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Marion School District’s Financial Outlook

This report outlines the changes in the K-12 funding formula for Marion School District, including adjustments to teacher salaries, revenue sources, and tax levies. It also examines the district's financial outlook, general fund balance, and potential factors that may impact funding in the future.

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Marion School District’s Financial Outlook

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  1. Marion School District’s Financial Outlook Focus group discussion—May 2019

  2. Changes in K-12 Funding Formula • 2016 SD Legislature made changes to the funding formula: • State set a targeted teacher salary of $48,500 to base school’s state aid funding formula from. • 85% of the designated increase in funding was to go to certified teacher salaries and benefits for 16/17 school year. • State sales tax went from 4.0% to 4.5% to generate revenue. • Pension fund levy was eliminated. • 2-year average enrollment was eliminated. State funding formula is only based on the current year’s Fall count (last Friday in September). • Changes in CO fund and “other revenues”

  3. Changes in K-12 Funding Formula • Capital Outlay fund changes: • 45% of tax revenue received can be transferred to General Fund • Starting with the 2021 calendar year, schools will only be allowed to tax at a level of $2,800 per student in the CO fund.

  4. Changes in K-12 Funding Formula • Changes in “Other Revenues”: • Other revenues includes Utility Tax (Gross Receipts), Wind Farm Tax, Bank Franchise Tax, Local Revenue in Lieu of Taxes, County Apportionment, and County Revenue in Lieu of Taxes • Starting with the 17/18 school year, these revenues would be gradually included in the State Aid formula as follows: • 17/18: No change from base year • 18/19: 20% of other revenues included in State Aid formula • 19/20: 40% of other revenues “ “ “ “ “ • 20/21: 60% of other revenues “ “ “ “ “ • 21/22: 80% of other revenues “ “ “ “ “ • 22/23: 100% of other revenues “ “ “ “ “

  5. Changes in K-12 Funding Formula • Marion School District’s estimated loss due to Other Revenue change (compared to 17/18 baseline): • 19/20: $2,250.00 • 20/21: $90,750.00 • 21/22: $179,030.00 • 22/23: $279,200.00 • Loss of revenue is due to Marion’s large amount of Utility Tax (approx. $300,000) coming primarily from the ethanol plant, and the district’s small enrollment for this amount of revenue.

  6. General Fund Balance, Fiscal years 2014 – 2019 • June 2014: $1,199,526.64 (loss of $59,131.10) • June 2015: $1,053,619.19 (loss of $145,907.45) • June 2016: $922,639.56 (loss of $130,979.63) • June 2017: $925,873.35 (gain of $3,233.79) • June 2018: $885,439.77 (loss of $40,433.58) • June 2019 (estimated): $700,739.77 (loss of $185,000)

  7. General Fund Opt-Out Amounts Taken, 2006 – 2019 • 2006: $150,000 • 2007: $150,000 • 2008: $130,000 • 2009: $100,000 • 2010: $80,000 • 2011: $40,000 • 2012: $40,000 • 2013: $0 • 2014: $0 • 2015: $0 • 2016: $0 • 2017: $0 • 2018: $0 • 2019: $0

  8. Comparison of Area District’s Tax Levies Requested • Comparison of tax levy requests of Marion, Freeman, Parker, and Canistota school districts • http://marion.k12.sd.us/wp-content/uploads/2019/05/Area-District-Comparison-2019.pdf

  9. Tax Levy Difference Between 2019 & 2021 (with Opt-Out & less from CO) • Estimated Decrease in CO levy: • $640,000 (2019)- $487,200 (2021) = $152,800 • Increase in GF Opt-Out: • $300,000 • Total Tax Difference • $300,000 - $152,800 = $147,200

  10. Tax Levy Difference Between 2019 & 2021 (with Opt-Out & less from CO) • Estimated Tax Difference by Type (per $100,000 in property): • AG $552.86 (2021) - $555.61 (2019) = $2.75 decrease • OO $809.75 (2021) - $742.71 (2019) = $67.04 increase • Other $1,306.50 (2021) - $1,104.51 (2019) = $201.99 increase

  11. Other Factors To Consider • Assessed valuations could increase or decrease over the coming year • Tax levy request amounts are set by State each legislative session • Legislature could change the Capital Outlay requested maximum • Changes in student enrollment will affect how much Marion will received from the State’s funding formula • Unforeseen changes in funding could take place

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