The Prior Lake-Savage Area School Board unanimously approved a 2020-2021 preliminary levy maximum of 3.86% Monday night. The final levy will be approved by the board in December.
The levy will be collected from taxpayers in 2021 and the district will not recognize the revenue until the 2022 school year.
The levy makes up around 14% of the district’s overall budget while approximately 70% comes from state aid, Executive Director of Business Services Julie Cink said.
By certifying a maximum levy of 3.86% now, the board is allowing for some adjustment to be made to that number, if necessary, over the next few months.
The district’s levy is different from a county or city levy, Cink said.
“Our tax levies are either set by state formula or voter approved,” she said. “We don’t really choose how much to increase the levy by. A lot of it has to do with funding formulas that we’re required to follow by law. Ours is simply based on whatever the legislator says we can levy and it’s based on enrollment most of the time, so unless a school district has authority to levy by voters… We can’t really change our levy certification. It’s just on formulas mainly.”
Factors impacting a levy change include state level decisions; issues determined by voters such as a capital projects levy, bond or excess levy referendum; and local factors like abatements, property improvements not previously taxed, and inflationary pressure on the real estate market.
Factors contributing to this year’s levy change include a 7.2% increase in the adjusted net tax capacity, which is the tax capacity of the entire school district; a 7.1% increase in the referendum market value, which is the market value excluding agricultural land and seasonal homes; and a decrease in pupil units.
“It’s important to note that those are big increases and they have been increasing quite a bit,” Cink said.
The valuations of all the properties in the district have increased, she added.
“We also for the first time in years have a decreasing pupil unit so that also is reflected,” Cink said.
At the end of the 2019-2020 school year there were a total of 8,815 students enrolled within the district, a few more than anticipated. There are currently fewer students enrolled than at the end of last year. COVID-19 has had a negative impact on the student population and 10 students were lost just last week, she said.
“I anticipate that we’ll continue to lose a few more students as we get closer to that Oct. 1 number,” Cink said.
There are three components to the preliminary levy: the general fund levy, community service fund and debt service fund.
Increases in these areas make up the necessary increase in the levy, Cink explained.
“Between the general fund and the debt service, those are the two largest portions. Community (Education) is the smallest dollar wise,” she said.
In 2022, the general fund will increase 4.38%, the community service fund will increase by 13.25% and the debt service fund will increase by 2.55%.
What the levy
means for residentsBoard Treasurer Jonathan Drewes said during the work session that while there have been consecutive levy increases over the last three years, he personally has seen a decrease in his taxes as the tax base has grown.
“Most of the public wants to know what does this cost me in dollars not a percentage and odds are your dollars in many cases might actually be reduced next year,” he said.
Cink agreed and said most residents will see a decrease in their taxes.
“They’d have to have a big change in valuation of their property in order to see an increase,” she said.
The district works to ensure the levy is as low as possible every year and has kept the levy under approximately 4.5% for the last decade, except for in 2017-2018 when there was a voter approved levy, Cink noted.
“We really try to maintain that low. We try to be fiscally responsible in our increases and our levy certifications. A lot of people would say I don’t want any increase but unfortunately for our district or any district in the state of Minnesota we are bound by the legislative rewuirements of our formulas.”