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School tax levy scaled back

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news Perham, 56573
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Perham Minnesota 222 2nd Avenue SE 56573

Scaling back its objectives, the Perham School Board dropped its plea to the taxpayers by $600,000 and two years.

The board finalized the ballot question that will go to the voters Nov. 3.

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Originally, the board sought a levy increase of $699 per student, which would generate about $1 million a year--depending on enrollment fluctuations.

Instead, the board reconsidered and at the Sept. 1 meeting, backed off to $395 per student--which will generate about $500,000 per year.

The board made another concession: instead of seeking a five-year term on the levy, taxpayers will only pay the increased levy for three years.

At $395 per student, owners of a $100,000 home will pay an additional $68 a year. For a $250,000 home, the tax increase will be $171 annually. For a $1 million home, the increase will be $684 per year.

A tax increase equivalent to about $200 per pupil was also approved by the school board--but voters will not have a vote on the matter.

The Minnesota legislature gave all local schools the one-time option to bond for certain long-term contract obligations to retired teachers. In Perham's case, it is about $2.6 million, to meet obligations to year 2046.

Instead of paying the obligation annually from general education funds, the school will bond for $2.69 million, which will then be placed in a trust that will pay out to the teachers.

To repay the bond debt, the school will levy the equivalent of $200 per student for the next seven years. This will have the affect of "freeing up" about $150,000 to $250,000 a year for educational expenses.

To the taxpayers, this will mean an increase on their 2010 tax bill. For a $100,000 home, it will be a $10 increase each year. For a $250,000 home, it will be $42 a year.

The board voted unanimously to approve the special levy, referred to as a OPEB bond issue. This special levy requires only board approval--not a referendum. In addition, the taxes are spread across the district's entire tax base--including seasonal homes and agricultural land.

At last count, 72 school districts have sold OPEB bonds and approved the levy, and more are expected to follow before the state-imposed Oct. 1 deadline.

On the increased operating levy, a tax increase equivalent to $395 per student for the next three years, the board also voted unanimously. The question will be on the ballot Nov. 3. By state law, the tax base is narrower with an increased operating revenue levy, as agricultural land and seasonal homes are exempt.

"This buys us time for a couple of years...it doesn't add any fat to the budget," said Superintendent Tamara Uselman.

Even with the combined revenue from the two levies, the school is projected to be "in the red" by the 2013-14 school year. The projections are based on several assumptions: Inflation rate of 2 percent, slight declines in enrollment, and no increases in aid from the state.

As the board prepared to vote, comments were taken from the audience.

"I wish you would reconsider," said Bernie Steeves, Otter Tail Lake area, "$500,000 (a year) is too much. People don't have the money; and it's getting worse."

Steeves is one of a group of property owners that opposed the unsuccessful 2008 levy referendum. He stated last week that his group would support a levy for about $300,000 a year.

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