The district explained the changes in a presentation Dec. 4
The Osseo School Board is raising its 2013 property tax levy by about $2.2 million, or 3.1 percent, compared to 2012. It has certified the levy at the maximum allowed level of $73,347,501. In 2012 the levy was $71,148,240.
The board certified the levy in a 5-1 vote Dec. 4, following its required Truth in Taxation hearing. Chair Dean Henke dissented due to concerns about the Other Post Employment Benefits (OPEB) levy. One community member asked a clarifying question. No one else addressed the board.
At the meeting, Assistant Supt. Kim Riesgraf offered estimates of the tax impact for properties of varying values. The examples given were for Brooklyn Park, where a median-value home in costs about $156,000. Riesgraf said school taxes in other cities in the district may vary slightly because of differences in the impact of the state homestead and agricultural credits and the Fiscal Disparities program
The owner of a Brooklyn Park home worth $125,000 would pay about $608 in school taxes. For a home worth $175,000, the levy would be approximately $892. And for a $350,000 home, school taxes would be around $1,887.
Riesgraf noted that per-pupil increases in state funding have “not kept pace with inflation” and that, in the absence of budget cuts, most districts’ expenses are likely to increase at least 2-3 percent annually.
The levy certification process began in mid-September, when the Minnesota Department of Education prepared the first draft of their report calculating levy limits for each district in the state. On Sept. 18, the Osseo School Board approved a preliminary levy, which it could lower but not raise.
In mid-November the county mailed proposed property tax statements to all property owners in the district.
During the Dec. 4 hearing, Riesgraf briefly explained each major levy increase or decrease and the reason for it.
The first change mentioned was the increase to the voter-approved levy currently in place. Voters approved a levy that would increase with inflation. This year the increase is a total of $437,743.
The Other Post Employment Benefits levy went up $600,000 to help cover retiree benefit costs. This was the levy Henke objected to, saying it was mostly related to the accrual of sick days the district must pay out when employees retire.
“So for me, I would prefer to see us freeze that benefit, which would mean … if you’ve accumulated it, it’s still there, but you can no longer continue to accumulate additional liability for the school district,” he said.
Director Kim Green pointed out the sick days are not the only reason for this levy and asked Riesgraf to explain.
Riesgraf confirmed the levy also helps pay for insurance for retired employees who buy insurance through the district. The state requires the district to allow retired employees to purchase insurance through the district at the same price available to current employees.
“Because of their age, they cost more to insure, but we can’t charge them more,” Riesgraf said. “So that difference between what it would cost to insure an older employee compared to what the overall cost is … does create part of that liability that we’re talking about this evening.”
Health and safety-
The health and safety-alternative facilities levy went up $437,770. The funds will be used for state-approved capital projects related to health and safety and facility maintenance.
The levy is based on the cost of qualifying, state-approved projects.
Adjustments for prior years
The biggest change in the general fund levies came from adjustments due to the decertification of a Tax Increment Financing district two years ago. A TIF district is a tool used by cities to encourage development, but it affects the tax base of other taxing entities.
When the TIF district was decertified, or eliminated, the effect on the school district was delayed. As a result, the school district received about $1.4 million more in 2011 than it was supposed to get following the decertification. To compensate, it had to adjust the 2012 levy by collecting $1.4 million less. There is no such adjustment needed in the 2013 levy. That adds $1.4 million to the 2013 levy compared to 2012. But the impact of the adjustments is neutral over the course of the past three years.
The school board has no control over TIF districts.
Reduction for debt excess
The debt service levy, which funds payments on outstanding bonds, decreased $335,808 to approximately $20.6 million.
The law requires districts to levy the maximum amount in this category. It also requires districts to collect 105 percent of the amount of payments the district owes in order to cover delinquencies in tax collection. Because delinquencies are usually less than 5 percent, Riesgraf said, most districts accrue balances in their debt service funds. State formulas determine adjustments to the levy to spend down those balances.
Breaking down the general fund
The general fund is the largest chunk of the district’s budget, representing about $218 million this school year.
Local property tax levies make up 19.3 percent of the Osseo School District’s total current general fund budget, with state aid making up 75.5 percent. Serving slightly more than 20,000 students, the district includes about $133.45 million in basic state aid in its general fund and about $24.55 million in special education aid.
Of the $218 million in the general fund, 62 percent goes toward salaries, and 21.5 percent covers employee benefits. That means 83.5 percent of the district’s costs are personnel costs.
The third-largest piece of the general fund is purchased services at 13.1 percent. Then come supplies and materials, at 2.9 percent.
Although school boards must set the 2013 levy in December, they don’t finalize their budgets for 2013-2014 until June. However, the school board is already beginning the budget process to determine how it will cut about $14 million over the next two years, following the failure of two levy referendums Nov. 6.