The Perham-Dent School Board approved a 32.23 percent increase on the school’s portion of property taxes for 2015.
A balanced budget for the 2015-2016 school year is expected as a result of the increase.
The levy was approved as part of the board’s regular meeting on Dec. 17, along with the annual Truth in Taxation hearing, which was led by the district’s business manager, Kristi Werner.
The general fund will see an increase of about 50 percent, due mostly to Local Optional Revenue, which was the Minnesota State Legislature’s fix to the so-called “donut hole” funding situation.
The board had previously voted to collect the full Local Optional Revenue amount allowed by the state
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This revenue allows all public school districts to collect up to $424 per student without voter approval. This is in addition to a $300 per student board-approved levy, also authorized by the state government, that became payable on 2014 property taxes.
“That’s quite an increase,” said a community member who attended the meeting.
None of the board members or school administration argued with that opinion.
Local Optional Revenue is projected to bring about $626,000 to the $4 million levy’s total.
Also included in the increase is one-time funding to pay for a new surface underneath Heart of the Lakes Elementary School’s new playground, which cost about $157,500.
The Debt Service Levy will decrease by 100 percent in 2015, as the final payments on the elementary and middle school buildings end.
The Other Post-Employment Benefits (OPEB) levy will increase by 19.78 percent. Werner has previously explained that the district had been paying only the interest on these bonds until recently. The levy increase comes with the final push to pay off the debt, which, Werner said, should decrease the following year, and then the OPEB debt should be paid completely.
“I think another important point is that we’re making a jump at one time to get caught up for what we’ve been behind on for several years,” said board member Jim Rieber, who added that the funding increase would not seem as large if it could have been done over time.
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In districts where one or more voter-approved operating levies have been approved in the past, the new funding options simply overlapped and replaced some of those dollars. However, for districts such as Perham, which have not had an operating levy, the new funds are creating a spike.
“Without it, we’re deficit spending,” said Superintendent Mitch Anderson of the board-approved levy and Local Optional Revenue funds.
A community member asked why the board decided to take the maximum of both funding options presented by the state regulations, and if they would do so again if given the opening.
“We have been inadequately funded by the state now for probably 10 years,” board member Myron Roe said. “The hits you’re seeing are a result of that. …As a school district, for years and years and years, we’ve been cutting (expenses). In the last couple years, with this additional money, we’ve been able to avoid cutting – but we’re still operating on a deficit.”
Board member Sue Huebsch said that, just looking at percentages, rather than overall numbers, can be somewhat misleading when dealing with funding increases.
“Unfortunately, when you go from zero to even $1, you have an enormous increase,” said Roe.
“To be responsible, we need to balance the budget,” Rieber added.
The community member also questioned whether deciding to raise taxes was the best decision at this time, considering that the board may soon be trying to pass a referendum to build a new high school and complete other building work.
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Board members said that, while the timing may not be ideal, looking into building sooner rather than later makes financial sense since interest rates are very low and construction costs have continued to rise.
With this levy increase approved, landowners in the Perham-Dent School District will pay more on their property taxes.
The value of an average Otter Tail County home is $161,900, according to U.S. Census Bureau data. Based on that value, the district’s share of property taxes will be about $445 in 2015; up from $306 in 2014.
In 2014, Perham-Dent had the ninth lowest average tax payment when compared to 10 nearby districts, and was well below the statewide average of $625.
After the increase, Perham-Dent will have the seventh-highest payment among those same 10 schools.
Following the Perham-Dent school district’s increase in its property tax payments, property owners in the district are set to pay less than if in the New York Mills, Fergus Falls, Frazee-Vergas, Wadena-Deer Creek, Underwood or Pelican Rapids school districts in 2015. Of the 10 local districts, property owners in Henning, Detroit Lakes and Battle Lake districts will have lower payments.
