1. Fridley Public Schools ISD #14 Public Hearing for Taxes Payable in 2012

2. WELCOME December 20, 2011 Presented by: Rochel Manders Director of Finance

3. Agenda for Hearing A.State Funding of Schools B.Current District Budget and Prior Year Actual Financial Results C.Homestead Credit vs Exclusion Programs D.District’s Proposed 2012 Tax Levy E.Public Comments and Questions

4. School Funding is Highly Regulated by the State State sets formulas which determine revenue mostly driven by pupil counts State sets property tax levy caps State requires school boards to submit referendums for operating and capital needs to voters for approval

5. State Funding for Schools Has Not Kept Pace with Inflation Increases in basic general education revenue per pupil have been less than inflation For Fiscal 2012 and 2013, basic per-pupil funding is projected to increase by 1% per year, while district expenses will likely increase (without budget cuts) by at least 2-3% annually

7. Impact is Budget Cuts and Levy Referendums With minimal increases in state funding expected, many districts are facing projected budget shortfalls for FY 2013 and FY 2014, and anticipate the need for budget cuts To meet local school budget shortfalls, on Nov. 8, 2011, Fridley school district submitted two questions on the ballot seeking renewals of a referendum and capital projects levy Both questions passed with approximately 73% voter approval

8. Budget Information All school districts’ budgets are divided into separate funds, based on purposes of revenue, as required by law For our district, 8 funds: General Food Service Community Service Building Construction General Debt Service OPEB Debt Service Internal Service OPEB Trust

14. The Homestead Credit Change The 2011 legislature Repealed the Homestead Market Value Credit Created the Homestead Market Value Exclusion Effective with calendar year 2012

15. The Homestead MV Credit (old law) Affected only homestead properties with market values less than $413,000 Maximum credit of $304 on a $76,000 home Credit declined as market value increased

16. The Homestead MV Exclusion (new law) Excludes a portion of the market value on residential homesteads with a market value of less than $413,000 Formula is similar to homestead credit maximum exclusion is for a $76,000 home declining to $0 for homes with a value of $413,000 or more

17. Overall Impact of The Change Increases in property taxes for almost all taxpayers due to the uneven exchange in programs Tax increases will be largest in communities where a large share of the tax base is lower- valued homes (exclusion causes a larger reduction in tax base increasing tax rates)

19. Overview of Proposed Levy Payable in 2012 The total 2012 proposed property tax levy will decrease from 2011 by 4.8% or $435,769 Total proposed levy includes the operating referendum and capital projects levy approved by voters that was not included in the proposed levy in September 2011

20. Explanation of Levy Changes Category: Voter Approved Operating Referendum Change: ($161,108) Use of funds: general operating expenses Reason for decrease: Funding is based on the voter-approved allowance of $412.52 multiplied times resident pupils in the district and is provided through a combination of local tax levies and state aid Voters approved the operating referendum renewal included on the November 8 ballot Because the district’s total property value decreased the share of funding provided through the tax levy is decreasing State aid will increase by a similar amount so there will be little net change in revenue

21. Explanation of Levy Changes Category: Capital Projects Change: ($79,454) Use of funds: facility maintenance projects and technology Reason for decrease: Funding is based the voter-approved rate of 5.47% multiplied times the district’s net tax capacity Voters approved the capital projects levy renewal included on the November 8 ballot Because the district’s total property value (net tax capacity) decreased the funding provided through the tax levy is decreasing

22. Explanation of Levy Changes Category: Deferred Maintenance/Health & Safety Change: ($596,718) Use of funds: State-approved capital projects related to deferred maintenance and health & safety projects Reason for decrease: The levy is based on the estimated cost of qualifying state- approved projects The estimated cost of approved projects is lower than the previous year

23. Explanation of Levy Changes Category: Adjustments for Prior Years Change: $301,482 Use of funds: various purposes Reason for increase: Each year the amounts for many levy categories are based on estimates of values and expenses for future years In later years the estimates are updated and levy amounts are changed through adjustments to the current levy A negative TIF (tax increment financing) adjustment of $442,780 was included in the prior year levies and no such adjustment in included in the 2012 levies

24. Explanation of Levy Changes Category: Other Debt Service Change: $128,520 Use of funds: Payments on bonds Reason for increase: Alternative facilities bonds were issued in 2007 to provide funds for health and safety projects which were approved by the Commissioner of Education Planned increase in payments on alternative facilities bonds per the amortization schedule

25. Impact on Taxpayers Following is a table and graphs showing examples of changes in the school district portion of property taxes from 2009 to 2012 Examples include school district taxes only All examples are based on a 14.8% decrease in property value over this period

28. Public Comments and Questions