School Board considers operating levy
REGIONAL – Taxpayers could get a break on repayment of more than $78 million in bonds used to finance the restructuring of the St. Louis County School District.
But any potential relief could be more than offset if the district opts to pursue two different levies, including a possible operating levy which could now be approved without a public vote.
Superintendent Teresa Knife Chief reported to the board that the district would receive $4 million from a fund established for Iron Range schools. The state Legislature gave approval to set aside $38 million for school improvements across the Iron Range. Because the St. Louis County School District had recently completed a major overhaul of its schools, Sen. Tom Bakk, DFL-Cook, included a provision allowing the district to apply for funds to be used to help pay off the bonds that paid for the project.
Meanwhile, the district may also be able to refinance bonds that were obtained through the Buy America program. Congress is defaulting on those bonds because of sequestration, which has frozen some government funds.
Business Manager Kim Johnson said Ehlers and Associates included a clause that allows the district to refinance the bonds— and at current interest rates that could reduce the taxpayers’ cost to pay off the bonds by as much as $2.9 million, she said.
But taxpayers may not see the impact of any savings if the board opts to impose two new levies now under consideration.
The state Legislature gave districts the ability to levy up to $300 per student without voter approval as part of the package of education funding approved this session. Dubbed the Student Achievement Levy, the objective was to ensure more stable and equitable funding for education across the state.
Districts already have the ability to seek additional funds through a general excess operating levy, but voters must approve.
Bakk, who introduced the Student Achievement Levy, said the current system is unfair because districts with larger tax bases and substantial property wealth can more easily pass levies. “ISD 2142 doesn’t have a voter-approved levy and can’t get one, so they’re really getting left behind,” he said.
Johnson said the levy could generate more than $500,000 for the district and suggested on Monday, the board might consider pursuing the levy to fund Early Childhood and Learning Readiness programming. “I wouldn’t recommend just approving the levy,” she said. “We’d have to have a purpose for the funds.”
But board member Troy Swanson was reluctant to pursue the levy, noting that it would be unpopular with the public to raise taxes without giving them any say.
Board Chairman Robert Larson also cautioned that while the district may state how it plans to spend the money, the dollars would flow into the general fund and the district could not guarantee they might not be diverted for other uses.
Meanwhile, the district may revisit the prospect of seeking a lease levy to create more classroom space at the Cherry School.
The board had weighed that option in 2012 but did not pull the trigger. However, overcrowding at the school has revived talk of the lease levy.
A lease levy would not require voters’ approval, but must be okayed by the Minnesota Commissioner of Education.
Cherry’s growth is being fueled by students open-enrolling into the school. In 2012, about a quarter of the school’s students came from other schools with the vast majority migrating from Hibbing to Cherry.
There are a number of restrictions for use of a lease levy. The levy can be used to finance payments on a lease or a lease-purchase of a space that is newly constructed specifically for the district. However, the addition cannot exceed 20 percent of the square footage of the existing building.
In addition, the levy is intended to cover only the “capital” portion of the lease costs and may not be used to pay for custodial or maintenance services. Furthermore, the district’s annual levy is limited to no more than $150 per resident pupil unit.
Before the commissioner can approve the levy, the district is required to submit information on the financial justification for the lease, the terms and conditions and a description of the space and its proposed use.
The levy discussion is expected to be part of a larger conversation on how to meet Cherry’s space crunch during a special study session scheduled for 3 p.m. on July 16 at the Cherry School.