For some Twin Cities school districts, tax savings come with a trade-off

/ 26 September 2013 / eunice

Christopher Magan, Pioneer Press, September 26, 2013 – Homeowners’ property tax bills in many Twin Cities public school districts will drop next year, but voters will give up authority over existing levies to get the savings.

School funding changes approved by the Minnesota Legislature this year give district leaders more control over existing property tax levies and bring new state dollars to districts in communities heavy on neighborhoods and light on business and industry.

Take the Rosemount-Apple Valley-Eagan school district, for example. It is the state’s fourth largest and made up primarily of bedroom communities. Under the new funding rules, it will see more state money, driving down the cost of its operating levy by $5.6 million next year.

That means the owner of a $225,000 home — the district average — could see a tax bill that’s $128 lower than this year.

However, the district has a levy increase on the fall ballot seeking to increase its operating levy by $10 million annually. With the new state aid, the cost of that increase for the average homeowner would be $56 annually rather than the $184 district leaders had projected.

Rosemount and similar districts are receiving more “equalization aid,” meant to balance the cost of tax referendums that often cost suburban residents more because their communities have fewer businesses to chip in.

Districts across the Twin Cities also receive more equalization aid when they convert $424 per pupil of existing tax levies from voter control to school board control.

That money is meant to give districts a reliable funding source to offset the higher cost of doing business in the Twin Cities.

Scott Croonquist, executive director of the Association of Metropolitan School Districts, said the changes were meant to make school funding more equitable and reliable. Lawmakers also gave school leaders the power to convert $300 per pupil of existing taxes from voter to school board control.

“I think what the Legislature approved was a real win-win situation,” Croonquist said. “I think it’s all around good for taxpayers, good for families and students and good for the state.”

Not everyone agrees.

Conservatives have criticized the changes for taking local tax decisions out of the hands of voters. And while increases in state education funding do not come directly from property taxes the money comes from other taxes Minnesotans pay.

State Sen. Branden Petersen, R-Andover, who sits on the Senate Education Committee, characterized the latest funding changes as breaking a contract between voters who approved the initial tax requests and school district leaders who are taking control of decisions about those taxes.

“Voters made that decision. Now you’re changing the rules,” Petersen said. “I think it’s a way for the DFL to say they gave a funding increase without having to appropriate money for it.”

Petersen said the changes give uneven tax authority to school boards around the state and further complicate a funding system that is hard to understand and needs reform.

“The more we do a piecemeal approach the harder it is to do comprehensive funding reform,” he said.

Jeff Solomon, finance director in Rosemount, said if his district had not converted the $424 per pupil of location equity funding from voter to school board control it would have lost out on more than $1 million in new state aid.

Similar decisions have played out around the metro where many districts have taken advantage of additional equalization aid that comes with the new power to convert taxpayer approved funding to school board control.

Those new revenues also have the potential to lower the cost to taxpayers of various requests to increase operating levies on the ballot in November. Districts will finalize their levies by the end of the year.

“Many districts are in that situation,” Croonquist said. “I think it was the intent of the Legislature, they wanted to provide more property tax relief and a more equitable playing field.”