1. Marshall Public Schools #413 Public Hearing for Taxes Payable in 2018

2. Welcome
December 4th, :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. 24th 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
Must adopt final levy by December 28th
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 2018
Public Comments and Questions

5. Public Education is Strong in Minnesota……
In Minnesota, state law now requires 100% of juniors and seniors be offered the ACT at no cost
In % of Minnesota graduates took the ACT with an average composite score of 21.5
The national composite score for 2017 is 21.0 based on 60% of 2017 graduating seniors taking the ACT
Marshall’s composite score is 22.2

6. Success Story-Academics
2017 MCA Test Results
Math
Reading
Science
Avg. % Meeting or Exceeding Standards
ISD #413
60.3%
62.5%
58.0%
State Public School Average
58.6%
60.1%
53.9%
57.5%
State Charter School Average
45.8%
50.4%
41.4%
45.9%
2017 ACT Test Results
Percent Taking ACT Test
Avg. English
Avg. Math
Avg. Reading
Avg. Science
Avg. Composite
MHS Results
90.4%
20.7
22.7
22.3
22.4
22.2
State Average
90.2%
20.4
21.5
21.8
21.6
National Average
60.0%
20.3
21.4
21.0

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

9. Basic General Education Formula Lags Inflation
Since 2003, the state General Education Revenue formula has not kept pace with inflation
For FY 2017 and 2018, Legislature approved an increase of 2% per year:
$121 per pupil unit in FY 2018
An additional $124 for FY 2019
Per-pupil allowance for Fiscal Year 2019 would need to increase by another $596 (9.4%) to have kept pace with inflation

10. Comparing The General Education Formula Against Inflation

12. Under funding of special education causes a drain on funding for regular classroom programs
MDE FY 2015 reports the cost of providing special education programs on average was 40% underfunded, necessitating a transfer of $766 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

13. 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 , 331 of 331 Minnesota districts have referendum revenue and/or local optional revenue authority averaging $1,296 per pupil
20.5% of general education formula allowance
Of this amount, $879 is board approved or voter approved operating referendum, and $417 is Local Optional Revenue

14. ISD 413, Marshall School District Levy 2017 Payable 2018
School Year
Fiscal Year 2019

15. 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
An increase in school taxes does not always correlate to an equal increase in the budget

16. Contrast of City/County to School District Levy Cycle
City/County - Budget Year is same as calendar year. The 2018 tax levy provides revenue for the calendar year 2018 budget
Schools - Budget year begins July 1st and coincides with school year. The 2018 tax levy provides revenue for the school fiscal year. FY budget will be adopted in June 2018

17. 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

18. 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

19. School District Budget
Comparison of Actual and Revised Budgets

20. MARSHALL PUBLIC SCHOOLS 2017 ACTUAL and 2018 BUDGET OVERVIEW REVENUES
16-17 Actual Budget % Change
General Fund $27,098,937 $28,775, %
Foodservice $1,721,107 $1,828, %
Transportation $1,575,698 $1,675, %
Community Services $2,378,076 $2,174, %
Capital Outlay $1,160, $1,382, %
Debt Service $2,990,090 $2,963, %
Total $36,924,517 $38,799, %

21. MARSHALL PUBLIC SCHOOLS 2017 ACTUAL and 2018 BUDGET OVERVIEW EXPENDITURES
16-17 Actual Budget % Change
General Fund $26,740,992 $28,678, %
Foodservice $1,692, $1,718, %
Transportation $1,589,426 $1,613, %
Community Services $2,361,398 $2,310, %
Capital Outlay $853,966 $1,628, %
Debt Service $2,806,731 $2,999, %
Total $36,044,542 $38,948, %

22. Revenue % All Funds 2017-2018 Budget

23. Independent School District # District Revenues and Expenditures Actual for FY 2017, Budget for FY 2018

24. General Fund Revenues by Source

25. General Fund Expenditures by Program

26. General Fund Expenditures by Object

27. Proposed 2018 Property Tax Levy
Determination of levy
Comparison of 2017 to 2018 levies
Specific reasons for changes in tax levy
Impact on taxpayers

28. 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

29. Truth In Taxation Notice

30. 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

31. 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

33. Proposed Levy Payable in 2018
Schedule of events in approval of district’s 2017 (Payable 2018) tax levy
September 8th: Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy
September 18th: School board approved proposed levy amounts
Mid-November: County mailed “Proposed Property Tax Statements” to all property owners
December 4th: Public hearing on proposed levy at regular meeting
Following hearing school board will certify final levy amounts at the December 18th meeting

34. Factors Causing Changes from 2017 to 2018
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, enrollment changes, voter-approved referendums, and other factors
Changes in class rates/history

35. Overview of Proposed Levy Payable in 2018
The total 2018 proposed property tax levy will increase from 2017 by $128, or 1.94%
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

36. 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
Of 331 Minnesota School Districts, there are 216 with voter referendum authority in excess of $724 per pupil

37. 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 increased from $292 to $380 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.

38. 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

39. Explanation of Levy Changes
Category: Local Optional Levy
Change: +$29,981
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 remain opted in, to receive additional general fund revenue based on increasing enrollment
The district’s existing referendum revenue was adjusted accordingly but the net amount does reflect an increase in general fund levy

40. Explanation of Levy Changes
Category: 1st Tier Board Approved Referendum
Change: +$373,994
Use of funds: for general fund expenses
Reason for increase:
This is because the previous voter approved referendum amount has been phased out up to $300, through legislative action, and replaced by the school board approved amount of $300

41. Explanation of Levy Changes
Category: 1st Tier Voter Approved RMV Referendum
Change: -$361,700
Use of funds: for general fund expenses
Reason for decrease:
Elimination of the first $300 of voter approved referendum funding, replaced by board approved referendum funding
The companion piece is $424 of Local Optional Revenue

42. Explanation of Levy Changes
Category: Student Achievement Levy
Change: -$27,293
Use of funds: general operating expenses
Reason for decrease:
This special levy has now been phased out beginning with the fiscal year

43. Explanation of Levy Changes
Category: Long Term Facilities Maintenance Revenue Equalized and Un-equalized
Change: +$160,298
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 with much of the additional funding un-equalized and strictly levy

44. Explanation of Levy Changes
Category: Operating Capital
Change: -$40,952
Use of funds: Technology, facility maintenance, other capital expenditures
Reason for decrease:
Levy ratio reduced from 35% in 2017 to 28% in 2018
This change was made to partially offset increase in the Long Term Facilities Maintenance Levy

45. Explanation of Levy Changes
Category: Judgement Levy
Change: -$137,500
Use of funds: Provide reimbursement for costs of previous 504 accommodation legal settlement
Reason for decrease:
This was a new, one-time levy which helped defray settlement costs paid previously and now has been completed

46. Explanation of Levy Changes
Category: Voter Approved Debt Service Excess
Change: +$154,936
Use of funds: For annual required payments of principal and interest on voter approved bonds
Reasons for increase:
State changed formula on this typical reduction of debt service levy from 7.06% to 19.56%
This is also associated with our QZAB Alternative and Capital Facilities Bonds escrow amounts

47. 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 2018 are preliminary estimates, based on the best data available now-final figures could change slightly

48. 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 school board approved 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 Long Term Facilities Maintenance
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

49. How are the Proposed 2018 School Taxes Spent?
General Fund Amount
Provides funding for the district instructional programs, $3,548,425.70
alternative compensation, integration program, also part
of the costs for the maintenance of technology infrastructure
and for the purchase of instructional equipment , building maintenance, Q-comp,
lease/rental payments and LTFM spending
Community Service Fund
Levy for Community Education Programs such as ECFE $183,348.76
Debt Service (Including OPEB)
Levy for repayment of principal and interest on district debt $3,029,734.59
Total Levy $6,761,509.05

50. Pay 2017/Pay 2018 Levy Comparison
Fund
16 Pay 17
17 Pay 18
Increase or Decrease
% Change
General
3,578,262.45
3,548,425.70
-29,836.75
-.83%
Community Service
187,307.40
183,348.76
-3,958.64
-2.11%
General Debt Service
2,736,122.83
2,897,623.79
161,500.96
5.90%
OPEB Debt Service
131,358.02
132,110.80
752.78
.57%
Total
6,633,050.70
6,761,509.05
128,458.35
1.91%

51. ISD #413, Marshall Proposed Property Tax Statement for 2018
Actual 2017 Property Tax
Proposed 2018 Property Tax
Voter Approved Levies
$2,920,044.96
$2,700,452.30
Other School Levies
$3,713,005.74
$4,061,056.75
School District Total
$6,633,050.70
$6,761,509.05

52. ISD 413, Marshall
The School District Levy is proposed to increase by:
$128,458.35 or
1.94%

53. Tax Levy History 2002 Pay 2003 $1,685,744.13 5.30% 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
2017 Pay 2018 $6,761, % Increase

54. 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.

56. 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. 2017 - 2018 Tax Levy Spending $183,349 , 2.7% $3,029,735 44.8%
$3,548,426
52.5%
2017 -
2018 Tax Levy Spending
Community Service
Debt Service
General Fund

61. NEW IN 2018 40% AG BOND CREDIT Ag2School passed into law in June
Permanent law into perpetuity
“Annually appropriated from the general fund.” Subdivision 5 of the statute
Farm and Private Timber lands taxes will go down in 284 school districts beginning in 2018
Over $40 million in tax relief statewide
Ag2School was part of the $650 billion 2017 Tax bill signed into law. It had been part of the 2016 tax bill which was vetoed by the Governor.
MREA had been working on a credit for farm land since 2015 along with a coalition of farm groups including the Farm Bureau, Farmers Union, Corn Growers, and Soybean Growers

62. 40% AG BOND CREDIT IN Marshall Public School District
Total savings in Marshall Public School District: $306,523
Savings per $500,000 in land value: $157.03
“We are happy that our advocacy efforts on behalf of agriculture land owners in the district were worthwhile and glad that those efforts and Ag2School will benefit farmers in the Marshall district.” School Board Vice Chair Matt Coleman
If the AG2School Credit could have been included in the levy information, there would have been a $178K or 2.7% reduction in the total tax levy for 2017 Payable in 2018!
Questions on Ag2School?
(Get these numbers from Truth in Taxation press release ed to you by MREA November 2. Diane at if you need it resent to you. Since it is a credit to individual taxpayers it will not show up on your levy reports.)

63. 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

64. 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. $108,660 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 $2,060
Especially helpful to those with lower incomes
Fill out state tax form M-1PR

65. 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)

66. 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

67. ISD 413, Marshall General Fund $3,548,425.70 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
$3,548,425.70
Community Service
$183,348.76
Debt Service
$3,029,734.59
Total Proposed School Tax Levy
$6,761,509.05
Now Therefore, Be it resolved by the School Board of Independent School District No. 413, Marshall, Minnesota, that the amount to be levied in 2017 to be collected in 2018 is set at $6,761, The clerk of the Marshall School Board is authorized to certify the proposed levy to the County Auditor of Lyon County, Minnesota.

68. Next Steps
Tonight-
Board will accept public comments and questions on proposed levy
December 18th-
Board will conduct a subsequent hearing (if necessary) and certify the property tax levy

69. ISD 413, Marshall
Public Comments and Questions

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