Minnesota rural education association
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Minnesota Rural Education Association. Fall 2009 Truth in Taxation Information on changes to school property taxes. Who and what impacts levies?. The State Legislature and Administration; have the sole authority to create levy options for school districts.

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Minnesota Rural Education Association

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Minnesota rural education association

Minnesota Rural Education Association

Fall 2009 Truth in Taxation

Information on changes to school property taxes


Who and what impacts levies

Who and what impacts levies?

The State Legislature and Administration;

  • have the sole authority to create levy options for school districts.

  • control levy parameters including equalization factors and various tax bases used for levies.

  • have debated and used other levy parameters in the past including reverse referendum options and levy caps.

  • establish the overall tax policy for the state including income and sales tax levels, property tax classifications and rates.


Who and what impacts levies1

Who and what impacts levies?

School District Officials;

  • by participating in state education programs financed all or in part by levies.

  • control whether or not to ask voters to approve referendums for general operations and major capital projects.

    Property Values;

  • by doubling in value, statewide, over the past 10 years.

    Student Enrollment;

  • equalization factors are a function of district property wealth per pupil. As pupil counts decline a district’s wealth/pupil can increase and therefore reduce equalization aid from the state


Minnesota rural education association

A brief history of legislative activity:As state aid shrinks, levies are used to increase school revenue

2001 ‘The Big Plan’: State Takeover of the General Education Levy

  • Governor Ventura and the 2001 legislature reformed the property tax system by eliminating the general education levy. The result was $880 million in property tax relief.

  • Sales tax expansion and further income tax cuts were not adopted.

  • A new tax base for referendums was created. The Referendum Market Value tax base was created and doesn’t include seasonal recreational property and agricultural land beyond a house, garage and one-acre.

  • The state created $880 million in new education obligations for itself.


Minnesota rural education association

A brief history of legislative activity continued:As state aid shrinks, levies are used to increase school revenue

2003 E-12 bill (the state fails to fund general ed takeover)

  • $4.2 billion state budget deficit results in frozen funding for regular and special education programs;

  • Appropriations for education support programs such as after school enrichments grants and early childhood were reduced;

  • The state allowed districts to increase levies to make up for flat funding of schools.

    2005 E-12 bill

  • ‘4 & 4’ on the formula, but special education funds were still frozen;

  • $140 million in board authority levies were part of the final bill (operating capital and equity levies)

  • $70 million (17% increase) in operating referendums were approved in the fall of 2005.


Minnesota rural education association

A brief history of legislative activity continued:As state aid shrinks, levies are used to increase school revenue

2007 E-12 bill

  • State budget forecast allows for inflationary increases for major state government programs;

  • ‘2&1’ on the formula and a major buy down of the special education cross-subsidy ($330 million) are included;

  • Kindergarten funding increased to the equivalent of half a first grader

  • One-time funds for operating capital included

    2009 E-12 bill

  • Education funding from frozen for two years. Federal stimulus money will be used to backfill temporary cuts to the state general education formula;

  • A new board approved OPEB liability levy was created. Districts must sunset retiree benefits to take advantage of this


What about my district

What about My District?

Did we pass an operating referendum? No

Did we pass a bond issue? No

Did our district utilize the newly created OPEB levy? No

Did our district’s property wealth per pupil increase this year? Yes Did our enrollment decline? No

If so, did our district fall below an equalization factor for a levy we use? (Operating Capital, Equity, Debt Service, QComp, etc.)

See charts on next two pages….


Equalization factors for adjusted net tax capacity levies

Equalization Factors for Adjusted Net Tax Capacity Levies


Equalization factors for referendum market value levies

Equalization Factors for Referendum Market Value Levies


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