by Jim Boyle
The property tax bill for residents in the Elk River Area School District is going up.
Between the various voter-approved taxes and otherwise, the overall school tax bill across the communities of District 728 will be $62.4 million this year, an increase of nearly $2.1 million, or 3.45%, over the previous year, according to information shared at a Dec. 13 Truth in Taxation meeting hosted by the Elk River Area School Board.
Only one person addressed the School Board during the public comment portion of the meeting.
Jan Blount, of Elk River, asked about the relationship between the state and “independent” school districts.
“My question is: Do you have to follow the (state’s rules) to get that money?” she asked and wondered aloud about why the school districts are considered independent if they have to follow the state’s rules.
Superintendent Dan Bittman said he appreciated the question and noted that the state Legislature makes the rules.
The woman expressed frustration with feeling that constituents are silenced because of their need to draw school aid and questioned why districts would be called independent when, in her mind, they’re not.
“Maybe you don’t agree with that, but that’s what it appears to be to me,” she said.
District 728 gets twice as much state aid as it does local tax revenue. District 728 got $81.9 million in state aid for the 2011-12 school year compared to $39.4 million for the same school year. Both totals have risen, with the state providing $105.8 million for the 2020-21 school year and local taxes coming through with another $57.9 million.
Of the $62.4 million local taxes for the 2021-22 school year, voter-approved levies make up the greatest share of this at $36.3 million, or 58%. The other $26.1 million, or 42%, are from other levies that the district can pass along to taxpayers.
How much each resident’s property tax bill for education changed from this year to the next will depend largely on their property values, which in Sherburne County rose by about 7%.
Taxable market value had been stagnant in 2013-15, but has been on the rise since. A house in Sherburne County that was once valued at just over $200,000 in 2013 is now valued at nearly $350,000, according to an Elk River residence used for illustrative purposes, according to Kim Eisenschenk, the school district’s executive director of business services. That includes a $19,402 increase in value over the last year alone.
For this same house, the school tax levy had been at $1,500 or below from 2013 through 2019. It went up sharply in 2020 after an operating levy and building bond levy were approved on Nov. 5, 2019. It went up again last year, and this year, that same property owner is witnessing a $44 increase in school taxes.
The Elk River Area School Board approved at its Dec. 13 meeting the final levy, which did not change from the preliminary levy it approved on Sept. 30.
District 728’s 2021-22 general fund budget is projected to be $176.2 million. The Elk River Area School District gets most of its general fund funding from state aid. It’s projected to get $105.8 million for the 2020-21 school year compared to $57.9 million in local levy dollars, and that was the first significant jump on the part of local taxpayers in 10 years.
The local property tax number had vacillated between $38 million and $43 million in eight of the nine previous years. It was only $31.7 million for the 2013-14 school year. The reason for the district’s jump in local property taxes was the operating levy approved in 2019 came online for the first time in 2021.
Eisenschenk said the district is in the midst of exciting times due to all the building going on and uncertain times due to the impact of COVID-19 on operations. She said the school budget for the 2022-23 year was built as the district navigates strange times it faces in a pandemic. The district will go through a revised budgeting process like it does every year.
“This year will be more critical, because there were lots of unknowns due to COVID,” she said.
For one, the school district will have more students than it predicted when it began assembling the budget. School lunches are another example of the school district returning to more normal operations, and so numbers will need to be revisited now that all schools have been back up and running, unlike last school year. District 728 Community Education, which couldn’t operate when schools were shut down, is another example.
Eisenschenk talked about the significant amount of building expenditures as the school district finished up three stadium projects, among other things, and it works its way through the construction of a new middle school in Otsego.
“Thankfully voters approved a bond referendum in 2019 and now we are doing all of that,” she said.
The school district’s general fund, which takes care of the nuts and bolts operations of the school district, is based on enrollment, transportation to and from school and special education. It also provides money for facility maintenance, instructional equipment, and health and safety code compliance and other things.
Nearly two-thirds of school taxes (65%) will be spent on the general fund. Another one-third (33%) will be spent on the district’s debt service fund to cover the principal and interest costs of district debt.
The debt service fund levy is based on annual debt retirement schedules. The annual levy total is what is needed for principal and interest plus 5%. The state calculates an appropriated level of fund balance, and, when necessary, a levy reduction is made and the excess is rebated back to the taxpayers through the levy process.
The community education levy is based on the population of school district, and the early childhood levy is based primarily on the number of students under age 5. This accounts for less than 2% of school taxes.
Less than half a percent goes toward a debt service fund for post-employment benefits.
Three-fourths of the district’s expenditures goes toward salaries and benefits. The next biggest factor is purchases services, which accounts for nearly 12% and includes money for substitute teachers.