Local Issues:Impacts of LegislationLocal Issues:

Impacts of Legislation

Rie GilsdorfMatt Robinson

Rie GilsdorfMatt Robinson

Removal of General Education Levy:History Review

Removal of General Education Levy:History Review

Portion of revenue received through property tax

Ended in 2001Lost Interest Revenue LevyReferendum Revenue Transfer

Portion of revenue received through property tax

Ended in 2001Lost Interest Revenue LevyReferendum Revenue Transfer

Removal of General Education Levy:

Example of Impact

Removal of General Education Levy:

Example of ImpactISD 196: Rosemount, Apple Valley, Eagan (09/02)Board unanimously approved levy - for maximum amount allowable by StateTotal amount up 2.64%

Stated reasons for increase:Lost interest revenue levy / Removal of General Education Levy

Rise in property valuesReferendum Revenue Transfer

ISD 196: Rosemount, Apple Valley, Eagan (09/02)Board unanimously approved levy - for maximum amount allowable by StateTotal amount up 2.64%

Stated reasons for increase:Lost interest revenue levy / Removal of General Education Levy

Rise in property valuesReferendum Revenue Transfer

Corporate Tax Relief: A History Review

Corporate Tax Relief: A History Review

1971’s Minnesota Miracle: Commercial Property Tax Rate boosted to 3%

Beginning with taxes payable in 2002, Commercial tax rate lowered to 2%

1971’s Minnesota Miracle: Commercial Property Tax Rate boosted to 3%

Beginning with taxes payable in 2002, Commercial tax rate lowered to 2%

Corporate Tax Relief:Impact: Farmington District

192

Corporate Tax Relief:Impact: Farmington District

192

2002 Combined bond and excess levy a 35% hike in levied $$

Offset by housing growth, individual taxes only up by 14%

Bond alone accounts for $164 increase for average home

2002 Combined bond and excess levy a 35% hike in levied $$

Offset by housing growth, individual taxes only up by 14%

Bond alone accounts for $164 increase for average home

Corporate Tax Relief:Impact: Burnsville-Eagan-

Savage, D 191

Corporate Tax Relief:Impact: Burnsville-Eagan-

Savage, D 191

$5 million budget cuts for 2003

Cut transportation by increasing walking distances

Insufficient parent interest in pay-to-ride system

$5 million budget cuts for 2003

Cut transportation by increasing walking distances

Insufficient parent interest in pay-to-ride system

Corporate Tax Relief:Impact: Forest Lake School

District

Corporate Tax Relief:Impact: Forest Lake School

District

November 2005 Levy would have extended 2001 Levy

Defeated by 60% of votersNew Board Members campaigned on Anti-Tax platform in same election

Board then faced 10% reduction in Operations budget

November 2005 Levy would have extended 2001 Levy

Defeated by 60% of votersNew Board Members campaigned on Anti-Tax platform in same election

Board then faced 10% reduction in Operations budget

Stagnant Basic Allowance:History

Stagnant Basic Allowance:History

General Education Formula Allowance

2002: $4,0682003: $4,601 (up $533)2004: $4,601 (up $0 - Inflation = 2.66%)

2005: $4,601 (up $0 - Inflation = 3.39%)

General Education Formula Allowance

2002: $4,0682003: $4,601 (up $533)2004: $4,601 (up $0 - Inflation = 2.66%)

2005: $4,601 (up $0 - Inflation = 3.39%)

Stagnant Basic Allowance:Impact

Stagnant Basic Allowance:Impact

ISD 196: Rosemount, Apple Valley, Eagan

2002-2003 (One year prior to stagnation)Projected revenues increased by $18.8 mil

Increase in general ed revenue ($104/student) Increase in $ set aside for transportation Referendum levy revenue Increase in LEP revenue

ISD 196: Rosemount, Apple Valley, Eagan

2002-2003 (One year prior to stagnation)Projected revenues increased by $18.8 mil

Increase in general ed revenue ($104/student) Increase in $ set aside for transportation Referendum levy revenue Increase in LEP revenue

Stagnant Basic Allowance:Impact

Stagnant Basic Allowance:Impact

ISD 196: Rosemount, Apple Valley, Eagan2003-2004 (Preliminary)

Budget overspends revenue in every categoryEnrollment projected to be stableAssumes 4.5% increase in salariesAllows 3% increase in instructional allocationsIncreases secondary co-curricular support by 3%Keeps $8 per pupil staff development allocation

Acknowledges that changes due to new legislation are unknown and will be worked into the final budget in the fall.

ISD 196: Rosemount, Apple Valley, Eagan2003-2004 (Preliminary)

Budget overspends revenue in every categoryEnrollment projected to be stableAssumes 4.5% increase in salariesAllows 3% increase in instructional allocationsIncreases secondary co-curricular support by 3%Keeps $8 per pupil staff development allocation

Acknowledges that changes due to new legislation are unknown and will be worked into the final budget in the fall.

Stagnant Basic Allowance:Impact

Stagnant Basic Allowance:Impact

ISD 196: Rosemount, Apple Valley, Eagan Projected 2004-2005

Budget reflects a $14 million deficit $7.5 million expenditure reduction Shift technology to capital expenses ($2 mil) Every fund is expecting a deficit

Impacted by the General Education Formula allowance freeze from 03-05

Fund balance spent down since the enactment of the last levy (2001)

Causes of deficitPressure from stagnant state supportDeclining enrollmentInflation

ISD 196: Rosemount, Apple Valley, Eagan Projected 2004-2005

Budget reflects a $14 million deficit $7.5 million expenditure reduction Shift technology to capital expenses ($2 mil) Every fund is expecting a deficit

Impacted by the General Education Formula allowance freeze from 03-05

Fund balance spent down since the enactment of the last levy (2001)

Causes of deficitPressure from stagnant state supportDeclining enrollmentInflation

Stagnant Basic Allowance:Impact

Stagnant Basic Allowance:Impact

ISD 194: Lakeville School District (2003)

Board wrestles with $2.3 mil deficit caused by:

Stagnant increases in basic allowance6% District Spending Increases

Teacher’s salaries unknown - contract to expire

ISD 194: Lakeville School District (2003)

Board wrestles with $2.3 mil deficit caused by:

Stagnant increases in basic allowance6% District Spending Increases

Teacher’s salaries unknown - contract to expire

Statutory Operating Debt:Definition

Statutory Operating Debt:Definition

NegativeNet Unreserved General Fund Balance

Exceeding 2.5% of General Fund Expenditures

NegativeNet Unreserved General Fund Balance

Exceeding 2.5% of General Fund Expenditures

Statutory Operating Debt:Statutory Operating Debt:

How do districts get there?

How do they recover?

How do districts get there?

How do they recover?

Statutory Operating Debt: Case #1: Prinsburg

Statutory Operating Debt: Case #1: Prinsburg

$200,000 or -71% in 2005“Common District” No regular-education students

Must provide Special Education to private school students

$200,000 or -71% in 2005“Common District” No regular-education students

Must provide Special Education to private school students

Statutory Operating Debt: Prinsburg Recovery

Statutory Operating Debt: Prinsburg Recovery

$47,000 or -16% in 2006

Requested Special Levy Authority from Legislature

Able to exceed Levy Cap

$47,000 or -16% in 2006

Requested Special Levy Authority from Legislature

Able to exceed Levy Cap

Statutory Operating Debt: Case #2: Main Street

Statutory Operating Debt: Case #2: Main Street

$16,200 or -25% in 2005Performing Arts charter school

Opened in 2-year period when start-up funds not available

Would have been $93,000

$16,200 or -25% in 2005Performing Arts charter school

Opened in 2-year period when start-up funds not available

Would have been $93,000

Statutory Operating Debt: Main Street Recovery

Statutory Operating Debt: Main Street Recovery

$77,000 or -4.68% in 2006Gen Fund total from $63,000 to $1.6 million by recruitment

But, build-out of laboratory caused rent to increase

Now out of SOD for 2007

$77,000 or -4.68% in 2006Gen Fund total from $63,000 to $1.6 million by recruitment

But, build-out of laboratory caused rent to increase

Now out of SOD for 2007

Conclusion: the Triple Whammy

Conclusion: the Triple Whammy

Removal of the General Education Levy and addition of Levy Cap

Corporate Tax Rate CutStagnant Basic Revenue

Had real consequences for Districts

Removal of the General Education Levy and addition of Levy Cap

Corporate Tax Rate CutStagnant Basic Revenue

Had real consequences for Districts