Mn Property Tax Refund

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					      St. Michael-Albertville
Independent School District #885
  Truth in Taxation Hearing for
     Taxes Payable in 2010
     Welcome
       December 7, 2009
          Presented by:
Dr. Marcia Ziegler, Superintendent
        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.
   You are here for the school district’s annual
    required 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 Budget
C. Information on the District’s Proposed
   Tax Levy for Taxes Payable in 2010
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
        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 2010-11 is $594
        below the 2002-03 inflation adjusted amount
   For Fiscal 2011 and 2012, per-pupil funding is
    not projected to increase, while most districts’
    expenses will increase by at least 3-4%
    annually.
      Impact is budget cuts and
      levy referendums…
   With no increase in state funding many districts
    are facing projected budget shortfalls for FY 2011
    and anticipate the need for budget cuts.
   To meet local school budget shortfalls, on
    11/3/09, 58 Minnesota districts submitted
    proposals to voters on seeking support of
    increased operating levies: 41 Districts passed at
    least 1 operating levy question, 17 failed.
     Trends in General Education Formula Allowance
              for Minnesota School Districts
                      FY 03 – FY 11

                                                  Formula         Change      Formula Allow.       Annual
                  Formula          CPI-U         Allowance         Since        if Adjusted for   Funding
 Fiscal Year     Allowance      (2009=1.0) *     in 2011 $s       2002-03      Annual Inflation   Shortfall
   2002-03          4,601          0.8338           5,718             0              4,601            0
   2003-04          4,601          0.8520           5,596           -122             4,701          -100
   2004-05          4,601          0.8776           5,433           -285             4,843          -242
   2005-06          4,783          0.9110           5,441           -278             5,027          -244
   2006-07          4,974          0.9346           5,515           -203             5,157          -183
   2007-08          5,074          0.9692           5,425           -293             5,348          -274
   2008-09          5,124          1.0000           5,310           -408             5,518          -394
   2009-10          5,124          1.0132           5,241           -478             5,591          -467
   2010-11          5,124          1.0363           5,124           -594             5,718          -594

SOURCE: Formula Allowance and CPI-U are from Minnesota Department of Education,
K-12 Education Finance Overview, 2008-09

* Consumer Price Index for all urban consumers for the Minneapolis-St. Paul area.

Prepared by Ehlers & Associates, Inc.
      Contrast of City/County to
      School District Levy Cycle

   City/County - Budget Year is same as
    calendar year. The 2010 taxes provide
    revenue for the calendar year 2010 budget.
   Schools - Budget year begins July 1st and
    coincides with school year. The 2010 taxes
    provide revenue for the 2010-2011 school
    fiscal year. Budget will be adopted in June
    2010.
      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
                                   St. Michael-Albertville School District No. 885
                                        District Revenues and Expenditures
                                         Actual for FY 09, Budget for FY 10


                        2008-09 ACTUAL    2008-09 ACTUAL   June 30, 2009    2009-10 BUDGET   2009-10 BUDGET    JUNE 30, 2010
         FUND           REVENUES AND     EXPENDITURES &    ACTUAL FUND      REVENUES AND     EXPENDITURES &     PROJECTED
                         TRANSFERS IN    TRANSFERS OUT       BALANCE         TRANSFERS IN    TRANSFERS OUT    FUND BALANCE

General Unreserved         $34,382,316       $34,458,340       $5,191,261      $35,515,738      $36,887,621       $3,819,378

General Reserved            $2,418,892        $1,784,684       $2,333,092       $2,010,665       $1,767,978       $2,575,779

Food Service                $1,931,478        $1,681,222        $819,544        $2,061,502       $2,002,648         $878,398
Community Service
Unreserved                     $61,654           $52,587        $112,396           $74,000          $44,801         $141,595
Community Service
Reserved                    $3,497,331        $3,588,147         -$90,335       $3,872,913       $3,902,418        -$119,840

Building Construction         $746,091       $29,940,317       $4,917,014           $5,000       $4,920,000           $2,014

Debt Redemption            $11,892,923       $37,630,671     $47,200,722       $11,282,582      $10,758,386      $47,724,918

Trust                          $11,054           $11,700          $35,482           $4,000          $10,300          $29,182

Internal Service                                                       $0                                                 $0

Total All Funds            $54,941,739      $109,147,668     $60,519,176       $54,826,400      $60,294,152      $55,051,424
                       Revenue - All Funds $54,826,400
                             2009-2010 Budget
                            Building Const.,     Debt Service,
       Community Service,
                             $5,000, 0.0%      $11,282,582, 20.6%
        $3,946,913, 7.2%                                            Trust, $4,000, 0.0%



 Food Service,
$2,061,502, 3.8%




                                                                             General,
                                                                        $37,526,403, 68.4%
General Fund Budget Highlights
              2009-2010 General Fund Budget $37,526,403
                      Revenues by Major Source
                                    Other, $655,500,
               Federal, $154,082,        1.7%
                     0.4%                              Property Tax Levies,
                                                         $3,565,683, 9.5%




     State Aid,
 $33,151,138, 88.3%
   General Fund Budget Highlights
                                2009-2010 General Fund Budget
                       Expenditures by Program Area - Budget $38,655,599

                       Dist. Support        Pupil Support
                         Services            $2,665,460        Sites and
                         $768,891               6.9%           Buildings
District & School          2.0%                                $4,755,764
      Admin.                                                     12.3%
   $1,455,952
       3.8%                                                                        Other
                                                                                  $275,000
                                                                                    0.7%

Instructional
  Support
 $3,658,067
    9.5%



       Special Educ.
        Instruction                 Vocational                                Regular
         $4,123,578                Instruction                              Instruction
           10.7%                     $359,070                               $20,593,817
                                       0.9%                                    53.3%
         General Fund Budget Highlights
                                  2009-10 General Fund Budget
                            Expenditures by Object Category $38,655,599

                                                  Capital
                          Supplies and
                                              Expenditures,
                           Materials,
                                              $152,762, 0.4%       Other, $351,199,
                        $1,615,501, 4.2%
                                                                        0.9%


     Purchased
Services, $5,379,601,
       13.9%




Employee Benefits,
 $7,351,499, 19.0%
                                                                                Salaries and Wages,
                                                                                $23,805,037, 61.6%
Proposed 2010 Property
Tax Levy
   Determination of levy
   Comparison 2009 to 2010 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                      Step 4. The Legislature sets the formulas
determines the estimated market value for each           which determine school district levy limits. These
parcel of property in the county.                        are the maximum amounts of taxes that school
                                                         districts can levy in every category.


Step 2. The Legislature sets the formulas for             Step 5. The Minnesota Department of
tax capacity. (E.g., for homestead residential            Education calculates detailed levy limits for
property, tax capacity = 1% of first $500,000 in          each school district, based on the formulas
value + 1.25% of value over $500,000.) These              approved by the Legislature in step 4. These
formulas determine how much of the tax burden             limits tell districts the exact amounts that can be
will fall on different types of property.                 levied in every category.


Step 3. The County Auditor calculates the tax            Step 6. The School Board adopts a proposed
capacity for each parcel of property in the county       levy in September, based on the limits set in step
(based on values from step 1 and tax capacity            5. After a public hearing, the board adopts a
formulas from step 2), as well as the total tax          final levy in December. Final levy cannot be
capacity for each school district.                       more than the preliminary levy, except for
                                                         amounts approved by voters.

 Step 7. The County Auditor divides the final levy (determined by the             * For certain levy categories
                                                                                  (referendum, equity and
 school board in step 6) by the district's total tax capacity (determined in      transition levies), tax rates and
 step 3) to determine the tax rate needed to raise the proper levy amount.        levy amounts are based on
 The auditor multiplies this tax rate times each property's tax capacity, to      referendum market value,
 determine the school tax for that property.*                                     rather than tax capacity.
     Proposed Levy
     Payable in 2010
Schedule of events in approval of district’s
2009 (Payable 2010) tax levy
   September 8 – Dept. of Education prepared and distributed
    first draft of levy limit worksheets setting maximum
    authorized levy
   Sept 21: School board approved proposed levy amounts
   Mid-November: County mailed “Proposed Property Tax
    Statements” to all property owners
   December 7: Public hearing on proposed levy at regular
    meeting
   Following hearing school board will certify final levy amounts
St. Michael-Albertville School District No. 885
Comparison of Proposed Tax Levy Payable in 2010 to Actual Levy Payable in 2009

                                        Actual Levy          Proposed Levy
                    Fund               Payable in 2009       Payable in 2010       $ Change      % Change
General Fund
      Voter Approved Referendum                $2,070,149            $2,099,131       $28,982
      Equity                                     466,217               487,107        20,890
      Operating Capital                          414,688               421,989          7,301
      Health and Safety                          345,703               372,947        27,244
      Instructional Lease Levy                      6,734                43,648       36,914
      Safe Schools                               168,580               176,759          8,179
      Other                                        77,610                72,720        (4,890)
      Adjustments for Prior Years                 (18,997)              (26,959)       (7,962)
      Total, General Fund                      $3,530,683            $3,647,340      $116,657      3.3%
Community Service Fund
    Basic Community Education                    $172,127              $172,127           $0
    Early Childhood Family Education              79,497                80,185           688
    School-Age Child Care                         15,000                20,000         5,000
    Other                                          3,656                 2,997          (659)
    Adjustments for Prior Years                   33,570                27,033        (6,536)
    Total, Community Service Fund                $303,849              $302,342      ($1,507)     -0.5%
Debt Service Fund
      Voter Approved Debt Service              $9,069,381            $9,267,551     $198,171
      Adjustments for Prior Years                    176                11,503        11,327
       Total, Debt Service Fund                $9,069,557            $9,279,054     $209,497       2.3%
Total Levy, All Funds                         $12,904,090           $13,228,737      $324,647      2.5%
     Overview of Proposed Levy
          Payable in 2010

   The total proposed levy for 2010 is
    higher than the 2009 levy by $324,647,
    or 2.5%
   Law requires that we explain the reasons
    for the major increases in the levy
Explanation of Levy Changes
   Category: Voter Approved Referendum
   Change: +$28,982
   Use of funds: general operating expenses
   Reason for increase:
       Referendum Revenue is based upon the voter
        approved per pupil amount multiplied times
        resident pupil units.
       For taxes payable in 2010 resident pupil units are
        expected to increase by approximately 110, leading
        to an increase in revenue
    Explanation of Levy Changes
   Category: Health & Safety Levy
   Change: +$27,244
   Use of funds: State-approved capital
    projects related to health and safety
   Reason for increase:
       The amount of this levy is based on the
        estimated cost of qualifying state-approved
        projects
       The estimated cost of approved projects is
        slightly higher than in the previous year
    Explanation of Levy Changes
   Category: Instructional Lease Levy
   Change: +$36,914
   Use of funds: Leasing of instructional
    space
   Reason for increase:
       WTC did an addition to there building and
        some remodeling
    Explanation of Levy Changes
   Category: Voter Approved Debt Service
   Change: $198,171
   Use of funds: Payments on bonds
   Reason for increase:
       Payments on bonds are financed by a
        combination of property tax levies and state debt
        equalization aid
       Total required payments on the district’s bonds
        are increasing by approximately $470,000, but
        state aid is increasing by approximately $270,000
Impact on Taxpayers
   The next 2 slides show examples of changes
    in the school district portion of property taxes
    from 2007 to 2010
       Examples include school district taxes only
       All examples are based on a cumulative decrease
        in property value of 6.2% over this period
           Actual changes in value may be more or less

            than this for any parcel of property
           These figures are intended to provide a fair

            representation of what has happened to school
            district property taxes over this period for
            typical properties
Impact on Taxpayers
   Examples include taxes for the City of St.
    Michael
        school taxes in other parts of the district may be slightly
         higher or lower, due to variations in the impact of the
         state homestead and agricultural credits
   Figures for 2010 are preliminary estimates,
    based on the best data available now –
    final figures could change slightly
   Estimates were prepared by Ehlers &
    Associates, the district’s financial advisors
St. Michael-Albertville School District No. 885                                                                                                                 November 30, 2009
Estimated Changes in School Property Taxes, 2007 to 2010
Based on -6.2% Cumulative Changes in Property Value from 2007 to 2010 Taxes

                              Taxable         Actual         Taxable          Actual        Taxable          Actual        Taxable  Estimated               Change       Change
                              Market          Taxes          Market           Taxes         Market           Taxes         Market     Taxes                in Taxes     in Taxes
                             Value for       Payable        Value for        Payable       Value for        Payable       Value for  Payable                2007 to      2009 to
   Type of Property         2007 Taxes       in 2007       2008 Taxes        in 2008      2009 Taxes        in 2009      2010 Taxes  in 2010                 2010         2010
                             $106,564          $490         $108,696           $510        $108,696           $523        $100,000     $542                   $52          $19
                              159,847           815          163,043            843         163,043            863         150,000      892                    77          29
      Residential             213,129          1,139         217,391           1,176        217,391           1,204        200,000     1,242                  103          38
      Homestead               266,411          1,464         271,739           1,509        271,739           1,545        250,000     1,592                  128          47
                              319,693          1,788         326,087           1,842        326,087           1,886        300,000     1,942                  154          56
                              372,975          2,113         380,435           2,175        380,435           2,226        350,000     2,293                  180          67
                              426,257          2,433         434,783           2,500        434,783           2,559        400,000     2,643                  210          84
                              479,540          2,737         489,130           2,812        489,130           2,879        450,000     2,979                  242          100
                              532,822          3,078         543,478           3,174        543,478           3,249        500,000     3,310                  232          61
                             $319,693         $2,120        $326,087          $2,161       $326,087          $2,205       $300,000    $2,261                 $141          $56
      Commercial/             532,822          3,688         543,478           3,754        543,478           3,830        500,000     3,943                  255          113
       Industrial #           799,233          5,647         815,217           5,745        815,217           5,861        750,000     6,046                  399          185
                             1,065,644         7,607        1,086,957          7,736       1,086,957          7,892       1,000,000    8,149                  542          257
                             $532,822         $1,837        $543,478          $1,890       $543,478          $1,861       $500,000    $1,924                  $87          $63
      Agricultural            639,386          2,102         652,174           2,160        652,174           2,112        600,000     2,184                   82          72
      Homestead               745,951          2,367         760,870           2,430        760,870           2,362        700,000     2,444                   77          82
                              852,515          2,632         869,565           2,700        869,565           2,613        800,000     2,704                   72          91
      Apartments             $319,693         $2,186        $326,087          $2,243       $326,087          $2,295       $300,000    $2,376                 $190          $81
   (4 or more units)          426,257          2,915         434,783           2,991        434,783           3,060        400,000     3,168                  253          108
                              532,822          3,644         543,478           3,739        543,478           3,826        500,000     3,960                  316          134


Tax Rates
 Tax Capacity Rate                            45.259                          45.192                         46.140                         52.011
 Referendum Market Value Rate                0.11814                         0.12304                        0.12716                        0.14188


+ Figures above are for property in the City of St. Michael. Since the portion of the homestead credit deducted from school district taxes varies
  across municipalities, school taxes may be slightly different than shown above for homestead property in other portions of the school district.
General Notes
1. The figures in the table are based on school district taxes only, and do not include taxes for the city or township, county, state, or other taxing jurisdictions.
2. All estimates for 2010 taxes are preliminary estimates, based on the best data available as of the date above.
3. For all examples of properties, taxes are based on changes in taxable market value of 2.0% from 2007 to 2008 taxes, 0.0% from 2008 to 2009, and -8.0%
   from 2009 to 2010.
4. For agricultural homestead property, the value assumed for the house, garage, and one acre was $213,129 for 2007 taxes and $200,000 for 2010 taxes.
St. Michael-Albertville School District No. 885
Estimated Changes in School Property Taxes, 2007 to 2010
Based on -6.2% Cumulative Changes in Property Value from 2007 to 2010 Taxes

                                   Example 1: $150,000* Residential Homestead Property                                       Example 2: $500,000* Residential Homestead Property
                                $1,000                                                                                     $3,500

                                  $900
                                                                                                                           $3,000
                                  $800




                                                                                                   School Property Taxes
        School Property Taxes




                                  $700                                                                                     $2,500

                                  $600                                                                                     $2,000
                                  $500                                                                                                                                       $3,310
                                                                                    $892                                             $3,078       $3,174        $3,249
                                                         $843         $863                                                 $1,500
                                  $400      $815

                                  $300                                                                                     $1,000
                                  $200
                                                                                                                            $500
                                  $100
                                    $0                                                                                        $0
                                            2007         2008         2009        2010 est.                                           2007         2008          2009       2010 est.
                                                     Year Taxes are Payable                                                                    Year Taxes are Payable


                                    Example 3: $500,000* Commercial-Industrial Property                                      Example 4: $1,000,000* Commercial-Industrial Property

                                $4,000                                                                                     $10,000
                                                                                                                            $9,000
                                $3,500
                                                                                                                            $8,000
  School Property Taxes




                                $3,000



                                                                                                   School Property Taxes
                                                                                                                            $7,000
                                $2,500                                                                                      $6,000
                                $2,000                               $3,830        $3,943                                   $5,000
                                           $3,688       $3,754
                                                                                                                            $4,000                 $7,736       $7,892      $8,149
                                $1,500                                                                                                $7,607
                                                                                                                            $3,000
                                $1,000
                                                                                                                            $2,000
                                 $500                                                                                       $1,000
                                   $0                                                                                           $0
                                            2007         2008         2009        2010 est.                                            2007         2008         2009      2010 est.
                                                     Year Taxes are Payable                                                                     Year Taxes are Payable

* For all four examples of properties, the value shown in the title of the chart is the taxable market value for taxes payable in 2010. Taxes are calculated based on changes in
  taxable market value of 2.0% from 2007 to 2008 taxes, 0.0% from 2008 to 2009, and -8.0% from 2009 to 2010.
    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
    State Property Tax Refunds
   Minnesota Property Tax Refund (aka
    “Circuit Breaker” Refund)
       Has existed since 1970s
       Available to all owners of homestead property
       Annual income must be approx. $96,940 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 $2,310
       Especially helpful to those with lower incomes
       Fill out state tax form M-1PR
    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
        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
Next Steps
   Board will accept public comments
    and questions on proposed levy
   Board action to certify the 2010 school
    tax levy
Public Comments and Questions

				
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