Understanding School Taxes

  • As with public school districts throughout the nation, we receive the majority of our revenue primarily through taxes. Taxes can be confusing, especially with the complexities of laws, rules and regulations, this page is intended to share the basics of taxes as they apply to our school district.  This page will not answer all of your questions, and in those cases where you need more information, please feel free to contact us (see below).

    The information we are providing covers the main subjects we normally hear from our taxpayers.

    Levy process

    Public school systems are primarily funded by federal, state or local taxes.  In certain cases, the School Board will need the consent through the voting process for a specific educational initiative.

    Every owner of taxable property pays property taxes for the various taxing jurisdictions in which the property is located.  These jurisdictions include county, city or township, school district and any applicable special districts.  Our school district is located in five counties; each administers their property tax system, including sending bills, collecting taxes from property owners and distributing the funds back to other taxing jurisdictions.  Each of these taxing jurisdictions sets its own tax levy, which is often based on limits set through state law. 

    Every spring, our counties mail property tax statements to all owners of taxable property.  ISD 728's portion of the property taxes are located differently on each county property tax statement.

    Voter Approved Levies: The amount of voter approved levies is determined by the residents of the school district.  These levies are proposed to residents, voted on during elections and must be approved by the majority.  The voter approved levies can be broken down into three categories: Operating Levies, Capital Project Levies and Bond Levies.

    Operating Levies: These levies must be approved by voters.  The majority of funding for school districts comes from the state; however, state funding has not kept pace with inflation and has forced districts to ask their residents to provide more funding.  These levies can be used to pay for any operational expense of the district including salaries, classroom supplies, utilities and transportation.

    Capital Project Levies: The School Board can ask voters to approve levies for specific capital projects.  Voters have supported capital projects in the past.

    Bond Levies: These levies must also be approved by voters.  Bond levies provide funding for the construction of or the addition to school district buildings and can not be used for operating expenses as described under the operating levies.

    Other Local Levies:All Minnesota school districts have authority from Minnesota statue to levy for specific programs without voter approval.  These amounts are related to specific programs and cannot be used for general operating expenses.

    Why your tax rates change

    There are a number of reasons that change the amount of property taxes residents pay from year to year.  Click on one of the resources to the left for more information. The most common factors include:

    • Change in taxable market value of your property: Each parcel of property is assessed at least once every five years by each of our counties. If the market value of your property increases more or less than the average increase of decrease of other properties in our district, the taxes on your property will also change. Additions and improvements made to a property generally increases its market value.  As each of our communities continue to grow, the tax base also continues to grow; resulting in the levies requested by the school district being spread over more properties.

    • State Legislature: Each year the legislature determines how much the state will fund for a variety of aids provided to school districts. Recent history shows a decrease in how much aid the state is providing for programs such as operating capital and debt service. This decrease in aid causes an increase in property taxes to cover the difference.

      Student Enrollment: Some of the district's levies are funded on a per-pupil basis.  Our district has been one of the fastest growing school district in Minnesota. This growth has created an increase in the levy from year to year. However, as more and more people move to our communities, the tax base increases and the taxes are spread over more properties.

    • Resources to learn more about changes in property taxes


    To read a list of reasons why your property taxes might have changed, click here.


    To know more about Minnesota's property tax system, click here


    Click here to read the Minnesota Taxpayers Association's 2014 edition of Understanding Your Property Taxes.


    Budget Hearings

    Budget Hearings, formerly "Truth in Taxation" hearings, were created by the State Legislature and are required by state law and are normally held on separate evenings by the various taxing authorities (city, county and school district).  Property owners are notified by mail of their projected taxes and the dates for the Truth in Taxation meetings. The purpose of the open forum was to educate taxpayers on the budget, explain upcoming spending priorities and how the school district tax process works.  Budget Hearings are normally held each December.

    Levies

    Achievement & Integration Levy:  This is the local portion of the district's revenue to support the state-approved diversity integration plan.

    Alternative Facilities Levy:This is used to fund deferred maintenance projects approved by the state, which requires a 10-year facilities plan.

    Career and Technical Levy:  This levy provides funding for an approved Career and Technical Education program at $80 times the district's average daily membership in grades 10-12 or 25% of a state-approved budget.

    Community Service -After-School Enrichment Levy: This levy provides supervised activities for school-age care youth.

    Community Service -School Age Care Levy: This levy covers the additional cost of providing services to children with disabilities or children experiencing family or related problems of temporary nature.

    Community Service -Youth Service Levy:This levy is $1 times the district's population and is used for youth development and services.

    Debt Service Levy:  This is used for bond principal and interest payments.

    Early Childhood Family Education Levy: This levy is $120 times the greater of 150 or the number of people under 5 years of age residing in the district in the prior year.

    Early Childhood Family Education Home Visit Levy: This levy is $1.60 times the number of people under 5 years of age residing in the district in the prior year. This revenue is used for providing education services and social services to families with young children.

    Equity Levy: This provides additional revenue for districts with referendum revenue per pupil unit below the 95th percentile for the region. 

    Health and Safety Levy:  This is for approved projects such as indoor air quality, fire hazard and asbestos removal.

    Lease Levy:  This allows a district to levy up to a maximum of $162 per pupil unit for additional instructional space.

    Location Equity Levy: This levy is for districts that have any of its areas located within the seven-county metropolitan area; $424 per adjusted pupil units.

    OPEB Debt Service Levy: This is the levy used to pay for debt issued to pay for other post-employment benefits.

    Operating Capital Levy:This is the local allocation of the state calculated operating capital.  It is used for equipment and facility needs.

    Referendum Levy: This is a voter-approved levy for operating funds. Currently, this amount is $697 per resident pupil unit.

    Reemployment Levy: This is used for unemployment insurance costs.

    Safe School Levy: This is used for security systems, such as alarms, police liaisons and other security and safety programs.

    Transition Levy: This levy mitigates the loss of general education revenue that districts experienced from changes enacted by the 2003 state legislature.

     

    Bonds

    Alternative Facilities Bonding: These bonds are issued to "stretch the dollars" to accomplish larger projects and spread the tax impact over 20 years. 

    Capital Facilities  or Equipment Bonds: There is no tax impact to these bonds, which are issued to fund larger capital expenditures such as a district-wide purchase of computers or a facilities remodeling.

     

    Watch an informational video!