Truth in Taxation Law

St. Michael-AlbertvilleIndependent School District #885

Truth in Taxation Hearing forTaxes Payable in 2013

Truth in Taxation Law

State law initially approved in 1988 The 2009 legislature made several

changes: Property tax hearing can now be held at regular

meeting. Hearing must be at 6:00 PM or later. Levy may be adopted at 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.

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 over the prior year

Specific purposes and reasons for which taxes are being increased

District must also allow for public comments

Agenda for Hearing

A. Background on School Funding, Property Tax Levies, and Budgets

B. Information on District BudgetC. Information on the District’s

Proposed Tax Levy for Taxes Payable in 2013

D. Public Comments and Questions

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.”

As a result… School District Revenues and Taxes Are 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

Basic General EducationAdjusted for Inflation

State Funding for Schools Has Not Kept Pace with Inflation

Increases in basic general education revenue per pupil have been less than inflation Per-pupil revenue for fiscal year 2012-13 is

$426 below the 2002-03 CPI inflation adjusted amount and $859 below IPD inflation adjusted amount

Per-pupil funding increased $50 for fiscal 2012 and $50 for fiscal 2013.

STMA general education revenue per student is $5,631, ranking 336 out of 338

STMA referendum is $695

2003200420052006200720082009201020112012201380.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

93.9%

89.7%

88.8%

87.1%

85.8% 85.3%

STATE GENERAL EDUCATION FOR-MULA AS PERCENT OF FORMULA PLUS

REFERENDUM REVENUE

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

20%

40%

60%

80%

100%

120%

34%

11%10%3%

26%

0%

100%

42%

Referendum Debt Service Health & Safety Oper Capital

State Share of Revenue for MajorEqualized Levies

Source: MDE

15

School Shift SummaryFebruary 2012 Forecast

Aid Payment Shift @ 64.3 – 35.7 (vs 90-10) $1.873 Billion

Property Tax Shift (@ 48.6% of Gross Levy) $563 Million

_____________

Total School Shift (as of 6/30/2013) $2.436 Billion

Contrast of City/County to School District Levy Cycle

City/County - Budget Year is same as calendar year. The 2012 taxes provide revenue for the calendar year 2012 budget.

Schools - Budget year begins July 1st and coincides with school year. The 2013 taxes provide revenue for the 2013-2014 school fiscal year. Budget will be adopted in June 2013.

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

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.

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 Service Building Construction Debt Service Trust

FUND

2011-12 Actual Revenues and

Transfers In

2011-12 Actual Expenditures and Transfers

Out

June 30, 2012 Actual Fund

Balance

2012-13 Budget Revenues and

Transfers In

2012-13 Budget Expenditures and Transfers

Out

June 30, 2013 Projected Fund

Balance

General Fund/Restricted $3,153,043 $3,836,692 $1,887,074 $2,073,007 $2,095,099 $1,864,982

General Fund/Unrestricted $40,303,517 $39,074,758 $6,654,386 $42,484,086 $41,884,102 $7,254,370

Food Service $2,358,078 $2,140,188 $1,468,961 $2,382,273 $2,310,075 $1,541,159

Community Service Fund $4,506,902 $4,167,170 $775,253 $4,326,796 $4,189,053 $912,996

Building Construction Fund $47,536 $871,949 $137,823 $100 $250,786 ($112,863)

Debt Service Fund $24,975,940 $68,762,600 $3,034,140 $13,336,105 $12,795,585 $3,574,660

Trust Fund $21,517 $15,450 $34,667 $16,100 $18,050 $32,717

Internal Service $0 $0

Total – All Funds $75,366,533 $118,868,807 $13,992,304 $64,618,467 $63,542,750 $15,068,021

St. Michael-Albertville School District No. 885District Revenues and Expenditures

Actual for FY 2012, Budget for FY 2013

Revenue - All Funds $64,618,4672012-2013 Budget

General, $44,557,093 69.0%

Trust, $16,100 0.0%

Debt Service, $13,336,105 20.6%

Building Const., $100, 0.0%Community Service,

$4,326,796 6.7%

Food Service, $2,382,273 3.7%

General Fund Budget Highlights

2012-2013 General Fund Budget $44,557,093Revenues by Major Source

Federal $119,855

0.3%

Other $723,867

1.6% Property Tax Levies

$3,781,571 8.5%

State Aid

$39,932,517 89.6%

2011-12Federal $730,560State $37,172,449Levies $3,554,745


2012-2013 General Fund BudgetExpenditures by Program Area - Budget $43,979,201

Regular Instruction

$23,398,970 53.2%

Vocational Instruction$755,370

1.7%

Special Educ. Instruction$4,711,876

10.7%

Instructional Support

$3,905,798 8.9%

District & School Admin.

$1,517,7093.5%

Dist. Support Services$889,866

2.0%

Pupil Support$3,009,874

6.9%

Other$190,000

0.4%

Sites and Buildings

$5,599,738 12.7%


2012-2013 General Fund BudgetExpenditures by Object Category $43,979,201

Purchased Services, $6,044,341

13.7%

Capital Expenditures,

$1,224,6387 2.8%

Supplies and Materials,

$2,063,025 4.7% Other, $115,762 0.3%

Employee Benefits $8,434,811 19.2%

Salaries and Wages, $26,096,624 59.3%

Proposed 2013 Property Tax Levy

Determination of levy Comparison 2012 to 2013 levies Specific reasons for changes in

tax levy Impact on taxpayers

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

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

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

Minnesota School District Property Taxes - Key Steps in the Process

Step 1. The City or County Assessor determines the estimated market value for each parcel of property in the county.

Step 4. The Legislature sets the formulas which determine school district levy limits. These are the maximum amounts of taxes that school districts can levy in every category.

Step 2. The Legislature sets the formulas for tax capacity. (E.g., for homestead residential property, tax capacity = 1% of first $500,000 in value + 1.25% of value over $500,000.) These formulas determine how much of the tax burden will fall on different types of property.

Step 5. The Minnesota Department of Education calculates detailed levy limits for each school district, based on the formulas approved by the Legislature in step 4. These limits tell districts the exact amounts that can be levied in every category.

Step 6. The School Board adopts a proposed levy in September, based on the limits set in step 5. After a public hearing, the board adopts a final levy in December. Final levy cannot be more than the preliminary levy, except for amounts approved by voters.

Step 3. The County Auditor calculates the tax capacity for each parcel of property in the county (based on values from step 1 and tax capacity formulas from step 2), as well as the total tax capacity for each school district.

Step 7. The County Auditor divides the final levy (determined by the school board in step 6) by the district's total tax capacity (determined in step 3) to determine the tax rate needed to raise the proper levy amount. The auditor multiplies this tax rate times each property's tax capacity, to determine the school tax for that property.*

* For certain levy categories (referendum, equity and transition levies), tax rates and levy amounts are based on referendum market value,

rather than tax capacity.

Proposed Levy Payable in 2012

Schedule of events in approval of district’s 2012 (Payable 2013) tax levy

September 12 – Dept. of Education prepared and distributed first draft of levy limit worksheets setting maximum authorized levy

Sept 17: School board approved proposed levy amounts

Mid-November: County mailed “Proposed Property Tax Statements” to all property owners

December 3: Public hearing on proposed levy at regular meeting

Following hearing school board will certify final levy amounts

St. Michael-Albertville School District No. 885Comparison of Proposed Tax Levy Payable in 2013 to Actual Levy Payable in 2012

Actual Levy Proposed LevyPayable in 2012 Payable in 2013 $ Change % Change

General FundVoter Approved Referendum $2,424,707 $2,333,320 ($91,387)

Equity 386,912 390,527 3,615Operating Capital 309,459 301,795 (7,664)

Health and Safety 158,733 229,034 70,301Instructional Lease Levy 55,40

656,868 1,462

Safe Schools 192,228 197,296 5,068Other 184,926 181,078 (3,848)Adjustments for Prior Years (30,801) (51,823)

(21,022)Total, General Fund $3,681,570 $3,638,095 ($43,475) (1.18%)

Community Service FundBasic Community Education $159,908 $155,137 ($4,771)Early Childhood Family Education 66,850 66,321 (529)

School-Age Child Care 15,000 30,000 $15,000Other 2,977 3,552 575Adjustments for Prior Years 6,753 18,095 11,342Total, Community Service Fund $251,488 $273,105 $21,617 8.60%

Debt Service FundVoter Approved Debt Service $7,674,585 $7,918,551 $243,966

Adjustments for Prior Years (4,556) (402,923) (398,367)

Total, Debt Service Fund $7,670,029 $7,515,628 ($154,401) (2.01%)

Total Levy, All Funds $11,603,089 $11,426,827 ($176,261) (1.52%)

Fund

Overview of Proposed Levy

Payable in 2013

The total proposed levy for 2013 is lower than the 2012 levy by $176,261, or 1.52%

Law requires that we explain the reasons for the major changes in the levy

Explanation of Levy Changes

Category: Voter Approved Referendum

Change: -$91,387 Use of funds: general operating

expenses Reason for decrease:

Referendum Revenue is based upon the voter approved per pupil amount multiplied times resident pupil units.

For taxes payable in 2013 resident pupil units were estimated to slightly decrease (open enrollment and tuition in students not included)

Referendum Aid (state equalization) will increase


Category: Operating Capital Levy Change: -$7,664) Use of funds: Equipment,

Technology, Software, Textbooks Reason for decrease:

Adjusted cost pupil unit increased (all students)

Operating Capital Aid (state equalization) will increase


Category: Equity and Safe Schools Change: +$3,615 and $5,068 Use of funds: Equity for general fund

use and Safe Schools for SRO’s, counselors, social workers, nurses, psychologists, drug and suicide prevention programs

Reason for increase: Based upon $46 and $30 multiplied by adjusted cost

pupil unit; pupil units are expected to increase by approximately 170, leading to an increase in revenue


Category: Health and Safety Change: +$70,301 Use of funds: Building and grounds

maintenance and repair for health and safety

Reason for increase: Approval of projects by state Prior year’s request was lower than

usual


Category: School-Age Child Care Change: +$15,000 Use of funds: Children who require

extra staff support in the Kids Play program

Reason for increase: Increased costs associated with

serving students requiring extra staff support


Category: Community Service Adjustments from Prior Years

Change: +$11,342 Use of funds: Children who require extra

staff support in the Kids Play program Reason for increase:

Under reported costs in prior years associated with serving students requiring extra staff support


Category: Debt Service Change: +$243,966 Use of funds: Payment of voter

approved bonds for buildings Reason for increase:

Increase required to service bond repayment


Category: Adjustment for Prior Year Debt Service

Change: -$398,367 Use of funds: Payment of voter

approved bonds for buildings Reason for decrease:

Repayment of capital loan no longer required levy for debt excess repayment

STMA Levy History

2007 2008 2009 2010 2011 2012 2013$10,000,000

$10,500,000

$11,000,000

$11,500,000

$12,000,000

$12,500,000

$13,000,000

$13,500,000

$11,284,336

$12,431,781

$12,904,090

$13,228,737

$11,980,380

$11,603,089

$11,426,827

Public Comments and Questions

Truth in Taxation Law

Documents