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, Marshall School 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 1 st through June 30th

14. ISD 413, Marshall, Minnesota Contrast of City/Township/County Levy Cycle to School District Levy Cycle J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E C J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E C J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E C Legislation City/Twp/County Tax Levy Decision Collection of Levy Budget Year School District Tax Levy Decision Collection of Levy Budget Year 201520132014

15. Budget and Levy Adoption Calendar J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E C J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E C J A N F E B M A R A P R M A Y J U N J U L A U G S E P O C T N O V D E 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 201520132014

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 SCHOOLS 2013-2014 BUDGET OVERVIEW REVENUES 12-13 Actual13-14 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 SCHOOLS 2013-2014 BUDGET OVERVIEW EXPENDITURES 12-13 Actual13-14 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%

22. 2013-2014 Revised Budget Analysis

23. General Fund Expenditures June 30th, 2013

24. ISD #413, Marshall Marshall Public Schools Summary of Staff Employed 2012-132013-14 12-13 vs 13-14 Staff ClassificationActualBudget Percent Change Certified Administration10.511.59.5% Teachers Full-time1621651.9% Part-time18.0220.2312.3% Nurses1.35 0.0% Non-Certified ASG/Confidential/Others28.527.5-3.5% Support Staff8982-7.9% Custodial20.1 0.0% Total329.47327.68-0.5%

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

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

27. ISD 413, Marshall

28. ISD #413, Marshall

30. 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

32. ISD #413, Marshall The Revised General Fund Budget for 2013- 2014 shows a $114,478 excess in revenues over expenditures. This includes a transfer of $31,717 from the 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.

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

34. General Fund Revenues By Source

36. General Fund Revenue Sources by Percent

37. ISD 413, Marshall General Fund Changes in Basic Per Pupil Allowance 1997-98$3,5812.17% 1998-99$3,530-1.42% 1999-00$3,7405.95% 2000-01$3,9645.99% 2001-02$4,0682.62% 2002-03*$4,60113.10% 2003-04$4,6010.00% 2004-05$4,6010.00% 2005-06$4,7833.96% 2006-07$4,9743.99% 2007-08$5,0742.01% 2008-09$5,1240.99% 2009-10$5,1240.00% 2010-11$5,1240.00% 2011-12$5,1740.98% 2012-13$5,2240.97% 2013-14$5,3021.49% Total Change Per Pupil$1,72148.06%

38. Revenue-Adjusted For Inflation

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

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

42. 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

43. 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

44. 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

46. 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

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

48. Property Tax History-$150K Parcel

49. Changing School District Property Taxes

50. Comparable Levies On Residential Homesteads

51. Changing Property Taxes On A $150K Residential Homestead

53. ISD 413, Marshall How are the Proposed 2013 School Taxes Spent?

54. How are the Proposed 2014 School Taxes Spent? General Fund Amount Provides funding for the district instructional programs, alternative compensation, integration program, also part of the costs for the maintenance of technology infrastructure and for the purchase of instructional equipment, building maintenance and Health and Safety $2.691,877.44 Community Education Fund Levy for Community Education Programs such as ECFE $187,117.65 Debt Service (Including OPEB) Levy for repayment of principal and interest on district debt $2,720,474.09 Total Levy $5,599,469.18

55. Pay 2013/Pay 2014 Levy Comparison Fund12 Pay 1313 Pay 14Increase or Decrease % Change General2,833,931.252,691,877.44 -142,053.81 -5.01% Community Service 184,213.55 187,117.65 2,904.10 1.58% General Debt Service 3,029,555.322,590,059.97 -439,495.35 -14.51% OPEB Debt Service 133,376.87 130,414.12 -2,962.75 -2.22% Total6,181,076.995,599,469.18 -581,607.81 -9.41%

57. ISD 413, Marshall Basic general education aid and levy formula (1) NTC 2012 15,402,826 (2) Sales Ratio 2012 98.6% (3) ANTC 2012 15,626,910 (4) Standard Levy Limit FY 2015 0.0% (5) Gen Education Basic Levy Limit 2013 0.00 APU-Estimate2014-2015 2486.00 Formula Allowance Pay 2014 5,806.00 (6) Basic General Education Revenue 14,433,716.00 (7) Basic General Education Aid Revenue FY 2015 14,433,716.00 (8) General Education Aid Percentage FY 2015 100.0%

58. ISD 413, Marshall District #413 Proposed Property Tax Stmt. for 2014

59. ISD 413, Marshall The School District Levy is decreasing by: $581,607.81 or 9.41%

60. Tax Levy History 1999 Pay 2000$5,149,862.382.60% Decrease 2000 Pay 2001$5,063,847.461.67% Decrease 2001 Pay 2002$1,780,058.9764.58% Decrease 2002 Pay 2003$1,685,744.135.30% Decrease 2003 Pay 2004$3,568,330.76111.68% Increase 2004 Pay 2005$3,556,922.390.32% Decrease 2005 Pay 2006$4,253,869.0019.59% Increase 2006 Pay 2007$4,442,638.194.44% Increase 2007 Pay 2008$5,427,675.7022.17% Increase 2008 Pay 2009$5,560,578.162.40% Increase 2009 Pay 2010$5,489,763.141.27% Decrease 2010 Pay 2011$5,714,432.294.09% Increase 2011 Pay 2012$5,880,186.242.90% Increase 2012 Pay 2013$6,181,076.995.12% Increase 2013 Pay 2014$5,599,469.189.41% Decrease

61. ISD 413, Marshall What are the main variables that cause property tax increases and decreases? 1. Changes in value of the individual property 2. Changes in class rates/history 3. Market Value Homestead Exclusion 4. Voter Approved Referendums 5. Ongoing Legislative Action 6. Changes in the total value of all property in the district

62. 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.

64. Net Tax Capacity Property Comparison DescriptionResidential Homestead Commercial Industrial Agricultural Homestead (Land & Buildings) Property Value$200,000 Tax Rate Pay 2014 1.00 %2.00%.50% Net Tax Capacity Amount $2,000.00$4,000.00$1,000.00

65. 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 www.taxes.state.mn.us

66. 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. $105,500 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 $2,580 Especially helpful to those with lower incomes Fill out state tax form M-1PR

67. 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) 296-3781

68. 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

69. ISD 413, Marshall 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: Now Therefore, Be it resolved by the School Board of Independent School District No. 413, Marshall, Minnesota, that the amount to be levied in 2013 to be collected in 2014 is set at $5,599,469.18. The clerk of the Marshall School Board is authorized to certify the proposed levy to the County Auditor of Lyon County, Minnesota. General Fund$2,691,877.44 Community Service $187,117.65 Debt Service$2,720,474.09 Total Proposed School Tax Levy$5,599,469.18

70. Next Steps Tonight-Board will accept public comments and questions on proposed levy December 16th-Board will conduct subsequent hearing (if necessary) and certify the 2014 property tax levy

71. ISD 413, Marshall Public Comments and Questions

72. THE END THANK YOU FOR ATTENDING!