District to collect smaller levy in 2013

by Jim Boyle

Editor

The Elk River Area School District will collect fewer local property tax dollars in 2014 than it did in 2013.

The Elk River Area School Board approved $38.4 million local property tax levy on Dec. 9, which is 1.6 percent less than last year’s levy.

The majority of the reduction comes from a decline in debt service for the general fund, said Joe Primus, the manager of finance for the Elk River Area School District. The debt service levy has been reduced 2.6 percent, a result of some of refinancing, Primus said.

The district, which has portions of residential, commercial and agricultural land in five counties, has seen its net tax capacity increase between 1.1 to 1.2 percent, Primus said. The district’s assessed value has also increased.

Primus said these are good signs for the district.

The numbers guy for the school district said he has received some calls of inquiry since the proposed property tax statements went out. He said those living in the northern two-thirds of the district have generally seen a decrease in school taxes but those in the southern third have seen increases due to increases in property value.

“When the value of someone’s home goes up, the (property taxes) will probably go up,” Primus said. “The school tax levy has remained relatively flat for the past couple years.”

No one came to speak out or ask questions at the state-required budget hearing this past week.

Primus still took time to explain the budget, the district’s levies and changes made by the legislature to its levies in the past legislative session.

Greg  Hein, the Elk River Area School District’s director of business services, said the changes were made in an attempt to simplify things.

“Because of it being transition year, it’s actually more complicated this year,” he said. “Hopefully in the future it will become a little more transparent.”

Hein said it was worth noting the state has provided additional state aid equalization, which is going to reduce the property tax burden on local property taxes in the future.

The Elk River Area School District general fund budget for the 2013-14 school year includes $126.5 million in revenue and $129 million in expenses. The district expects to finish with a unassigned fund balance projected at $8.3 million at end of school year.

That’s almost 8 percent of projected expenditures or about four weeks of operating expenses, Primus said.

Fourteen percent of general fund is covered by property taxes, with the majority of the general fund comprised of state aid. Forty-nine percent of the property taxes collected are used to pay off debt. The Elk River Area School District will realize significant drops in its debt load in 2020 and 2022.

The general fund also includes a small portion of federal dollars and about 3 percent comes from fees and other revenues like grants.

About 71 percent of the district’s expenses are said to pay for wages and benefits.

“We provide a service, and with that service comes those kinds of costs,” Primus told the School Board.

Another portion goes toward purchased services like transportation from Vision Transportation.

Community Education also collects property taxes. About 17 percent of its budget comes from property taxes and another 14 percent comes in the form of state aid. The bulk of their revenue comes from fees they collect for services.

Most of their expenditures are used to pay for programming and school age care as well as Early Childhood Family Education, Early Childhood Special Education and School Readiness services.

Primus explained at the meeting the school district has four main funds that contain levies. They are the general fund, the community education fund, the debt service fund and OPEB debt service fund used for other post-employment benefits.

Primus also explained that the general fund levy has a number of components, including an equity levy, a transition levy and a referendum market value levy.

Once these levies are paid, the school district will receive its tax dollars to pay for expenditures during the 2014-15 school year.

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