001Okay, good. Uh, good evening everyone and welcome. We are the Otana School Board. It's Monday the 8th of December. It's 5:30. I'm going to call this meeting to order. Tim is going to give us an update on our attendance. All but LOL, who is on his way, he'll be here. All right, let's start with the pledge. >> Algiance to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all. >> First up tonight would be to approve the agenda as presented. >> So moved. >> Second. We have a motion and a second. Any further discussion? All in favor with an I. >> I. Any opposed? That motion carries. Item four is public forum. Sir, do we have any cards
002for public forum? We have none. We're going to move on. Uh first item tonight, item five would be reports. Um, item A would be the audit. I'll turn things over to Dr. Champa for some introductions. >> All right. Well, we have a presentation tonight with the audit. So, if you'd please join us. Thank you. [snorts] >> Yeah. >> Good evening. Welcome. >> Yeah, please. Is it >> There you go. >> All right. And we haven't had the benefit of uh you being a presenter for our audience in the past. Want to do a quick introduction? >> I will. Yeah, you guys are very lucky to have me. No, I'm just kidding. [laughter] Um, no, my name is Luke Graden. Uh, I'm a principal here at CLA. Uh, I office out of our Rochester, Minnesota office.
003So, um, pretty local over there. Um, I've been here for about 11 years. Uh, I've been working in the school district space my entire career. So, happy to be here to presenting to you guys. first year being as you said presenter and principal on your audit. However, I have been working on your audit for a few years now as in different roles. So, but happy to be here tonight. So, thank you guys for having me. Um, can I use this to click? >> Mhm. >> Maybe. Yeah. Okay. All right. So, I'll just >> Could you do me a favor? Just pull your mic a little bit closer. >> A little closer. Yeah. >> Yeah. I appreciate it. >> Is that better? >> Yes. Thank you. >> Yeah. Um, okay. So, I'll just dive right in.
004If you guys have any questions as I go along, please feel free. um won't take up too much of your time on this, but wanted to give you guys an update and let you know how the audit went. So, uh first slide here is just kind of our overall audit results. So, we're issuing a clean audit opinion. That just means the financial statements are fairly stated in all material respects. Uh essentially as clean of an audit as you can have uh no findings on the financial reporting side. And then also the compliance side. So, for the compliance side, we look at uh our internal controls. We look at our Minnesota legal compliance. The state will give us kind of a laundry list of check boxes that we have to go through make sure that the
005schools are in compliance with uh and then yellowbook compliance, the governmental compliance as well. And we didn't have any issues or concerns on any of those fronts. So overall just a very clean audit. Uh the other compliance piece that we also have to do is that single audit piece. Uh so a single audit is a federal program compliance audit. So essentially it's required for anyone who has a certain threshold of federal dollars that come in each year. Uh and so Otana Schools is always on that list. And so um a single audit, you know, we have to select a certain amount of programs and basically are testing compliance. So making sure that you're following all the guidelines that the government sets out. Um we were uh able to test the child nutrition program and the
006title one program. So, kind of looking at, you know, the different controls and procedures in place in those programs and both of those went really well. No findings or concerns on that either. And I am happy to report that we were able to issue that report. The government was kind of holding off on getting us the compliance supplement um with the closure. So, we we literally just got it in time and so we were able to get it all issued at the same time instead of having to wait. So, that was really good news. Uh and so, again, overall a clean clean audit report uh on all fronts. So with that, I'll go into some numbers here. So this first slide is your general fund uh your general fund revenue and it's kind of showing
007where that revenue is coming from. So you got your 78.6 million of general fund revenue this year. Uh obviously the biggest piece of that pie coming from the state. So 79% coming from the state. Uh your state revenue up about 3 million from last year to right around 62 million. So, as you, you know, you can kind of see those numbers, how big of a number that is compared to what's left. Uh, the other kind of bigger piece is that federal piece, that 3.5%. That's down quite a bit. Last year was about 5.8 million. This year, about 2.8 million, which is probably kind of standard of where you'll expect to be going forward. Obviously, over the last 5 years, there's been a lot of COVID dollars and kind of other one-time programs that have occurred
008that are now kind of done. And so, that, you know, 2.8 83 million is kind of more where you'll, you know, normally expect to be all things considered equal. So, uh, again, just kind of seeing where that money is coming from on the general fund side. All right, so this is your general fund expenditures. Uh, 80.6 million of general fund expenditures this year. Uh, so this slide's got a little bit going on. So the bigger pie chart on my left, hopefully your left, um, is that overall 80.6 million. And so you can kind of see where that money is being spent. All those smaller pieces on the left, those are essentially overhead. So you got your admin, district support services, buildings, and then your capital. And then that 84% of instruction that spits over to
009the right side, and that's your everything else and kind of the instruction of the students essentially. So long story short, you're taking that 84% putting it directly to the instruction of the students, which is a super high number, great to see. Uh and then obviously you can see where that is being spent. Obviously 44% of it of the total to regular instruction, 22% to special education. Um but kind of the biggest note there is that 84% going directly to the instruction of the students. So super good number there. Um the other thing to note overall that 80.6 million essentially right on budget. So you know the budget was you know spot on as far as what what was expected there. Uh and it was about a 5.5 million increase in expenses from last year. Um
010most of that hitting those two biggest pieces that regular and special instruction. We'll kind of see that pop up again in a little bit. All right. So, uh getting into your your fund balances first in the general fund. So, your general fund unassigned fund balance quite high last year, dropped down uh quite a bit this year about a 1.4 4 million decrease this year down to that 9.7. Um so still, you know, healthy unassigned fund balance, but certainly a dip. Um again, you had budgeted to spend down about 1.8 million in the general fund, ended up spending down about 1.9. So again, you know, we talked about kind of being right on budget there. Um but you can see kind of a a majority of that overall fund balance decrease hit your unassigned fund balance
011here. And we'll kind of go through the other fund balances in the fund now. Um, so this this one here is kind of a combo of a few. So you have assigned, committed, and non-spendable fund balances. Relatively small compared to unassigned, of course, but um, worth noting. So um, I'll just explain briefly what they are just in case anyone doesn't know. So your assigned fund balance is simply fund balances set aside by management that, you know, they know they're going to spend on something you hear, you know, upcoming in the next year or two. Committed, exact same thing except except essentially board driven. and the board will commit those funds to be spent on a future expenditure. And then that non-spendable that just simply represents however many uh or however many dollars you have sitting
012in inventory and prepaids within that fund. So, you know, it's basically already been spent, hasn't been expensed out yet and will be next year. So, overall, we kind of combine those here. Um, so the one thing that kind of sticks out on this one from 22 to 23 had a really big jump. So, pre23 you only had non-spendable. there wasn't any assigned or committed fund balances here at all. Uh and so that's why you see that big jump added about 1.2 million in 23. Uh so here in 2025 have about 750,000 of that non-spendable um 350,000 in assigned and then about 280,000 or so in that committed fund balance. The committed being set aside for the career pathways program. So then your restricted fund balances. So these are these this represents all of the dollars
013coming in from the state that have to be used for specific purposes. So the state will you know essentially earmark a lot of the funding that comes in and says hey we you have to use this on specific programs within the district. You know it's not just all here's you know $60 million you got to spend it on these specific areas. Um, and so this is, you know, funds like that that came in and weren't fully used up. And so you have these outstanding fund balances, which is obviously very common. Um, so again, kind of one thing that really sticks out on this side from 23 to 24, you see a really big decrease in that fund balance. Um, essentially what happened there is you had a long-term facilities maintenance, which is one of the
014restricted fund balances that was at about 3.4 million in 23, went down to 1 million in 24. And what happened is a lot of times when you have larger uh construction projects like you guys have essentially that LTFM kind of builds up a little bit because you're focused on this one big project you know that's being funded elsewhere and LTFM you know kind of waits towards the end and then you kind of use that for you know other things that pop up and that's kind of what happened there. Um which is the intended purpose of LTFM so it's perfect. Um and so again last year to this year pretty steady right around 4 million total here. Um there's kind of a variety of you know programs that are represented in there. You have student activities
015that sit in there. Um you also have staff development, the uh alternative learning center, operating capital. Uh the read act is a new one this year. Basic skills and then long-term facilities maintenance has about 1.6 million of that 4 million in there. So all right, that's your general fund fund balances. So kind of a few other slides for you guys here. So this this one here is an enrollment trend over the last 5 years. You can see the splits between, you know, the grades and everything there, but kind of the numbers on the top. That's just looking at the total. So overall, you know, dip this year about a 30 decrease in ADM served or students served, but overall been, you know, relatively steady if you look at the trend line right around the, you
016know, 4,800 and, you know, 20 to 20 to 50 on average or what whatever you want to say. So overall pretty steady there. Um, which is good to see. Obviously, we're seeing, you know, birth rates declining pretty rapidly, which is amounting to, you know, ADM's decreasing really across the board with most of the districts we work with. So, good to see, you know, this number staying relatively firm over the last 5 years. All right. So, then this number is kind of combining a few slides we've seen before. So we had that 80 million or so of general fund expenditures uh and then comparing it as on a per student basis spend. So that total general fund expenditures per student spend um kind of shows how much expenses have increased in the general fund over the
017last two years. Um had a almost 9 million increase from 23 to 24 and then that [clears throat] 5.5 million increase from 24 to 25. So you can see that, you know, kind of driving this average on a per student basis cost up um quite a bit from 23 to 24 and then and then again to 25. Again, really all of that increase driven by, you know, the regular instruction and then the special education instruction or at least most of the most of the increase. Right? So I really just have two two more slides for you guys here. So, I'm just going to kind of briefly touch on the food service fund balance and then the community service kind of two of the other main funds that, you know, kind of helps with, you know,
018operating uh within the district. So, this first one, your food service fund balance, uh dark blue being revenue, uh light blue being expenditures, and then that yellow being your fund balance. So, as you can see, overall revenue has been increasing the last 5 years, as has expenses, as has fund balance. So really been a steady increase across the board in this fund which is good to see. Um this fund has had a lot of changes the last 5 years as you know uh obviously you know with co uh federal dollars changed a lot and then the state obviously changed with meals served a lot too and so there's just been a lot kind of a whirlwind. Um but really a very common uh theme with the food service fund balance when you look at that
019fund balance going up every year. We see that with literally every district we work with and all across southern Minnesota. It's the same exact slide pretty much different numbers but same same trend line. So um really common to see that increase and so again revenues increased expenses increased. You had budgeted to lose about 250,000 in this fund ended up gaining about 210,000 and then that ending fund balance right over 2 million at 2,20,000. So um again a very healthy fund balance sitting in this food service fund and then kind of the pretty similar story just to a lesser or more less extreme extent is the community service fund balance. So um revenue and expenses increasing but just you know little by little over the last 5 years and then fund balance kind of the same
020thing has been increasing slightly over the last 5 years. So this one more than any you really want to see operate as its own kind of business. you know, you have, you know, your fees for services in the community and it's more so supporting itself a lot more than than the other funds and with their funding. And so, again, overall, you know, healthy years, budgeted to spend down about 120,000 this year, ended up gaining about 170,000. So, uh, the fund balance in this fund also is sitting just a little bit under 2 million. So really just a healthy, you know, fund balance and really operationally um for this fund and the food service fund in the last 5 years. So overall just, you know, good good numbers across the board. Um all right, so that's
021that's all I have for you guys. Anybody have any questions for me or anything on the numbers or anything we did during the audit or anything like that? May >> maybe I'll just make a couple comments. the finance committee had an opportunity to um hear this presentation and dive a little deeper. Um obviously we're pleased with the results. So congratulations to administration and others. Um I do have one just quick question. You prompted my curiosity when you were speaking about ADMs and declines due to birth rate. Do you have any just sort of anecdotal sense of what kind of declines districts are seeing? >> Um just like as a percentage like other what other districts are seeing? Yeah. >> Um I guess I don't have it as a percentage in my brain right now, but
022I can say like, you know, on a district that has, let's say, a thousand ADMs or 800 ADMs total, which is obviously much different size in here, but um I've I can think of multiple clients in that 80 80 to a,000 range that have seen 20 to 30 to 50 student decreases almost every year over the last 5 years. And that's not not everyone's. There's some that are wor quote unquote worse than others, but um you know the trend line is down >> you know for probably 80% of the districts that I serve. So certainly not a uncommon problem or um yeah I don't know if problem is the right word but uncommon situation I guess and and obviously that number is such a huge driver of the state revenue that you receive which again
023is such a huge portion of the total revenue you receive and so a big big thing for sure >> else questions. Excellent. Thank you. >> Yeah thank you guys very much. Appreciate it. Have a good meeting. Uh we are going to continue on. We're actually jumping over to item number seven which would [clears throat] be general information. Two items in there tonight. The enrollment report as well as a tiff notice from the city of Oatana. Anybody have any questions for Dr. Champa on this information? >> Actually, can can I just get a clarification on the the city of Owatana TIFF notice? it just I'm I guess maybe just I'm not sure why the school district is included in that or we need to sign off on that or what does that even what does it
024mean? I would say later. So right now it's anformational item. Um just noting that there is a hearing January 6th at 7 p.m. and it has just been common to put the notification as information. >> Got it. So we're not signing off on anything. It's just forformational purposes only >> Tonight when it will come back. >> Yes. >> Right. >> In January, >> right? >> And so then we're signing off to say basically we agree with the city plan. >> Yeah. That we'll forego the tax implications for whatever period of time and amount that they calculate. So we don't know those numbers yet, but I would say it's fairly routine. Yeah, we've done many of these over the years and we typically will follow the lead of the city and not otherwise stand in the
025way of a development project >> that they're working on. >> But we don't know the details. >> Got it. >> Anything else? >> We will move on. Uh item eight tonight, discussion only. First one will be board forum. Ron, would you mind if we start down on your end? >> Sure. Um, Andrea and I had the I guess fortunate opportunity to attend the breakfast at the high school last Friday. What do you think? Good for you. >> It was Yeah, it was really good. >> Really nice. Yeah. >> Yeah. And so it's it's put on by the counseling department and they're trying to raise funds for kids at the high school that are um homeless or disadvantaged in any way. And it's anonymous through the counseling department who they help. Um, so yeah, we got
026to talk to Nancy Williams a little bit and just had a good time with the breakfast and it I guess for me it was just it was good to see the staff at the high school rallying around these students and supporting them. They raised I think 18 over $1,800. >> Yeah. >> Um, so that was just good. And then also too just to see the the busyiness of the start of the school day. So I was there from >> Yeah. from 7:45 to like 8:30. And so >> there there's a lot that goes on [laughter] uh with 1500 students coming into the school and a lot of staff. And so just to appreciate the the staff in general, I think, you know, for me it was just good good to see. >> Thanks for going.
027>> Yeah, absolutely. I I don't have anything else to add. >> Nothing. >> Um I I don't have anything >> other than what's in the agenda. >> I caught the very tail end of it and felt the same way. Thought they did a nice job. >> Nothing for me. Uh this next Monday, LOL and myself will have the opportunity to sit in on the ALC advisory meeting with Dr. Champ and a few of the [clears throat] department leads. And um we're really excited for that just because um historically that advisory group has brought together a unique set of students who whose voice is not often heard. Um and it's nice to be able to, you know, get more student input. Um, besides the advisory meeting, I don't particularly have anything. Uh, I know carolers has
028been uh in full swing now. So, we're caroling almost every day. And then we also have a choir concert tonight. So, I will be leaving slightly early for that. >> And lol. There's there's nothing else new for you. Nothing. >> Not particularly. >> Are you sure there's nothing else? [laughter] That's >> um me, Ava Cox, and I were selected to be Otana's nominees for the Excel Award. >> Congratulations. [applause] >> LOL. That's great. Congrats. Um item B would be the administrative report. I'm going to turn things over to Dr. Champa. >> All right. So, you have the administrative report in front of you that has all of the updates. It felt like a really fast turnaround since the last one with our one meeting. Um, and then you also have the cadence of accountability in
029front of you. So remember this is our cabinet members reflection on the strategic directions on a monthly basis. They also add not only a numeric value but a narrative as well. And then when you hear them speak to their goals, that's what you're seeing. So it's bringing some context to what those dots look like. But overall the um summary is really that there is positive gains in all of those areas. Any questions? >> No questions. But I was just going to say Tammy or Dr. Champa that I appreciate the the community engagement series coming up. I think that's going to be really helpful for people in the community to have that opportunity to get more information. >> Thank you. >> And when is you have one this week? I think >> we have two this
030week. So we have one on Wednesday night and we have another one coffee and conversation on Friday morning. >> Anything else? Okay, we're going to move on. Uh item nine tonight, keep an eye on the 10:00 uh would be the consent agenda. The quick reminder is that we would be approving the minutes from November 24 as well as the personnel report. Does anybody have any reason to pull anything out? Hearing none, we'll entertain a motion to approve. >> I move to approve the consent agenda as presented. >> Second. >> We have a motion and a second. Is there any further discussion? Hearing none, Tim, I'll turn it over to you. >> Ron, >> I. Andrea >> I >> Julene >> I >> Lori >> I >> Mark >> I >> Elizabeth >> I >> and
031I vote I 70 motion carries. Thank you very much. There are a couple of items that need board action. The first would be item A the audit for the year ended June 30, 2025 um in order to kick this off. Is there a member of the um finance committee that would please introduce this motion? I move that the board approve the audit for the year ended June 30th, 2025 as presented. >> Second. >> We have a motion and a second. Is there any further discussion? Any questions? >> Audit? >> Again, thanks to the administrative team. Uh, with that, we have a motion and a second. And this is not a roll call vote. So, all in favor with an I. >> I. Any opposed? >> That motion carries. Sarah, do we have to wait? We
032have to wait on this one. Okay, we're going to skip over that and we're going to skip to item C, which would be gifts to the district. And as you probably had noticed, there are still a couple of gifts that made their way into the uh um uh school district in this past time period. Dr. Champa, anything you have to add with regard to that? >> Oh, just grateful for the continuous gifts. Excellent. Uh, we'll entertain a motion to approve the gifts. >> So move. >> Oh, thank you. There's a second. [laughter] >> We're offkilter tonight. We are right now. >> Keep looking at the clock. [laughter] >> Six more minutes of discussion. >> Can read the whole thing. >> We have a motion in a second. Uh, Tim, if you would, please. >> Hey,
033Ron. >> I. >> Andrea. Hi. >> Jolene. >> I. >> Lori. >> I. >> Mark. >> I. >> Elizabeth. >> I. and I vote I 70. Motion carries. Here's what we're going to do. It is we have six minutes to go before the um truth and taxation uh presentation. And so we will we as board members will take a seat along with the audience and director Mark Stz is going to come up and at 6:00 we'll do the presentation of the tax truth and taxation uh report and then when that is done so we're going to pause this meeting have that at 6:00 and then following the truth and taxation presentation we will come back for that tax levy certification. So with that this meeting is paused. >> Yeah. presentation here. As you scroll through
034Okay, good evening. Um, this is the district's annual truth and taxation hearing. Um, hopefully, yep, everything's working good here. So, um, basically we're required to have this meeting anytime between November 25th and November 29th. Obviously, here we are dece December uh 8th and the meeting has to be at 6:00 or later. So, here we are at 6:00 and it's part of the regularly scheduled meeting. So, tonight after we do the presentation um and accept any public comment there may be um then the board will be asked to approve the final levy for taxes payable in 26. So, as part of state law, I have to go through certain things on this um presentation. Um and we'll be talking about the current year budget as well as the proposed property taxes that we're going to be
035recommending later tonight. So, what's up there? Okay, as I said, um I'll give you some background information on school funding. Then we'll talk about the district's budget, and it's a little bit different than cities and counties. Cities and counties, their budget year follows the calendar year. School districts, um our budget year starts on July 1st, goes to June 30th. So, what I'm going to present tonight for the budget is the current year budget um for the 2526 school year because obviously we don't have a budget for the 26 27 year as of this time. Then we'll talk about the proposed property tax levy and uh allow for public comment. One thing I would like to remind people of is that um the state constitution puts the onus of public schools and educating our public school
036students um on the state of Minnesota. It's part of the constitution and it allows for the legislature um to set such provisions for taxation and they do that through the form of state income taxes as well as uh property taxes as they relate to Minnesota schools. [clears throat] So the state's heavily involved in regulating school district funding. Um they set the formulas which determine uh the levies as well as the state aids that school districts succeed. They set tax policies. Um they set the maximum authority for proposed property tax levies. The only way a district can raise the levy above the state maximums is to hold either a operating levy referendum or a capital um bond referendum. Um obviously we had an operating levy in November. It did not pass and so obviously that is
037not included in our tax levy this particular year. So, we presented this when we were out talking to the public about the operating levy, but the general education formula really hasn't kept pace with inflation. In fact, the top line, and I know these are really small numbers, um, represents what the formula would be per pupil uh, if it had kept pace with inflation. That's $8,91. and then the amount that it's currently at, which is 7,481. That gap is about $1,420 per pupil. That would produce an additional about 7.3 7.4 million in revenue annually for the district had the formula kept pace with inflation. Obviously, um it hasn't and many districts are feeling the financial pinch as a result of that. So these are some statistics related to the underfunding of special education. And according to
038the department of education in 2024, um the costs of programs were unfunded by 503 million. They project that to grow to 524 million by the year 2028. Um the cross subsidy for our school district was 3.2 million last fiscal year. So we received funding but our expenses were 3.2 million above um the funding received specifically for special education that has to be picked up by the general fund. Okay. So, as we move into budget information here, I think most people are pretty familiar with this, but the district's budgets are segregated into various funds. The general fund is for the general operations of the school district. Um, as Luke mentioned earlier during the audit presentation, food service fund is a self-sufficient fund, um, and is responsible for the food food service programs within the district. Community
039service fund, um, they go from birth to grave, if you will, because they're, uh, responsible for early childhood programs as well as adult programs and everything in between with the community. Um, the building construction fund is starting to wind down. Uh, that was the result of the bond referendum that was passed back in 2019. Um, we're finishing up projects and so at some point that fund will pretty much disappear for the district unless there's another bond referendum or something of that nature down the road. Um the debt service fund is the fund that's utilized to make our principal and interest payments on bond debt. And then the internal services fund is for our selfinsured health insurance fund as well as our self-insured dental insurance fund. So if you look at the budget, I know there's
040a lot of numbers here and they're pretty small. Hopefully you can see those. Um, as Luke reported, our fund balances are in really good shape as of July, uh, June 30th, 2025. However, we did run a deficit last year, as he pointed out, and we're currently projecting a deficit for this year. Now, special education funding, because of the way that we're reporting certain items, is scheduled to increase. um and we'll include that in the amended budget. But in the original budget the board approved back in June, um we are showing a deficit in the general fund for next year. I anticipate that's going to be closer to break even when we present the um uh the amended budget. Food service fund again in good shape. We're projecting a slight decrease in the fund balance. Um,
041same with community service fund, building construction fund. As I said, the only earnings there right now are interest earnings and then we're spending down um as we complete projects. The debt service fund, again, that's principal and interest payments on our debt. and districts are are mandated by the state to levy 105% of principal and interest payments on our debt. The reason for that is the state wants to make sure that we're able to cover our debt payments as our fund balance grows. And you'll see this later. Um at some point we have to return that money to our taxpayers. So, that'll show up on our debt service levy and I'll point that out. And then the internal services fund I is um just an estimate of what our revenues and expenses are going to be
042and where we anticipate that to be at the end of the year. So, you can see all told um for for the current year, we're projecting 98 million roughly in revenues, 106 million in expenses. Again, a majority of that deficit is in the construction fund. These numbers are going to look slightly different than uh what Luke presented because Luke was presenting last year's numbers. This represents what we're projecting for the current year. You can see revenues from all funds are projected at 98 million. uh the vast majority of that 81% is the general fund and then you can see food service, community service, building construction and debt service. If we take a look just at the general fund, uh a majority of our funding, as Luke presented earlier, comes from the state of M Minnesota.
043We're projecting about 78%. Um, federal funding is about 3.3%. Again, that dropped off over the last few years because of the f COVID funding going away. Um, so it doesn't make up a big piece, but it does make up an important piece in our title programs and in special education. uh local funding is mainly property taxes in the general fund and then we have other so again this seems like a duplication this happens to me every year the audit is presented um and then we do our truth and taxation hearing the numbers look a little bit different because we're looking at two different years but they are pretty similar so you can see um general fund expenditures about 82% we're projecting to be in salaries and benefits which is very common. Um really the other
044thing to to note I guess and I'll note it on the next slide and Luke mentioned it too over 80% of our expenditures go directly to the classroom and that is a high high number. Um, most districts don't see a number that high. And again, this shows it by program. Um, and I'll just mention it one more time. Over 80% of our expenditures go directly to the classroom. Okay. One thing people have to understand, I guess, is that if the district's property tax levy changes, it does not necessarily result in more revenue to the school district. Many of our levies are tied to state aid formulas. And in many cases, what'll happen is a levy might go up, but state aid might fall. And so, it's revenue neutral. Um and and so I guess we're
045a lot different than cities and counties um in that our tax levies are controlled by the state of Minnesota. They set the formulas, they set the maximums. I've told board members this in the past. Um you really don't have a lot of control over the property tax levy. about all you can do is ask the public for operating levy or a bond referendum. That's the only way you can exceed those maximums. The state legislature sets those maximums. Okay. I talked about the difference in um budget cycles and levy cycles between cities and counties. So I won't go through that again. And this is a depiction of a proposed property tax statement. Um, you know, I guess as a reminder on your proposed property um tax statements, there's you're always going to see three jurisdictions. You're
046going to see city, you're going to see the county, and you're going to see the school district. You might see others because there's special taxing districts like watershed boards and so forth [clears throat] that can show up on on the proposal statement, but you know, the city doesn't control our levy. We don't control the county's levy or the city's levy. Everybody operates independently. So, school [clears throat] district property taxes as I mentioned before we have the have a limited authority to levy taxes. Uh the department of education calculates the levy amount in various categories and then that's set by state law and voter approval. So this is just a timeline or a the process for what for property tax levies being set for school districts. So it starts out with the city or county assessor
047in our case uh determining estimated market values on all the properties in the district. The legislature sets the formulas and the tax capacities for school district. County auditor calculates the tax capacity for each parcel of property. Department of Ed calculates the levy limits. The school board sets the levy. And then the county auditor divides our levy amongst the various properties within the district. So, as a reminder, back on September 8th, um you don't know this, but I know it very well, but MDE came out with the preliminary estimates, which we have to review for accuracy and make sure the data is correct and so forth. And we go back and forth with the Department of Ed um and make corrections if they're required. Then on September 22nd, uh the school board adopted or approved the
048proposed levy and you set that at the maximum. The dollar amount did not change between the proposed levy and then the final levy this evening. Um in mid November the proposed property tax statements were sent out. Tonight we're having the public hearing and then after this hearing and public comment we'll ask the board for approval of our levy. So um kind of a highlevel overview um for proposed property taxes in 2026 it is a 2.24% increase. Again, that's just the school district, city, county, um, are going to be different. And the changes by levy category and reasons for those changes, um, I'm going to talk about next. One thing I could I should remind people of. So, these are property taxes payable in 2026. It is for our 2627 fiscal year. So it's for next
049year which we haven't adopted the budget yet um for next year. Um so here it is by category. You can see the general fund levy is going up by 4.1%. Community service levy is actually decreasing. Uh the debt service levy stayed almost identical to what it was last year. And all told it's an increase of 454 almost 455,000 on about 20.7 million. So a pretty modest increase overall. Biggest changes um long-term facilities maintenance. This is in the general fund. Uh it went up by 442,000. The biggest reason for that is the school board chose to underlevy by $400,000 last year. So, we're just going back up to the state maximum. and then in the adjustments column. So I don't think people realize um everything related to levy and everything related to budgets and school districts
050are based on estimates. So if you look at our current year budget, we had to estimate what we thought our enrollment was going to be this year. And you know, these are educated estimates, so we're pretty close. Um, but you do have estimates that go into determining property tax levies. And as a result of this, we have adjustments from previous years. And it happens to be a negative $217,000 adjustment um once the actual numbers become known. Okay. So there's a lot of things that determine an individual taxpayers's property tax. Um one of them for sure is the change in the value of property. Another one is a change in all the values of property within the jurisdiction. Um another factor that goes into property taxes are increases and decreases in the levy amounts. Um, again,
051the state controls many of the funding formulas. Uh, there's voter approved levies that can have an impact on that. So, all three of these items um go into determining how much an individual taxpayer is going to pay. So with that, I'm going to go through an example here, and it may seem fairly straightforward, but I think it illustrates kind of how property valuations can affect a person's tax bill. So here we have two $100,000 homes. And let's assume they're both paying $250 in school property taxes. Okay. Now, if the home on top, the or orange home, increased, if their assessed value increased by 10%, it'd be at 110,000. If the lower home increased by 25%, it would be valued at $125,000. The school district would still collect $500, but how it is spread between the
052properties changes. So, as a result of that 10% increase, the home on the top, their property tax actually went down. And the home on the bottom that had a larger um assessed value increase, their property tax actually went up. But the pie doesn't get any bigger. And I guess that's a question I get quite often. people f um give me a telephone call and ask about their individual property taxes. And the thing that I try and stress to them is that just because your tax bill went up, the school district doesn't receive any more funding. And that's really a hard concept for people. And it it doesn't make sense, but that's the way it is because it's built on formulas determined by the state of Minnesota. Okay. So, I'm going to show you two examples
053here. One is kind of unrealistic. The other one is maybe a little bit more realistic. Um, the examples are of properties where their assessed value has not changed over four years. And you're all going to look at me and say, "Well, that doesn't happen." Okay? And I agree. So, the second example is going to be four um properties with a 19.1% increase over a 4-year time period in their assessed value. Okay? And I'll show you what happens to their school property taxes. So, a lot of small numbers here. Um, but if we look at a residential homestead with a assessed value of $300,000, you can see their total property taxes if the assessed value stayed the same over those four years, their school property taxes would actually decrease by $199. Okay. Again, I recognize that's
054not a very realistic example, but um we're showing it for illustration purposes that well, I'll get to it in a little bit here. And this is a graphical representation of this. If you look at the chart on the right side, there's that $300,000 home, and you can see their property taxes went down over the four years. And here we show an example of a $500,000 commercial industrial property. Again, taxes going down and uh $8,500 agricultural homesteaded property. Okay. If we look at a property that has increased in value 19.1% over the 4-year time period, if you look at the graph on the right, you'll see their taxes went from 1,230 in 2023 to my eyes aren't very good here. 1,287 in 2026. So, you're talking about a $57 increase over a 4-year time period because
055the valuation increased over that time period. Okay, this is um kind of a reminder that there is property tax relief for taxpayers. Um Minnesota has something called the homestead credit refund. They also have a special property tax refund, a senior citizens property tax deferral, and income taxes. And I would encourage people to consult their tax professionals um if they want to look into any of these items that we've listed here. Okay. It doesn't want to go to the next one. I'll get there. Okay, we're just there. There we go. So, at this point, um we would ask that uh the board accept any public comments from people that are here and then later this evening, we'll ask for approval of the final property tax levy. Any comments questions? Um, I'm sure the county auditor's office
056does. We don't have that. Um, that would be with the county Correct. Correct. Yeah. I if if you have a community that's experiencing a lot of housing developments and maybe commercial industrial uh growth, uh it gets spread over a bigger base. That's definitely beneficial. um when it comes to property taxes. All right, that concludes the public hearing. Okay. So, we have 6:26 and the board is uh resuming the meeting. We are on item 10B, which would be the tax levy certification. Um, we've we've heard the entire presentation. Anybody as a last opportunity have any questions for Mark? >> Okay. Would one of you that is on the finance committee be kind enough to introduce this uh tax levy certification? >> Sure. I move that the board approve the tax levy limitation and certification as presented.
057>> Second. >> We have a motion and a second. Any further discussion? >> Okay. Hearing none. All in favor with an I. >> I. [clears throat] >> Any opposed? That motion carries. That would then take us to item 11. I will make the motion that we adjourn this meeting. >> Second and a second. All in favor with an I. >> I. Any opposed? >> Motion carries. Good meeting. Thanks, folks. >> You Thank you, Mark.