REGIONAL— The St. Louis County School Board discussed the district’s increasingly precarious financial future at a study session at the Virginia office on Tuesday— and heard loud and clear that they should put both a capital and operating levy referendum before the voters.
“We need an ‘and’ not an ‘or,’” said ISD 2142’s Finance Director Kim Johnson.
The capital and operating levy referenda would provide the district with critical future funding as it stares down a $6 million deficit in its 2026-27 budget.
The capital levy would generate revenue for capital expenditures via a tax levy. The operating referendum would generate revenue on a per pupil basis through a combination of tax levy and state aid. The money received through the operating referendum would be available for any operating expenditure.
At the meeting, the board weighed a $1.5 million capital projects levy that includes funds for software expenditures, technology (such as laptops), two buses, two transportation vans, as well as band equipment and athletic uniforms.
As of the start of this month, utility costs are also a valid use for capital funds. This would allow the capital projects levy to free up funds to be used to cover utility costs across the district.
The proposed capital levy would raise property taxes 2.775 percent, or approximately $18 on a residential property valued at $100,000.
The board also discussed an operating referendum that would raise $1,030 per pupil. A new tax law allocates state matching funds at a rate of 150 percent of the statewide referendum market value per pupil should the district pass an operating referendum of at least $460 per pupil. This significantly increases the amount a potential referendum could generate or, conversely, it reduces the amount in taxes needed to generate the desired amount.
The proposed $1,030 levy would generate approximately $2 million in revenue, with around $1.1 million coming from property taxes and another $900,000 from state aid.
Board member Chris Koivisto said he felt $1,030 felt like a conservative estimate. “I would like to see it be more per pupil,” he said. “So we continue to attract students, so we can get this trend of students leaving to at least stabilize.”
Koivisto recommended an operating referendum up to $1,250 or $1,300 per student. He described the proposal as putting a patch on a problem rather than fixing it. “I’d like a fix,” he said.
Koivisto’s recommendation was met with reservations from Ron Marinaro, who agreed that the district needs the money but worried that voters might not pass both tax levies. “Two could get us none, one could get us one, and one could get us none,” Marinaro said.
Currently, 2142 is one of just a quarter of Minnesota school districts that do not have a voter-approved operating referendum.
The district’s $6 million deficit loomed over the discussion. The deficit is over 18 percent of the district’s operating budget.
The school district has seen consistent declines in enrollment since 2021. Those declines have reduced state funding at the same time as health care costs and inflationary pressures have risen sharply, all driving the district’s budget deep into the red. If both ballot questions pass in November, the money won’t be available until the 2027-28 school year, meaning the district still has to address its deficit for the upcoming school year.
“We’ve got to continue to look at everything,” said Johnson about balancing this year’s budget.
The district has until Aug. 11 to finalize the ballot questions for the capital projects levy and operating referendum.