ELY- The Ely School Board will hold a special meeting on Monday, Aug. 5, at 6 p.m., to discuss a new capital project levy. Minnesota’s election timeline for a new levy is the reason for the special meeting date. If the school board decides to pursue a capital project levy, it must file with the Minnesota Department of Education by Aug. 7 and formally adopt a resolution calling for a ballot on the new levy by Aug. 13.
Addressing the shortfall
As previously reported, ISD 696 has a half-million-dollar budget shortfall for the 2024-25 school year. To make up for the gap, the school board opted to spread the shortfall across the next two fiscal years to lessen the impact on students. The district also found ways to cut expenses and increase revenues to slice the shortfall in half during this fiscal year.
That leaves the Ely Public Schools with a quarter million shortfall to make up in 2025-26. “We need to do something,” said Superintendent Anne Oelke. “Without more revenue, we will need to make more cuts.”
A capital project levy
As part of its efforts to address the shortfall, the school board considered adding a capital project levy to the November ballot for the voters to approve or reject. The advantage of such a levy is that it uses a larger tax base than an operational levy, which lowers the cost to residents. A capital project levy would help alleviate the shortfall by shifting technology and building-related expenses out of the general fund, allowing more general fund dollars to be used for operations.
The district invited its municipal financing and debt advisory consultants from Ehlers Public Finance Advisors to present the financial numbers and timeline at the school board’s July 22 study session.
ISD 696 currently has an operational levy in place, which it intends to renew. The problem with an operation levy, however, is that it places a greater burden on year-round residents.
“Seasonal recreation (properties) are not included in operating referendum levies,” Beth Downes of Ehlers noted. Capital project levies do tax seasonal properties, which makes the tax burden on residents far less.
“For a home with a $200,000 estimated market value, a capital project levy providing $350,000 of annual revenue would add $61 in taxes,” said Elhers’ Jodie Zesbaugh.
Why all the levies?
As the Ehlers consultants explained, more and more Minnesota school districts are resorting to new operations and capital project levies to close the funding gap in state funds. Before last year, Minnesota’s school funding formula did not have any indexing for inflation. Zesbaugh presented an inflation analysis, starting with 2003. The result explained much of why Minnesota public schools have been struggling.
“Had the funding allowing increased by the rate of inflation every year since 2003, the allowance per student would be $8,645,” Zesbaugh said. The 2024-25 allowance from Minnesota is $7,281 per student, which is a gap of $1,365 compared to what schools received in 2003.