Forest Lake Area Schools Public Hearing for Taxes Payable in 2019 DECEMBER 6, 2018 PRESENTED BY: LARRY MARTINI, DIRECTOR OF BUSINESS SERVICES
Tax Hearing Presentation State Law Requires Presentation of: State Law Requires Public Meeting: • Current year budget • Between November 25 th and December 28 th • Prior year actual revenue & expenditures • After 6:00 PM • Proposed property tax levy including % • May be part of regularly scheduled increase meeting • Specific purposes & reasons taxes are • May adopt final levy at same meeting being increased *State Law also requires the district allow for public comments
1. Background on School Funding Agenda for 2. District’s Budget Hearing 3. District’s Proposed Tax Levy for Taxes Payable in ____________ 2019 4. Public Comments
Constitution Assigns Legislature Responsibility to Set Funding for Minnesota Public Schools Minnesota 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.”
As a Result… School funding is highly regulated by the state State Sets: • Formulas which determine revenue; most revenue based on specified amounts per pupil • Tax policy for local schools • Maximum authorized property tax levy (districts can levy less but not more than amount authorized by state, unless approved by voters) State also authorizes school board to submit referendums for operating and capital needs to voters for approval
Challenge: State Set Basic General Education Formula Lags Inflation • Since 1991-92, state General Education Revenue formula has not kept pace with inflation • For Fiscal Year 2018-19, Legislature approved an increase of 2% or $124 per year • Per-pupil allowance for Fiscal Year 2018-19 would need to increase by another $2,749 (9.8%) to have kept pace with inflation since 1991-92 • Our Referenda total of $1,287 ($825 + $462) is not even half of that gap.
MDE reports the FY MDE reports the FY 2016 cost of providing 2016 cost of providing Translating into a Translating into a special education special education statewide average statewide average programs was programs was funding shortfall of funding shortfall of underfunded by $697 underfunded by $697 $5,783 per special $5,783 per special million, or an average of million, or an average of education student education student Underfunding 40% underfunded 40% underfunded of Special Education Underfunding of special Underfunding of special Primary options to Primary options to education costs education costs bridge special bridge special requires a transfer from requires a transfer from education funding gap education funding gap regular program regular program are to cut regular are to cut regular resources to support an resources to support an program budgets or program budgets or underfunded program underfunded program increase referendum increase referendum mandated by state and mandated by state and revenue, most districts revenue, most districts federal law federal law have done both have done both
Result: Growing Dependence on Referendum Revenue • In 1992-93, 65% of districts had operating referendum revenue averaging $332 per pupil • For 2018-19, all Minnesota districts have referendum revenue and/or local optional revenue levy authority averaging $1,371 per pupil o Referendum revenue provides 13% of General Fund operating revenue o Of this amount, $951 is a board approved or voter approved operating referendum, and $420 is Local Optional Revenue
Change in Tax Levy Does not Determine Change in Budget 1 2 3 4 Tax levy is based on Some increases in tax Expenditure budget is An increase in school many state- levies are revenue limited by state-set taxes does not always determined formulas neutral, offset by revenue formulas, correlate to an equal plus voter approved reductions in state aid voter-approved levies, increase in budget referendums and fund balance
School District Levy Cycle Differs from City/County Levy Cycle City/County: Schools: • Budget Year same as calendar year • Budget year begins July 1st and coincides with school year • 2019 taxes provide revenue for • 2019 taxes provide revenue for 2019 calendar year budget 2019-20 school fiscal year • Budget will be adopted in June 2019
All school district budgets are divided into Budget separate funds, based on purposes of Information revenue, as required by law ____________ Our District’s Funds: • General Because approval of school district budget lags • Food Service certification of tax levy by six • Community Service months, state requires only current year budget • Building Construction information and prior year • Debt Service actual financial results be presented at this hearing. The • OPEB Debt Service Fiscal 19-20 budget will be set in June 2019.
Forest Lake Area Schools District Revenues and Expenditures Actual for FY 2018, Budget for FY 2019 Actual Results for 2017-2018 FISCAL 2018 2017-18 ACTUAL 2017-18 ACTUAL JUNE 30, 2018 2018-19 BUDGET 2018-19 BUDGET JUNE 30, 2019 FUND BEGINNING REVENUES AND EXPENDITURES & ACTUAL FUND REVENUES AND EXPENDITURES & PROJECTED General Fund Food Service Community Ed Construction Debt Service OPEB Debt FUND BALANCES TRANSFERS IN TRANSFERS OUT BALANCE TRANSFERS IN TRANSFERS OUT FUND BALANCE Revenue $ 75,166,080 $3,893,810 $4,794,219 $714,844 $8,690,970 $533,000 General $1,275,101 $74,924,190 $74,198,112 $2,001,179 $72,500,000 $72,500,000 $2,001,179 Food Service (98,212) 3,898,810 3,715,575 85,023 3,735,120 3,689,936 130,207 Expenditures $74,612,924 $3,715,575 $4,529,304 $52,238,515 $9,054,200 $522,837 Ending fund balance Community Service 338,010 4,783,844 4,434,961 686,893 4,689,458 4,628,389 747,962 $ 2,137,470 $ 292,943 $ 821,795 $ 37,362,764 $ 921,913 $ 252,693 Building Construction 87,138,556 302,871 50,966,925 36,474,502 350,000 34,000,000 2,824,502 Proposed Districtwide Budgets for 2018-2019 Debt Service 1,275,865 8,663,478 9,054,200 885,143 9,022,000 9,015,000 892,143 General Fund Food Service Community Ed Construction Debt Service OPEB Debt OPEB* Debt Service 230,508 532,359 522,837 240,030 318,000 420,000 138,030 Beginning fund balance $ 2,137,470 $ 292,943 $ 821,795 $ 37,362,764 $ 921,913 $ 252,693 Total All Funds $90,159,828 $93,105,552 $142,892,610 $40,372,770 $90,614,578 $124,253,325 $6,734,023 Revenue $72,500,000 $3,735,120 $4,689,458 $350,000 $9,022,000 $318,000 *Other Post Employment Benefits Expenditures $72,500,000 $3,689,936 $4,628,389 $34,000,000 $9,015,000 $420,000 Ending fund balance $ 2,137,470 $ 338,127 $ 882,864 $ 3,712,764 $ 928,913 $ 150,693
• Determination of levy Payable • Comparison of 2018 to 2019 levies 2019 • Specific reasons for changes in tax levy Property Tax • Impact on taxpayers Levy ____________
Property Tax Background • Every owner of taxable property pays property taxes to various “taxing jurisdictions” (county, city/township, school district, special districts) in which property is located • Each taxing jurisdiction sets own tax levy, often based on limits in state law • County sends bills, collects taxes from property owners, and distributes funds back to other taxing jurisdictions
Parcel Specific Notice: This is a sample of the notice mailed to every property owner between November 11-24 with information on the impact of the Proposed 2019 levy on their property. Contents: • Proposed property tax compared to last year • By voter approved and other • By taxing jurisdiction • Contains time and place of public meeting
School District Property Taxes • Each school district may levy taxes in over 40 different categories • “Levy limits” (maximum levy amounts) for each category are set by o State law o Voter approval • Minnesota Department of Education (MDE) calculates detailed levy limits for each district
Property Tax Background School District Property Taxes • Key steps in process are summarized on next slide • Any of these steps may affect the taxes on a parcel of property, but district has control over only 1 of the 7 steps
Schedule of Events in Approval of District’s 2018 (Payable 2019) Tax Levy September 7: Mid- MDE prepared November: September 20: December 6: Following and distributed County mailed School Board Public hearing hearing, School first draft of “Proposed approved on proposed Board will levy limit Property Tax proposed levy levy at regular certify final levy report setting Statements” to amounts meeting amounts maximum all property authorized levy owners
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