to make the following proposed tax levies for general purposes:
General Fund
$3,578,262.45
Community Service
$187,307.40
Debt Service
$2,867,480.85
Total Proposed School Tax Levy
$6,633,050.70
Now Therefore, Be it resolved by the School Board of Independent School District No. 413, Marshall, Minnesota, that the amount to be levied in 2016 to be collected in 2017 is set at $6,633, The clerk of the Marshall School Board is authorized to certify the proposed levy to the County Auditor of Lyon County, Minnesota.

62. Next Steps
Tonight-
Board will accept public comments and questions on proposed levy
December 19th-
Board will conduct a subsequent hearing (if necessary) and certify the property tax levy

63. ISD 413, Marshall
Public Comments and Questions

64. THANK YOU FOR ATTENDING!
THE END
THANK YOU FOR ATTENDING!