MARSHALL - Marshall School District Business Director Bruce Lamprecht provided a glimpse into the district's past and present financial positions and future outlook during the annual Truth in Taxation presentation at the Marshall School Board meeting Monday.
The mandatory presentation included background on school funding, property tax levies and budgets, information on the district budget and information on the district's proposed tax levy for taxes payable in 2014.
Lamprecht pointed out that public education has been traditionally strong in Minnesota. In fact, the state's average composite score on the ACT test (22.9) was the highest in the nation for the eighth straight year. At Marshall, the composite score average was 22.7.
"That's very good news," he said.
Minnesota also ranks high when it comes to the number of high school graduates who take the ACT assessment, which is the most commonly-taken standardized college entrance exam, with a 74 percent rate in 2013 compared to 54 percent nationally.
Lamprecht noted that school district funding is highly regulated by the state, which sets formulas to determine revenue, sets tax policy for local schools, sets maximum authorized property tax levy amounts and authorizes school board to submit referendums for operating and capital needs to voters for approval.
Lamprecht reported that state funding for schools has not kept pace with inflation, noting that 44.2 percent of districts in the state will continue to face projected budget shortfalls for fiscal years 2014 and 2015 despite the increased funding expected this year. The per-pupil revenue for fiscal year 2014-15 is projected to be $332 below the 2004-05 inflation-adjusted amount.
The impact of that long-lasting deficit is budget cuts and operating referendums across the state. Lamprecht noted that voters in 300 districts (89.3 percent of all districts in Minnesota) have approved an operating referendum levy, with a current state average of $920 per pupil unit. Of the 66 questions proposed this year, 58 passed. This past November, the Marshall proposal to increase its operating referendum by $150 per pupil unit to run concurrently with its current referendum of $675 failed by 22 votes.
"The funding has not kept up with inflation over the past 10 years or so," Lamprecht said. "And we've experienced both of these (budget cuts and operating referendums) in this district."
But things appear to be looking better for Marshall and other schools across Minnesota. The Marshall audit results for 2012-13 showed an ending general fund balance of $3,509,483, or 16.7 percent of expenditures, while the transportation fund showed an ending fund balance of $66,637 because of revenue coding changes.
The capital outlay fund ended with a balance of $644,496, exceeding the established goal of $400,000 by a good amount, Lamprecht said. The district food service fund showed a slightly less ending fund balance than projected, but the debt service fund balance is quite significant because of the bond refunding that took place.
"It's because of the refinancing," he said. "Last year, we received a large number, so that's why there's such a big difference."
Regarding the expenditure budget, the general fund accounts for 72 percent, followed by debt redemption (10 percent), community services (7 percent), transportation (4 percent), food service (4 percent) and capital outlay (3 percent).
The revised general fund budget for 2013-13 shows an excess of $114,478 in revenues over expenditure. That includes a transfer of $31,717 from the transportation fund to zero out the fund balance. It translates into a $3,594,844 ending fund balance or a 16.25 fund balance percentage, which is well above the district's approved goal of 8 percent.
"We're in pretty good shape," Lamprecht said.
Marshall's general fund revenues currently come from four sources. A total of 78 percent of revenue is provided by the state, 11 percent from local property tax levies, 8 percent from local and county revenues and 3 percent from federal sources.
Fortunately, Minnesota state aid for education has begun to reverse a 10-year decline, which in turn, has lowered school property taxes for payable 2014.
"That's good news, and it's a result of what's happened in the Legislature the last couple of years, and especially the most recent legislative session," Lamprecht said. "We're now in a good position in regards to cash balance, and it's because we are receiving 90 percent of our funding in our fiscal year and it's metered out, so that's good."
A total proposed school tax levy amount of $5,599,469.18 is to be levied in 2013 and collected in 2014, marking a Marshall district levy decrease of $581,607.81 (9.41 percent).
"That's a pretty significant amount," Lamprecht said.
The last time tax levy amounts decreased was in 2009, for taxes payable in 2010. A decrease of 1.27 percent was set back then, followed by a 4.09 percent increase in 2010, a 2.9 percent increase in 2011 and a 5.12 percent increase in 2012.
Lamprecht identified six main variables that cause property tax increases and decreases. The variables include changes in value of the individual property, changes in class rates/history, market value homestead exclusion, voter approved referendums, ongoing legislative action and changes in the total value of all property in the district. He also noted that the district has control over only one of the seven steps in establishing property taxes.
The proposed 2014 school taxes are expected to be dispersed to the general fund ($2,691,877.44) to provide funding for the district's instructional programs, alternative compensation, integration program and part of the cost for the maintenance of the technology infrastructure and for the purchase of instructional equipment, building maintenance and health and safety.
The community education fund ($187,117.65) will fund community education programs, such as Early Childhood Family Education. The debt service (including OPEB) fund ($2,720,474.09) is projected to be a levy for repayment of principal and interest on district debt.
The board will be asked to certify the 2014 property tax levy at the Dec. 16 meeting.