1. Local Issues: Impacts of Legislation Rie Gilsdorf Matt Robinson Rie Gilsdorf Matt Robinson

3. Removal of General Education Levy: History Review G Portion of revenue received through property tax G Ended in 2001 G Lost Interest Revenue Levy G Referendum Revenue Transfer G Portion of revenue received through property tax G Ended in 2001 G Lost Interest Revenue Levy G Referendum Revenue Transfer

4. Removal of General Education Levy: Example of Impact G ISD 196: Rosemount, Apple Valley, Eagan (09/02) G Board unanimously approved levy - for maximum amount allowable by State G Total amount up 2.64% G Stated reasons for increase: G Lost interest revenue levy / Removal of General Education Levy G Rise in property values G Referendum Revenue Transfer G ISD 196: Rosemount, Apple Valley, Eagan (09/02) G Board unanimously approved levy - for maximum amount allowable by State G Total amount up 2.64% G Stated reasons for increase: G Lost interest revenue levy / Removal of General Education Levy G Rise in property values G Referendum Revenue Transfer

5. Corporate Tax Relief: A History Review G 1971’s Minnesota Miracle: Commercial Property Tax Rate boosted to 3% G Beginning with taxes payable in 2002, Commercial tax rate lowered to 2% G 1971’s Minnesota Miracle: Commercial Property Tax Rate boosted to 3% G Beginning with taxes payable in 2002, Commercial tax rate lowered to 2%

6. Corporate Tax Relief: Impact: Farmington District 192 G 2002 Combined bond and excess levy a 35% hike in levied $$ G Offset by housing growth, individual taxes only up by 14% G Bond alone accounts for $164 increase for average home G 2002 Combined bond and excess levy a 35% hike in levied $$ G Offset by housing growth, individual taxes only up by 14% G Bond alone accounts for $164 increase for average home

7. Corporate Tax Relief: Impact: Burnsville-Eagan-Savage, D 191 G $5 million budget cuts for 2003 G Cut transportation by increasing walking distances G Insufficient parent interest in pay-to- ride system G $5 million budget cuts for 2003 G Cut transportation by increasing walking distances G Insufficient parent interest in pay-to- ride system

8. Corporate Tax Relief: Impact: Forest Lake School District G November 2005 Levy would have extended 2001 Levy G Defeated by 60% of voters G New Board Members campaigned on Anti-Tax platform in same election G Board then faced 10% reduction in Operations budget G November 2005 Levy would have extended 2001 Levy G Defeated by 60% of voters G New Board Members campaigned on Anti-Tax platform in same election G Board then faced 10% reduction in Operations budget

9. Stagnant Basic Allowance: History G General Education Formula Allowance G 2002: $4,068 G 2003: $4,601 (up $533) G 2004: $4,601 (up $0 - Inflation = 2.66%) G 2005: $4,601 (up $0 - Inflation = 3.39%) G General Education Formula Allowance G 2002: $4,068 G 2003: $4,601 (up $533) G 2004: $4,601 (up $0 - Inflation = 2.66%) G 2005: $4,601 (up $0 - Inflation = 3.39%)

10. Stagnant Basic Allowance: Impact G ISD 196: Rosemount, Apple Valley, Eagan G 2002-2003 (One year prior to stagnation) G Projected revenues increased by $18.8 mil G Increase in general ed revenue ($104/student) G Increase in $ set aside for transportation G Referendum levy revenue G Increase in LEP revenue G ISD 196: Rosemount, Apple Valley, Eagan G 2002-2003 (One year prior to stagnation) G Projected revenues increased by $18.8 mil G Increase in general ed revenue ($104/student) G Increase in $ set aside for transportation G Referendum levy revenue G Increase in LEP revenue

11. Stagnant Basic Allowance: Impact G ISD 196: Rosemount, Apple Valley, Eagan G 2003-2004 (Preliminary) G Budget overspends revenue in every category G Enrollment projected to be stable G Assumes 4.5% increase in salaries G Allows 3% increase in instructional allocations G Increases secondary co-curricular support by 3% G Keeps $8 per pupil staff development allocation G Acknowledges that changes due to new legislation are unknown and will be worked into the final budget in the fall. G ISD 196: Rosemount, Apple Valley, Eagan G 2003-2004 (Preliminary) G Budget overspends revenue in every category G Enrollment projected to be stable G Assumes 4.5% increase in salaries G Allows 3% increase in instructional allocations G Increases secondary co-curricular support by 3% G Keeps $8 per pupil staff development allocation G Acknowledges that changes due to new legislation are unknown and will be worked into the final budget in the fall.

12. Stagnant Basic Allowance: Impact G ISD 196: Rosemount, Apple Valley, Eagan G Projected 2004-2005 G Budget reflects a $14 million deficit G $7.5 million expenditure reduction G Shift technology to capital expenses ($2 mil) G Every fund is expecting a deficit G Impacted by the General Education Formula allowance freeze from 03-05 G Fund balance spent down since the enactment of the last levy (2001) G Causes of deficit G Pressure from stagnant state support G Declining enrollment G Inflation G ISD 196: Rosemount, Apple Valley, Eagan G Projected 2004-2005 G Budget reflects a $14 million deficit G $7.5 million expenditure reduction G Shift technology to capital expenses ($2 mil) G Every fund is expecting a deficit G Impacted by the General Education Formula allowance freeze from 03-05 G Fund balance spent down since the enactment of the last levy (2001) G Causes of deficit G Pressure from stagnant state support G Declining enrollment G Inflation

13. Stagnant Basic Allowance: Impact G ISD 194: Lakeville School District ( 2003) G Board wrestles with $2.3 mil deficit caused by: G Stagnant increases in basic allowance G 6% District Spending Increases G Teacher’s salaries unknown - contract to expire G ISD 194: Lakeville School District ( 2003) G Board wrestles with $2.3 mil deficit caused by: G Stagnant increases in basic allowance G 6% District Spending Increases G Teacher’s salaries unknown - contract to expire

14. Statutory Operating Debt: Definition G Negative G Net G Unreserved General Fund Balance G Exceeding 2.5% of General Fund Expenditures G Negative G Net G Unreserved General Fund Balance G Exceeding 2.5% of General Fund Expenditures

15. Statutory Operating Debt: How do districts get there? How do they recover? How do districts get there? How do they recover?

16. Statutory Operating Debt: Case #1: Prinsburg G $200,000 or -71% in 2005 G “Common District” No regular- education students G Must provide Special Education to private school students G $200,000 or -71% in 2005 G “Common District” No regular- education students G Must provide Special Education to private school students

17. Statutory Operating Debt: Prinsburg Recovery G $47,000 or -16% in 2006 G Requested Special Levy Authority from Legislature G Able to exceed Levy Cap G $47,000 or -16% in 2006 G Requested Special Levy Authority from Legislature G Able to exceed Levy Cap

18. Statutory Operating Debt: Case #2: Main Street G $16,200 or -25% in 2005 G Performing Arts charter school G Opened in 2-year period when start-up funds not available G Would have been $93,000 G $16,200 or -25% in 2005 G Performing Arts charter school G Opened in 2-year period when start-up funds not available G Would have been $93,000

19. Statutory Operating Debt: Main Street Recovery G $77,000 or -4.68% in 2006 G Gen Fund total from $63,000 to $1.6 million by recruitment G But, build-out of laboratory caused rent to increase G Now out of SOD for 2007 G $77,000 or -4.68% in 2006 G Gen Fund total from $63,000 to $1.6 million by recruitment G But, build-out of laboratory caused rent to increase G Now out of SOD for 2007

20. Conclusion: the Triple Whammy G Removal of the General Education Levy and addition of Levy Cap G Corporate Tax Rate Cut G Stagnant Basic Revenue G Had real consequences for Districts G Removal of the General Education Levy and addition of Levy Cap G Corporate Tax Rate Cut G Stagnant Basic Revenue G Had real consequences for Districts