##VIDEO ID:z-jMI0vA5L4## all right we will go ahead and proceed with the hearing on truth and Taxation um Paul Durban all right good evening chair Nelson School Board super nenant Wagner Community welcome to uh this year's truth and Taxation hearing for 24 pay 25 Levy so the requirements for truth and Taxation meeting uh are twofold one discuss the District budget and the 24 PID 25 property tax levy and two an opportunity for public comment and questions um which we'll have before our regular scheduled board meeting after the the hearing so on the screen in front of you is a timeline uh part in summary but also showing where we're headed with the levy um it begins in the summer when we submit data to the Department of Education uh for the preliminary Levy calculations and on September 30th uh the preliminary Levy was approved by you the board um at the maximum and then this e this evening December 2nd we have our truth and Taxation hearing and the school board will certify our Levy our final Levy at a specific dollar amount um two important pieces then uh and we'll look at this through a different lens a little bit later in the presentation but our property taxes that are collected will be starting in January of this year over 2025 and that's Revenue that's generated for the 2526 school year so the first requirement of the truth and Taxation hearing is to discuss District budget so we'll go through some highlevel uh Concepts and talk about what uh the budget looks like um later this year in March we will go through and approve a revised budget for this fiscal year um for now we will start with our adopted uh fiscal year 25 budget we have five main funds that we account revenue and expenditures for as a school district um as we discussed to Levy this evening three of these funds um carry a tax levy component so the general fund community service fund and Debt Service fund are all funded in part by our Levy this slide here shows the revenue that's budgeted for the district so as you can see um again this is our adopted budget for this year and we will look at revisions in March um so you may have seen these percentages in an earlier presentation either from uh executive director waler myself but a majority of our revenue is generated through state aid um 81% um this year which equates for about $ 47 million is generated through state aid um also note that if you followed our budget in the past few years the federal AIDS is lower and that's due to covid funds coming off right or those uh Co relief funds that maybe we we received in past years and it's also interesting that the is only about 12% of our District's budget uh of our Revenue um far less that you would see through maybe the city or county where a lot more of their budgets are generated through a levy this slide here is just uh for simple purposes of showing that our other funds may have a different component or um it may be funded differently so for example Food Services is funded mostly through Federal AIDS where community service and I I see us must have been cut off food or Community Services generated mostly local revenues and that supplicate and Levy uh for that 74% there so if you want to make that revision on this slide as we look at graphs I apologize um board uh members and superintendent Wagner I did put a handout that has the graphs and and so if there's anything that's challenging to see on the screen this evening uh you should have a packet there to find these uh representations in front of you as well so as we continue to look at our budget um now moving to expenditures how do we use the revenue that we're generating this chart illustrates one way that we can look at this and um what's important to note is that salaries and benefits are almost 80% of all of our spending and as a service organization that's what you want to see that the funds are going towards your staff and your people uh the salaries and benefits for your staff all right uh because enrollment has a significant impact on our Levy we want to touch on this this evening but we don't want to get stuck in the weeds as we'll be back in February with a more in-depth presentation about enrollment for our district so we'll have a study session in February we'll we'll go into more depth um enrollment is very challenging to predict so as we talk about actuals and estimates please remember that as we talk about future years we are talking about just that they are estimates um to our best ability and we have some pretty solid projections uh that we use to come up with those estimates but they are just that an estimate um so let's focus on the three definitions that are below the numbers then we can take a look at those three numbers on the screen so octo October one enrollment count is one measure that we use to measure enrollment this is used by the Minnesota Department of Education mde in calculation for federal revenue and Federal rate and it's also used in a few other formulas for um school funding this official enrollment count is generated through our Mars reporting which is Minnesota automated reporting student systems are Mars files that we report um centrally from the district to mde what's important about October 1 enrollment is that it ensures that students aren't counted in multiple districts so if a family moves from one school district or one school to another the student is only being accounted for one specific school we won't see the official October 1 enrollment number returned back to us until January and that's the reason that we're going to come back in February for a more in-depth enrollment session at that point the other two definitions here have more of an impact on the levy ADM means average daily membership this represents the portion of a school year which a student is enrolled so um it's simply the number of number of uh days the student is enrolled in our district divided by the board approved number of student contact days so for example let's just use a number um let's say I know it's is it 173 let's say it's 170 for a nice round number is our board approved number of days if a students here 153 days that would be 90% um that 0.9 would be our ADM for that student if they're only enrolled for say the 153 out of the 170 days so every student will be assigned an ADM for our district and the sum of those will equal our District's ADM the Apu is just an adjusted weighted ADM and it's the primary count used in school funding formulas and the other interesting piece for an APU so it might look a little bit higher than our actual enrollment or or number of students in seats the Apu has a multiplier for students that are in grade 7even through 12 of a 1.2 so now as we look at those numbers at the top of your screen here um if we look at our actuals for 2223 our ADM was 33775 so you notice the decimal there that's due to the calculation that we use to figure out an ADM 2324 our ADM was slightly less 32665 4 in our estimate for this year using our projection models what we used to build our budget was 3,199 8 so we see a slight decline in enrollment there so a lot with those definitions but it's important to understand what we're using to come up with the numbers that we'll see when we talk about the levy here shortly so when we see property tax base grow in value and our enrollment decline we end up with a larger tax base per pupil so one phrase that you may hear out um in other Publications is prop property wealth or property wealthy school districts and when we see a property values increase and our enrollment decrease we are going to see a greater ratio of property wealth to per pupil or pupil units and um what this has an impact on is something called Equalization and this is what the state uses um uh to determine a mix of Levy and Aid and so as we see our enrollment fluctuate in recent years decline and we might see our property values increasing that we've seen in recent years what we're going to see is more Reliance on Levy versus Aid um but also keep in mind there's another variable that is enrollment declines we also might see our total revenue decline as well so it doesn't always necessarily mean more taxes when that happens it's a very Dynamic formula right so this chart here is very helpful to see what's happening with enrollments here in Albert Lee so here's a historical representation of the last 10 years of our ADM in our district we'll be back in February to go more in depth on enrollment but it will help us today to just to see what's happening with our Levy as we dig into this um presentation so um looking forward to our revised budget um early IND indications are showing that our enrollment projections are going to come out really close to what we set for adopted budget so remember that 3,199 ADM that we mentioned in a prior slide um projections are looking good we'll know more after the October 1st number comes back and we can dig into that enrollment discussion with the board in February and that will guide us in our revised budget work that will come back in March so at this point there's no other significant changes um so as we learn lean into that revised budget later this year it's mostly depending on where our enrollment comes out the second part of uh the requirements for a truth and Taxation hearing is to discuss the levy so our 24 pay 25 a reminder is to certify the levy in December of 24 those property taxes be collected through fiscal year 25 and that revenue is for the 25 26 school year and what's really unique about this chart that's in front of you now if you can see that the school district's Revenue that we're generating starting in January of 25 isn't until or isn't used until the 25 26 school year which begins in July so we're collecting taxes starting this next month that are really for the next school year so we're offset a little bit whereas our other municipalities the city county and other municipalities are collecting taxes for a budget that is beginning the same year that they're collecting them the other portion of to note there about other municipalities and how they collect their taxes is they have a little bit more leeway in deciding how much to Levy for where a district if we want to go out beyond the maximum which we've approved in our preliminary Levy we would need to go out for an operating referendum and ask for voter approval on that in this case this year we did not need to do that um and we just stuck with the the maxim which we're we're entitled to all right so again three main funds um that we generate funds through the levy for our general fund our community service fund and our debt service fund um and each of these may have some of their Levy generated over different tax categories and we'll talk about those two tax categories this evening there's a referendum Market Val referendum market value tax category and there's a net tax capacity uh category um and uh because we did not ask for an operating referendum or go out for any additional voter approved bonds you won't see any changes from some of the numbers in the presentation tonight so I apologize there will be some repeat information from what you saw back in September to this evening so the levy as it is uh proposed the general fund portion will decrease by $651,000 pay 24 Levy to this year's 24 pay 25 Levy some highlights here to explain this decre increase um if you remember there was a large positive adjustment on last year's Levy and with the absence of that this year it looks like a reduction in the levy but really the levy was just being adjusted last year for um maybe enrollment change um from a prior year so um that referendum adjustment was there last year it's not there this year so it looks like a decrease of about $223,000 from last year's Levy the other reason that we see some decrease in this general fund Levy is that the declining in enrollment it's a much smaller impact on that decrease in our Levy but it's uh part of the reason that that Levy is declining and then the one that's very clear to see and we can connect the dots to is we approve the sale of bonds for our mechanical projects um in our ltfm funds so we're going to see a decrease in the levy for the general fund for ltfm funding so long-term facility maintenance decrease of $362,400 and most of that is simply going to shift to a levy in our debt service so essentially a wash so I talked about the two tax categories that contribute to the levy the first of those categories is your referendum Market values really this just adds up all properties of value and divides them in a pro-rated manner essentially a homeowner and a business or tax the same percentage in a RMV refer on the market value the refer on market value does not include seasonal recreational cabins um or seasonal wreck um and aand those are excluded from these taxes one thing that's important to note here is that um this year the referendum market value this tax category in our district is about $1 1.9 billion 1.97 compared to 1.9 billion last year an increase of 3.9% and the point that I want to make with this slide is that our property values are increasing but if you think back a couple years the RMV in our district increased over 20% two years ago and I believe it was 7.9% last year so our property values are increasing yes but at a slower rate than they were in the past so it's important to note that we still are seeing a property value increase uh and specifically with this category of the RM RMV so this slide here shows what types um what types uh of what is being funded through the referendum market value levy on the general fund so we have our local optional Revenue our voter approved operating Levy our equity revenue and transition revenue and you see that this Levy for the general fund in this tax category the referend of market value is about 4 point or 4,1 148,000 $413 okay this next slide shows the other main form of property tax category which is our net tax capacity and these levies are when each property type is multiplied by a class rate specific to their property type and their value so the increase last year was 7.8% in the year prior 21.7% and we're seeing an increase in our net tax capacity in our district of 2% this year so again we're seeing that same Trend property values have been going up over the last couple years but at a much smaller rate this year 2% compared to that 20% increase in that uh um 7.8% last year so a slower rate than in the past so looking at our general fund these are the types of things that are funded through the net tax capacity in our general fund so we have our operating Capital our teacher performance pay our Q comp our achievement integration unemployment insurance safe schools career and Tech ad long-term facility maintenance and leases and um just a side note that ltfm normally about 1.3 million we see that this is part of the reason for that reduction this year um in our general fund in that in the levy so uh the general fund levies distributed on that tax capacity are $2,250,000 518 Community Education saw minor increase in the levy from last year a lot of that had to do with our early childhood family education it's a very minor increase um from year to year so not a lot of discussion on this but our levy on Community Education um comes out to $167,900 ECFE Early Childhood family education and our home visits um one thing to note here um this is levied and I noticed I didn't write it in here but this is Levy distributed over net tax capacity not over the RMV so that second category and then our debt service also levied over the net tax capacity we're going to see an increase of $41,600 most of that is be due to that the bonds that we sold for ltfm so that's shifting from our general funds over to our debt service and this includes the fiscal year 26 principal and interest payments plus 5% for any of our debt and it includes Bond payments for that ltfm project our boilers and HVAC units that we um which those projects are going well by the way so The Debt Service fund over the net tax capacity $3,235 34 now we'll have a few new slides this evening that maybe we haven't seen before so these are um um this is information that I found interesting based off of our tax base this uh graph comes to us from one of our financial advisor PMA I apologize if it's hard to see so please reference the packet in front of you if you can't uh see the subtitles there or the notes um but if you look at this graph what it shows is the per pupil funding and what it may have been if it had followed in the CPI since 2003 and what we're seeing is a significant gap between that um what are actual formula allowances in our basic formula now this whole concept isn't about the levy this is about state aid but what it does demonstrate is that there is um a a shortfall between if we had followed inflation with our state formula our funding for state aid there's a significant gap of where we actually are and it is challenging to fund schools without um when our revenues aren't keeping Pace with inflation so um it's a bit dramatic but this year alone should that formula have followed the CPI instead of waiting for legislation to force um more funding from year to year um at different rates we would have seen $4 4,718 th000 more this year alone in state aid than what we are seeing so we see a large gap because that we did did not follow um that inflationary Factor just note also that um this actual formula allowance has been changing year to year due to legislation and state and changes with the model um I think we saw an increase last year from 6,863 per pupil to 7,281 all right now uh a few slides that I think are are um residents in our community would really appreciate a school property tax history on $100,000 residential home this is a is $100,000 home in 2018 to $100,000 home in 2019 all the way to 2025 this is for comparing Apples to Apples year to year it's not necessarily realistic for a home value that was in 2018 to 2025 that home will probably be uh valued at a much greater rate now and we'll look at some other comparisons for that what this does though is shows us what our our tax history as a district is on a $100,000 home in our community and you see that it's significantly Less in 2025 than it was in Prior years without a graph because there's so many different categories of properties here's um I think a helpful tool um we can look at residential Homestead these are the impacts of our school taxes on different types of properties and so what you see on the left is the estimated market value of these types of properties and if the property doesn't increase in value from last year to this year the the school district tax impact would go down and if you look at residential homes it's somewhere between 7even and 12% again this is all based on those property valuations and the value of the property so with that said looking at the average residential home in our school district 2015 was right around 100,000 now the average home in our area is about 175,000 so times are changing we saw a significant jump between 22 and 23 um and as you know when we talked about our RMV and net tax capacity we talked about two years ago about a 20% increase in that RMV in that tax capacity and about an 8% last year we're seeing that here in the average home values in our community as well also keep in mind um every individual home and property the values change differently year to year and so um one person and their neighbor's property values may be increasing at different rates or decreasing at different rates and assessed at different values so um it's hard to kind of pinpoint and give an exact uh depiction of what will happen uh but we can get a pretty good idea of just a general sense of what's happening in our community all right so this next slide um so we saw the slide noting that there's a decrease in tax on residential homes if the price stayed the same or their value of their home stayed the same from one year to the next so this slide also from PMA um they've they've generated um an estimated property value increase of 4% which is um which is the estimate for our area this year the property valuations will go up 4% um and we'll get an actual a better um number next year once we see where those all come out but what you can see is say $144,000 home last year may be valued at $150,000 this year after that 4% increase and what they'll actually realize in the school district contribution of their taxes would be a decrease in 5.9% of their tax the school district portion of their tax so we see a little bit of relief in the school district portion even with a property value increase on these residential Homestead Properties here all right uh and this slide is the one that made me decide I should print off some graphs for you in your packet because it's really hard to see that table down below but essentially it's taking that same home value that was outlined in an earlier slide and looking at um year-to-year similar to what we had on that $100,000 home what's happening now if we take that um 2018 we had $104,000 home $14,800 and following the trends in our community that would be about $150,000 home this year and what we see is that you know over the years their school district contribution to their property tax kind of has gone up slightly and then this this year diving down a little bit down the 547 there this just lets us take a little deeper look at historical values with those School District impact and what's happening with the property tax increase all right these next two slides are kind of fun uh a very I would say primitive way to demonstrate uh distribution of taxes um with the idea of property valuation changes um here on this slide what you see is a tax base that includes two homes so if we pretend there's only two homes in our community and we had a levy of $100 as a school district and both homes were equal value they'd each pay the same amount in this scenario $50 each for um the slide on or this the graphic on the left if they both went up the same value from year to year and our Levy didn't change there would be no change in tax burden between the two homes they'd still both pay $50 share of that Levy however if we update this slide and we look at the same small District Two homes one of them only goes up 10% in value but another home goes up 40% you see that the home that went up more will take on more of that tax burden right and the actual impacts of that is the home that went up less is going to have less of a tax burden so it gets really complicated when you mix in your commercial industrial your Eggland the number of different types of properties in your community and all the homes that you have and as those valuations change one neighbor scenario might be different than their next door neighbor or somebody down the street right or someone else in the community so as property values change the shift in burden changes too and so that explains a lot of what's happening on each individual tax statement it often has a lot more to do with their property valuation than it does with the levy that we have in front of us all right um one other point that we want to bring in here to the conversation is that on our uh Debt Service Levy there's an egg to school bond credit that the state of Minnesota has which has reached its maximum in 2023 and it will continue that maximum rate of 70% tax credit um our debt Levy was about $3.2 million this year and essentially what this means is that the state is picking up the bill for about 70% of that Levy and our egg land is um or the the farmer would pay that 30% portion um that equates to about $586,000 that our our local farmers would be on the hook for should this tax credit not be in place they don't need to do anything they don't need to apply for this it automatically comes off of their tax statement um every year um um and so it's just something nice to to point out that our farmers are receiving a little relief um with this egg to egg to school bond credit and then those payments do come back to us in the form similar to Aid um but basically they calc out the amount that the state's portion is and the state will send us that um contribution all right and this is an addition this year um I I did receive two phone calls this year and both calls were more about understanding what this statement means than anything else and to talk about their property valuations not so much about our Levy so um this is an example this is not a copy of an Albert Lee District you notice that it says Spruce County right and uh Spruce School District this is a total imaginary just an example more of a uh a learning device for us to to look at our tax statements so um the Third municipality listed on these is typically your school district uh Levy and so that's where the first thing that I my eyes draw right to is where's our Levy for the school district find that and what you'll see is two components a voter approved Levy um and a other levies listed and um this is sometimes if you don't know or haven't been following School Finance which most people don't um this is where you kind of wonder what what are we levying for so voter approved levies are taxes collected for example um like operating referendums I believe we renewed our last in 2021 uh maybe our building bonds that we sold to build our Stadium um those have um you know a yearly Levy component that we will see until those mature um so those would be like your voter approved levies and your other levies would be things for example um local optional revenues your operating Capital your ltfm that we mentioned this evening um those would be different buckets that fall under the other levies um and if any body ever has questions about their tax statements or um what those levies might look like for our district uh I would be happy to have a conversation and do a deep dive into those tax statements for them um Beyond this explanation tonight it can get quite confusing as we went through with our finance committee uh this afternoon um but what taxpayers really want to do is when they're looking at this statement and they want to see what the school district's impact on their taxes is is add up the two numbers here in the left column for their actual 24 add up the two numbers in the right column for fiscal year for proposed 25 and that will be the school district portions and they can kind of compare what's happening from 24 to 25 from the school district portion of their property tax and just to hammer home the point um a lot of times the biggest driver of what's happening with their taxes is truly their property valuation and not necessarily the levy and the property valuation is up at the top right corner of this statement so you can you can see what's happening with the values of your property as well one last point with this before we kind of have some closing uh notes is that in the spring you'll also get an estimate from the county about taxes and that is the appropriate time if you think those property valuations are incorrect or you feel like there's a need to appeal that would be the um there would be some instructions on the spring mail or that you get from the county on where to go to do so all right so this evening we've recapped everything from the timeline to our budgets to how enrollment is impacting our levies how levies are impacting our residents full circle all the way back to the flyers or the the mailers that we receive from the county in the mail so I want to make a couple main points as we wrap this up today uh a reminder that our two biggest factors on this year's Levy are the absence of a large adjustment that we had last year that's no longer there this year in our declining enrollment so as our enrollment continues to decline we're going to potentially have some tough decisions moving forward right now we're very thankful we're in a good place we met our fund balance goal this year the district's in a strong uh financial position um so today um you can see the recommendations here um just going through the summary on the chart um the general fund Levy decreasing from last year $51,500 Community aded Levy increasing slightly $5,499 and The Debt Service Levy increasing uh about $4 1,169 so the total Levy will decrease $244,950 48 um that's a decrease from 23 pay 24 to 24 pay 25 or a decrease of 2.44% so I do ask at the regular meeting portion of um this evening that the board approves the 24 PID 25 Lev a specific dollar amount of 9,797 453 um and um this now concludes the truth and Taxation portion of tonight's meeting thank you Paul for your presentation we'll go ahead and move into our uh study session I call the meeting to order join me in the pledge IED Al to the flag of the United States of America and to the republ for it stands one nation indivisible andice our next item is approve to approve today's agenda it is an action item is there a second second motion and second all in favor signify by saying I I motion carries 4.1 approval of two of 2024 pay 2025 final Levy it is an action item is there a second I'll second has been motioned and seconded any discussion Paul is here to answer any questions there's nothing I like better than a a tax agent Hearing in a 90 degree room so thanks for whoever responsible for that the only thing I want to say is that Paul it's nice to see that you've put your spin on this and it's I appreciate the additional information you've given us U more data to digest and and and I think it helps keep us informed as board members that's the only comment I have any other comments questions and also just the comment too A lot of times we don't understand with this kind of a levy it is basically set by the state you know it's something as we've talked about before there's little spins here and there that you can do but that's why when you have to um start out by going with a maximum then you get the real number when it comes down to it so as we see this year comes out less which is uh kind of nice it'd be nice to be able to even those out and just do 2% a year but that don't work that way instead of having to do like the city 15 or whatever and it just don't work that way now they're different obviously than what we are but no thanks for the explanations Paul any other questions comments All right we will go ahead with the motion all those in favor signify by saying I I oppose motion carries 70 thank you Paul thank you before we move into adjournment I'll share our mission to ensure individual academic social and emotional growth that leads to engage citizens and lifelong Learners our next meeting is Monday December 16th it is a regular school board meeting here in this room I want to take a moment though because I won't be present at that meeting and so Gary I will be virtually but I won't be leading and I wanted to thank Bruce for your service it has been a pleasure to be on the board with you I've enjoyed it very much and you've added a lot of a lot of um spunk and content to our meeting so thank you so much have one more you'll have one you have one more but I just wanted to take that time because you never know about virtual if if I get cut off or can't see or whatever so the agenda I received is at 6:30 oh shoot well you were here two minutes after we start yeah thank you all right is there a motion to adjourn second second Motion in second all in favor signify by saying I motion carries meeting adjourned