South Washington County Schools Truth in Taxation Hearing for Taxes Payable in 2007 December 5 2006 Presented by Amy Schultz Director of Finance by pdx47913

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									South Washington County Schools
    Truth in Taxation Hearing for
       Taxes Payable in 2007


      December 5, 2006
         Presented by:
          Amy Schultz
      Director of Finance
Truth in Taxation Law
   State law initially approved in 1988
   Two major requirements
       Counties must send out “proposed property tax
        statements” in November, based on preliminary
        tax levies set by all taxing jurisdictions (counties,
        cities, townships, school districts, etc.)
       Most taxing jurisdictions must hold a hearing prior
        to certifying the final levy
   You are here for the school district’s
    annual required hearing
Truth in Taxation Hearings
   School district is required by law to
    present information on:
       The budget for the current school year,
        including sources of revenue and
        expenditures by program area
       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 allow for public comments
Agenda for Hearing
A. Information on District Budget
B. General Background Information on
   School District Property Taxes
C. Information on the District’s Proposed
   Tax Levy for Taxes Payable in 2007
D. Public Comments
A. 2006-07 Budget
   All school districts’ budgets are divided
    into separate funds, as required by law
   For our district, 6 funds:
       General fund
       Food service fund
       Community service fund
       Building construction fund
       Debt service fund
       Trust and agency fund
A. Overview of Funds
   General Fund
       Accounts for most daily operating expenses of
        district - everything not included in other funds;
        80.0% of revenues for 2006-07
          Salaries, benefits, supplies, other costs for

           instruction, administration, transportation,
           custodial services, etc.
          Insurance, utilities, other purchased services
A. Overview of Funds
   Food Service Fund
       Accounts for all expenses of the breakfast and
        lunch programs
   Community Service Fund
       Accounts for expenses of educational and
        recreational programs not part of the “regular” K-
        12 and special education programs
            Early childhood family education
            Programs for adults
            Recreational programs
A. Overview of Funds
   Building Construction Fund
       Accounts for revenues and expenses
        associated with voter-approved building
        programs
   Debt Service Fund
       Accounts for principal and interest
        payments on the district’s voter-approved
        building bonds
A. Overview of Funds
   Trust and Agency Fund
       Accounts for gifts and donations to the
        school district
            A. 2006-07 Budget by Fund
South Washington County Schools
2006-07 Budget by Fund

                                          Food       Community  Building      Debt       Trust &      Total,
Fund                        General      Service      Service Construction   Service     Agency     All Funds

Beginning Fund Balance      25,249,944   1,197,783    1,304,461   5,200,001 62,485,622     64,374   95,502,185

Revenues                   141,453,119   6,163,580    8,330,607   4,926,000 15,685,681    250,300 176,809,287
Expenditures               144,666,084   6,308,881    8,745,113   8,850,059 16,798,710    250,300 185,619,147

Est. Ending Fund Balance    22,036,979   1,052,482      889,955   1,275,942 61,372,593     64,374   86,692,325
A. 2006-07 Revenues by Fund
        2006-07 Revenue Budget by Fund




80.0%                                    General
                                         Food Svc.
                                  3.5%
                                         Comm. Svc.
                                  4.7%   Bldg. Constr.
                                  2.8%   Debt Svc.
                              8.9%       Trust & Agency

                           0.1%
          A. General Fund Budget Highlights

2006-07 General Fund Budget
Revenues by Major Source
                                  79.2%

Property Taxes       23,662,245
State Aid           112,045,389                    Property Taxes
Federal Aid           3,693,285             2.6%
                                                   State Aid
Other                 2,052,200             1.5%
Total               141,453,119
                                                   Federal Aid
                                                   Other

                                          16.7%
             A. General Fund Budget Highlights

2006-07 General Fund Budget
Expenditures by Major Program Area            15.7%       14.8%           Administration

Administration                 5,819,000                                  District Support Svcs.
District Support Svcs.         4,247,701   1.7%                           Regular Instruction
Regular Instruction           72,093,316
                                                                  10.1%
Vocational Instruction         2,469,188                                  Vocational Instruction
Special Education             22,647,312                          0.9%
Instr./Pupil Support Svcs.    21,460,835                          4.0%    Special Education
Buildings and Sites           14,621,268
Other                          1,307,464                          2.9%    Instr./Pupil Support Svcs.
Total                        144,666,084
                                                                          Buildings and Sites

                                                                          Other
                                                  49.8%
           A. General Fund Budget Highlights

2006-07 General Fund Budget
Expenditures by Object Category               19.4%             Salaries and Wages

Salaries and Wages       88,132,016                   11.7%     Employee Benefits
Employee Benefits        28,083,993
Purchased Services       16,907,262
Supplies & Materials      4,673,372                             Purchased Services
Capital Expenditures      5,985,367                     3.2%
Other                       884,074                      4.1%   Supplies & Materials
Total                   144,666,084
                                                        0.6%    Capital Expenditures

                                                                Other

                                      60.9%
B. 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
    B. Property Tax Background
   School District Property Taxes
       Each school district may levy taxes in up to
        30 different categories
       “Levy limits” (maximum levy amounts) for all
        categories are set either by:
            State law, or
            Voter approval
       Minnesota Department of Education (MDE)
        calculates detailed levy limits for each district
    B. 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.
C. Proposed Levy Payable in 2007
   Schedule of events in approval of district’s
    2006 (Payable 2007) tax levy
       Early September – Dept. of Education prepared
        and distributed first draft of levy limit worksheets
       Sept. 21 – School board approved proposed levy
        amounts
       Mid-November – County sent out “Proposed
        Property Tax Statements”
       December 5 – Public hearing on proposed levy
       December 14 – School board will certify final levy
        amounts
C. Proposed Levy Payable in 2007
 South Washington County School District No. 833
 Comparison of Proposed Tax Levy Payable in 2007 to Actual Levy Payable in 2006

                                                Actual Levy      Proposed Levy                  Percent
 Fund Levy Category                            Payable in 2006   Payable in 2007    Change      Change
 General Fund
       Voter Approved Referendum                 15,163,611        16,330,435       1,166,824
       Voter Approved Capital Project Levy            0             1,000,000       1,000,000
       Equity                                     1,294,313         1,476,927        182,614
       Operating Capital                          1,708,520         1,905,216        196,695
       Health and Safety                           994,854          1,435,407        440,554
       Alternative Facilities Non-Bond            4,881,000         3,687,977      -1,193,023
       Crime/Safe Schools                          512,051           522,843          10,792
       Building Lease                             1,450,934         1,438,238        -12,696
       Other                                      1,539,692         1,555,241         15,548
       Adjustments for Prior Years                 467,898           218,497        -249,401
       Total, General Fund                       28,012,873        29,570,781       1,557,908    5.6%
 Community Service Fund
      Basic Community Education                    659,778           659,778           0
      Early Childhood Family Education             396,600           393,693        -2,907
      Other                                        174,537           206,004        31,467
      Adjustments for Prior Years                    -593             31,038        31,631
      Total, Community Service Fund               1,230,322         1,290,513       60,191       4.9%
 Debt Service Fund
        Voter Approved Debt Service              12,758,810        16,841,156      4,082,346
        Debt Service - Alt. Facilities Bonds       479,983          670,611         190,628
        Other Debt Service                         556,784          691,297         134,513
        Adjustments for Prior Years                 2,743           115,488         112,745
        Reduction for Excess Fund Balance         -747,469              0           747,469
        Total, Debt Service Fund                 13,050,852        18,318,552      5,267,700    40.4%
 Total Levy, All Funds                           42,294,047        49,179,845      6,885,799    16.3%
C. Proposed Levy Payable in 2007 -
Overview
   Total levy increased by $6,885,799, or
    16.3%, from 2006 to 2007
   Law requires that we explain the
    reasons for the major increases in the
    levy
       We will also explain the reasons for
        significant decrease in levy categories
C. Explanation of Levy Changes
   Category: Voter Approved Referendum
   Change: +$1,166,824
   Use of funds: general operating expenses
   Reason for increase:
       Funding for this program is provided through a
        combination of state aid and local tax levies
       Because the district’s total property value
        increased, the share of funding provided through
        the tax levy is increasing
       Overall referendum revenue will increase slightly,
        due to growing enrollment
C. Explanation of Levy Changes
   Category: Voter Approved Capital
    Projects Levy
   Change: +$1,000,000
   Use of funds: technology-related
    expenses
   Reason for increase:
       This new levy was approved by voters in
        the referendum on September 12
C. Explanation of Levy Changes
   Category: Equity Levy
   Change: +$182,614
   Use of funds: general operating expenses
   Reason for increase:
       Funding for this program is provided through a
        combination of state aid and local tax levies
       Because the district’s total property value
        increased, the share of funding provided through
        the tax levy is increasing
C. Explanation of Levy Changes
   Category: Operating Capital Levy
   Change: +$196,695
   Use of funds: equipment, building
    maintenance, and other capital expenses
   Reason for increase:
       Funding for this programs is provided through a
        combination of state aid and local tax levies
       Because the district’s total property value
        increased, the share of funding provided through
        the tax levy is increasing
C. Explanation of Levy Changes
   Category: Health & Safety Levy
   Change: +$440,554
   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 cost of projects planned for next year is
        slightly more than in the current year
C. Explanation of Levy Changes
   Category: Alternative Facilities Non-Bond
    Levy
   Change:-$1,193,023
   Use of funds: State-approved capital
    projects for deferred maintenance
   Reason for decrease:
       The amount of this levy is based on the
        estimated cost of qualifying state-approved
        projects
       The cost of projects planned for next year from
        this funding source is less than in the current
        year
C. Explanation of Levy Changes
   Category: Voter Approved Debt
    Service
   Change: +$4,082,346
   Use of funds: principal and interest
    payments on bonds
   Reason for increase:
       The levy is increasing because of the new
        bonds authorized by voters in the
        referendum on September 12, 2006
C. Explanation of Levy Changes
   Category: Debt Service – Reduction for
    Excess Fund Balance
   Change: +$747,469
   Use of funds: principal and interest
    payments on bonds
   Reason for decrease:
       Most districts gradually build up fund balances in their
        debt service funds; when the balance gets too high
        (as measured by formulas in state law), the state
        reduces the tax levy
       The district was required to make a levy reduction for
        taxes payable in 2006, but not for taxes payable in
        2007
C. Proposed Levy Payable in 2007
   The next 2 slides show examples of
    changes in the school district portion of
    property taxes from 2001 to 2007
       Examples include school district taxes only
       All examples are based on an increase in
        value of 8% each year
            Actual increases 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
C. Proposed Levy Payable in 2007
     For 2002 through 2007 taxes, examples
      are based on taxes for a portion of the City
      of Woodbury
          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 2007 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
South Washington County School District No. 833                                                                                                                                                                     November 30, 2006
Estimated Changes in School Property Taxes, 2001 to 2007
Based on 8.0% Annual Increases in Property Value

                          Taxable          Actual       Taxable          Actual       Taxable          Actual       Taxable          Actual       Taxable          Actual     Taxable      Actual     Taxable        Est.     Change
                           Market          Taxes         Market          Taxes         Market          Taxes         Market          Taxes         Market          Taxes       Market      Taxes       Market      Taxes     in Taxes
                          Value for       Payable       Value for       Payable       Value for       Payable       Value for       Payable       Value for       Payable     Value for   Payable     Value for   Payable     2001 to
  Type of Property       2001 Taxes       in 2001      2002 Taxes       in 2002+     2003 Taxes       in 2003+     2004 Taxes       in 2004+     2005 Taxes       in 2005+   2006 Taxes   in 2006+   2007 Taxes   in 2007+     2007
                           $63,017          $316         $68,058          $280         $73,503          $311         $79,383          $316         $85,734          $317       $92,593      $353      $100,000      $413        $97
                            78,771           401          85,073           364          91,879           414          99,229           424         107,167           425       115,741       470       125,000       545        144
     Residential            94,525           512         102,087           459         110,254           522         119,075           532         128,601           533       138,889       587       150,000       677        165
     Homestead             110,280           623         119,102           555         128,630           629         138,921           639         150,034           641       162,037       703       175,000       808        185
                           126,034           756         136,117           650         147,006           736         158,766           747         171,468           749       185,185       820       200,000       940        184
                           157,542         1,113         170,146           841         183,757           951         198,458           963         214,335           965       231,481      1,053      250,000      1,203        90
                           189,051         1,470         204,175          1,032        220,509          1,166        238,150          1,179        257,202          1,180      277,778      1,286      300,000      1,466        -4
                           220,559         1,828         238,204          1,223        257,260          1,380        277,841          1,394        300,069          1,396      324,074      1,519      350,000      1,729       -99
                           252,068         2,185         272,233          1,414        294,012          1,595        317,533          1,610        342,936          1,612      370,370      1,753      400,000      1,993      -192
                           315,085         2,900         340,292          1,796        367,515          2,024        396,916          2,042        428,669          2,039      462,963      2,206      500,000      2,496      -404


Tax Rates
 Tax Capacity Rate             57.470                                    33.749                        36.822                        31.327                        29.182                  27.460                  31.096
 Referendum Market Value Rate 0.18593                                   0.19634                       0.18617                       0.20227                       0.18393                 0.20180                 0.18814


+ Figures above for taxes payable in 2002 through 2007 are for property in a portion of the City of Woodbury. Since the portion of the homestead credit deducted from school district taxes varies
  across municipalities, school taxes payable in 2002 through 2007 may be slightly different than shown above for homestead property in other portions of the school district.
# Commercial-industrial property and seasonal-recreational property are subject to a new statewide property tax beginning with taxes payable in 2002.
General Notes
1. The figures in the table are based on school district taxes only, and do not include tax levies for the city or township, county, state, or other taxing jurisdictions.
2. All estimates for 2007 taxes are preliminary estimates, based on the best data available as of the date above.
3. For all examples of properties, taxes for 2002 through 2007 are based on an increase in the taxable market value of 8.00% from the prior year.
4. For agricultural homestead property, the value assumed for the house, garage, and one acre was $68,058 for 2001 taxes and $108,000 for 2007 taxes.
South Washington County School District No. 833
Estimated Changes in School Property Taxes, 2001 to 2007
Based on 8.0% Annual Increases in Property Value

                                           Example 1: Residential Homestead Property                                                        Example 2: Residential Homestead Property

                                $700                                                                                   $1,000
       School Property Taxes



                                $600
                                                                                                                        $800
                                $500
                                                                                                                        $600
                                $400
                                                                                                            $677                                                                                   $940
                                $300                                       $532       $533
                                                                                                 $587                   $400                                                            $820
                                          $512                  $522                                                              $756                 $736       $747       $749
                                                     $459                                                                                   $650
                                $200
                                                                                                                        $200
                                $100
                                  $0                                                                                       $0
Year Taxes Paid                           2001        2002       2003       2004       2005       2006     2007 est.              2001       2002       2003       2004       2005        2006     2007 est.
Taxable Market Value                     $94,525    $102,087   $110,254   $119,075   $128,601   $138,889   $150,000             $126,034   $136,117   $147,006   $158,766   $171,468    $185,185   $200,000


                                           Example 3: Residential Homestead Property                                                        Example 4: Residential Homestead Property

                                $2,000                                                                                 $3,000
                                $1,800
        School Property Taxes




                                $1,600                                                                                 $2,500
                                $1,400                                                                                 $2,000
                                $1,200
                                $1,000                                                                                 $1,500   $2,900
                                          $1,828                                                           $1,729
                                  $800                                                                                                                                                             $2,496
                                                                                                $1,519                                                                                  $2,206
                                                                $1,380     $1,394    $1,396                            $1,000                         $2,024     $2,042     $2,039
                                  $600               $1,223                                                                                $1,796
                                  $400                                                                                  $500
                                  $200
                                    $0                                                                                    $0
Year Taxes Paid                            2001       2002       2003       2004       2005       2006     2007 est.              2001       2002       2003       2004       2005        2006     2007 est.
Taxable Market Value                     $220,559   $238,204   $257,260   $277,841   $300,069   $324,074   $350,000             $315,085   $340,292   $367,515   $396,916   $428,669    $462,963   $500,000
C. State Property Tax Refunds
   State of Minnesota has two tax refund
    programs available for owners of homestead
    property
   Both 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
C. State Property Tax Refunds
   Minnesota Property Tax Refund (aka “Circuit
    Breaker” Refund)
       Has existed since 1970s, but amounts
        substantially increased for 2001 taxes
       Available to all owners of homestead property
       Annual income must be approx. $88,000 or less
       Refund is a sliding scale, based on total property
        taxes and income
       Maximum refund is $1,640
       Especially helpful to those with lower incomes
       Fill out state tax form M-1PR
C. State Property Tax Refunds
   Targeted Homeowners 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
D. Public Comments

								
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