REGIONAL- District 2142 is considering a Local Optional Revenue (LOR) underlevy to offset its proposed operating referendum, which would be matched with state funds.
Under a recent change in state law, districts that pass an operating referendum exceeding $460 per pupil qualify for additional state aid at a rate of 150 percent of the statewide referendum market value per pupil. This gives the district an opportunity to increase its annual revenue without increasing the burden on local taxpayers. State funding received through the formula would also include Minnesota’s Seasonal Recreation Property Tax Base Replacement Aid, which is collected from seasonal properties and previously went only to the state. Under the new formula, a portion of that funding could return to District 2142.
“State aid is not available with the board-approved local optional referendum. So we’d get rid of that, which would reduce the taxes, and then we would pass this referendum,” said Kim Johnson, the district finance director.
Johnson said that over the next few years, the operating referendum could minimize taxpayer expenses when the debt-service levy sees a steep reduction in 2029. The board could then add back the LOR. This would allow taxpayers to see a stable tax rate or even a reduction over time, while the district would increase its revenue.
“Doing it this way, I think, is a win-win on all bases,” Johnson said. “So, I think the key right here now is, what level [of operating referendum] do you want to go to the taxpayers?”
The board is now deliberating how much to seek per pupil through the state-matched operating referendum. At a working meeting Tuesday, the board considered options ranging from $1,325 per pupil to $3,040 per pupil.
At the lowest proposed level, $1,325 per pupil, the estimated tax impact would be completely offset by the LOR underlevy. At the highest proposed level, $3,040 per pupil, the owner of a $100,000 home would pay an additional $76 a year. At that level the district would receive $4.5 million, with $2.7 million coming from the state.
Some board members pushed for a higher per-pupil amount, especially as the district has found itself caught between rising operating costs, particularly health care, and a dwindling student population. The district has a $6 million deficit in the 2026-27 budget, but officials said state aid could help stabilize the district’s finances. If the operating referendum passes, the additional state funding would not arrive until 2028.
“I don’t want to make it so that we just can make our bills, and if we break a pencil, we can’t afford another pencil,” Chris Koivisto said, later adding that he wasn’t opposed to a $3,000-per-pupil rate.
“I just think it’s important for our schools to stay open and to be operating at a higher level,” Koivisto said.
“Whatever number we pick, we better be assured we can sell,” Ron Marinaro said, highlighting the possibility of missing out on state aid if the operating referendum fails.
“One thing that’s really important for taxpayers to understand is that state aid is only available if the operating referendum passes. We do not have access to that money if it fails; it’s gone,” Johnson said.
The board is also considering a $1.5 million capital projects levy. Unlike the LOR and operating referendum, the capital projects levy would apply to seasonal recreation properties.
“The capital projects levy puts skin in the game for the seasonal taxpayers, and that’s huge because we have so much market value in our district,” Johnson said.
The board must finalize ballot language for both proposals by Aug. 11 before sending them to voters.