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Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2014

Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2014. Welcome. December 2nd, 2013 6:01 P.M. Board Room-District Office Presented by: Bruce Lamprecht Director of Business Services. ISD 413, Marshall. Truth in Taxation Law

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Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2014

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  1. Marshall Public Schools #413 Truth in Taxation Hearing for Taxes Payable in 2014

  2. Welcome December 2nd, 2013 6:01 P.M. Board Room-District Office Presented by: Bruce Lamprecht Director of Business Services

  3. ISD 413, Marshall Truth in Taxation Law • State law initially approved in 1998. • The 2009 legislature made several changes: • Property tax hearing can now be held a regular meeting. Hearing must be at 6:00 PM or later. Levy may be adopted at the 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. • You are here for the school district’s annual required hearing.

  4. 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

  5. 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 2014 D. Public Comments and Questions

  6. Public Education is Strong in Minnesota…… • In Minnesota, the most commonly taken standardized college entrance exam is the ACT. Seventy-four percent of Minnesota high school graduates in 2013 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 2013 • Minnesota has led the nation in average composite ACT scores for eight consecutive years among states where more than half of high school seniors took the test. The national composite score was 20.7 • Marshall’s composite score was 22.7

  7. 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.”

  8. 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

  9. State Funding for Schools Has Not Kept Pace with Inflation • Increases in basic general education revenue per pupil have been less than inflation • There has been improvement overall this past year. • Per-pupil revenue for fiscal year 2014-15 is projected to be $332 below the 2004-05 inflation adjusted amount • For Fiscal 2014 and 2015, basic per-pupil funding is projected to increase by at least 1.5% per year, while most districts’ expenses will likely increase, without budget cuts, by 2-3% annually

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

  11. Impact is budget cuts and operating referendums… • Even with these increases in state funding expected, 44.2%* of districts continue to face projected budget shortfalls for FY 2014 and FY 2015 and anticipate the need to do some budget cuts • To meet local school budget shortfalls, voters in 300 districts, or 89.3% of all Minnesota districts, have approved an operating referendum levy • The state average amount for the current year is $920 per pupil unit • Of sixty-six questions proposed this year, fifty-eight passed or 88% *Survey by Minnesota Association of School Business Officials (MASBO)

  12. ISD 413, Marshall School District Levy • 2013 Payable 2014 • 2014-2015 School Year • Fiscal Year 2015

  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. ISD 413, Marshall, Minnesota Contrast of City/Township/County Levy Cycle to School District Levy Cycle 2013 2014 2015 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D A E A P A U U U E C O E A E A P A U U U E C O E A E A P A U U U E C O E N B R R Y N L G P T V C N B R R Y N L G P T V C N B R R Y N L G P T V C Legislation City/Twp/County Tax Levy Decision Collection of Levy Budget Year School District Tax Levy Decision Collection of Levy Budget Year

  15. Budget and Levy Adoption Calendar 2013 2014 2015 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D A E A P A U U U E C O E A E A P A U U U E C O E A E A P A U U U E C O E N B R R Y N L G P T V C N B R R Y N L G P T V C N B R R Y N L G P T V C Audit 2012-2013 2013/2014 Current Budget 14-15 Budget Preparation Adoption of 14-15 Budget Update Current Budget Year Final Current Budget Year Update Tax Levy Decision Collection of Levy 2014-2015 Budget Year

  16. Property Tax Share By Governmental Entity

  17. 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

  18. School District Budget Current School and Fiscal Year 2013-2014

  19. MARSHALL PUBLIC SCHOOLS2013-2014 BUDGET OVERVIEWREVENUES 12-13 Actual 13-14 Budget % Change ---------------- ----------------- ------------- General Fund $21,188,317$22,199,330 4.8% Foodservice $1,365,551 $1,406,675 3.0% Transportation $1,413,297 $1,341,231 -5.1% Community Services $2,053,008 $2,029,949 -1.1% Capital Outlay $723,775$740,034 2.2% Debt Service $27,199,619$3,197,267 -88.2% Total $53,943,567$30,914,486 -42.7%

  20. MARSHALL PUBLIC SCHOOLS2013-2014 BUDGET OVERVIEWEXPENDITURES 12-13 Actual 13-14 Budget % Change ---------------- ----------------- ------------- General Fund $20,993,295$22,116,969 5.4% Foodservice $1,353,286 $1,394,085 3.0% Transportation $1,346,660 $1,309,514 -2.8% Community Services $2,044,952 $2,077,641 1.6% Capital Outlay $842,447$896,621 6.4% Debt Service $3,434,288$26,752,346 679.0% Total $30,014,928 $54,547,176 81.7%

  21. 2013-2014 Revised Budget Analysis

  22. General Fund Expenditures June 30th, 2013

  23. ISD #413, Marshall Marshall Public Schools Summary of Staff Employed

  24. ISD #413 - MARSHALL GENERAL FUND EXPENDITURES JUNE 30th, 2013

  25. ISD #413-Marshall-General Fund Expenditures By Object Code

  26. ISD 413, Marshall

  27. ISD #413, Marshall

  28. ISD #413, Marshall

  29. ISD #413 Audit Highlights • The audit results for 2012-2013 showed an ending General Fund balance of $3,509,483 or 16.7% of expenditures • The Transportation Fund showed an ending fund balance of $66,637 due to revenue coding changes • The Capital Outlay Fund ended with a balance of $644,496 exceeding the established goal of $400,000 by a goodly amount • The Foodservice Fund ended with a slightly less ending fund balance than projected • The Debt Service Fund balance is quite significant because of the bond refunding that took place

  30. ISD #413, Marshall • The Revised General Fund Budget for 2013-2014 shows a $114,478 excessin revenues over expenditures. This includes a transfer of $31,717 fromthe Transportation Fund to zero out the fund balance. • This translates into a $3,594,844 ending fund balance or a 16.25 fund balance percent with a stated, approved goal of 8.0% (fund balance/expenditures) being the bare minimum.

  31. How Much Revenue is State Aid vs. Local Sources?

  32. General Fund Revenues By Source

  33. General Fund Revenue Sources by Percent

  34. ISD 413, Marshall General Fund Changes in Basic Per Pupil Allowance

  35. Revenue-Adjusted For Inflation

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

  37. ISD 413, Marshall Authority for School Levies A School District Tax Levy must be either: • Set by State Formula or • Voter Approved

  38. 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

  39. 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

  40. 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

  41. Legislative Changes Do Affect Tax Levy • The 2013 Legislature approved significant changes in school funding formulas which will affect tax levies payable in 2014 • State aid for operating referendums was increased, resulting in reductions in tax levy for most districts • State allowed some districts to add new board-authorized referendum revenue and location equity revenue, which will increase tax levies for some districts • State aid for operating capital revenue was also increased, resulting in reductions in tax levy • State added a new “Student Achievement Levy” which will fund some of the basic general education revenue for all districts

  42. The Homestead Credit Shift • The 2011 legislature repealed the Homestead Market Value Credit • In its place, the Legislature implemented a Homestead Market Value Exclusion

  43. Property Tax History-$150K Parcel

  44. Changing School District Property Taxes

  45. Comparable Levies On Residential Homesteads

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