Board approves 14 percent levy hike

Sept. 26--The Cloquet School Board set its proposed tax levy for 2015 at approximately $4,885,852 Tuesday night, up from $4,285,929 last year. The increase adds up to $599,922, or approximately 14 percent.

Cloquet Schools Superintendent Ken Scarbrough and Business Manager Kim Josephson both explained to Board members that it has been the district's practice in recent years to set the proposed levy increase at the maximum in September, knowing that the Board could decrease the levy at its final budget/levy vote in December. Josephson said the state is also usually still making changes to the allowed levy amounts when the Board is required to vote on the proposed levy.

"If you set it at something (a number) other than the maximum and something changes to that amount later, you'd have to come back before Sept. 30," Josephson said. (September 30 is the date by which local government units must have voted on a preliminary budget and levy amount.)

A year ago, the Board proposed a 16.2 percent levy increase in September, and voted for a 15.2 percent increase in December.

School Board candidate James Mallery II was in the audience and asked if the 14 percent increase would mean a 14 percent increase in each property owner's taxes.

Josephson said no.

"A 14 percent increase of our levy from one year to the next doesn't translate into a 14 percent increase of property taxes," the business manager said, clarifying that as the tax base of the community grows, it can absorb a levy increase of perhaps 3 to 5 percent.

(Nancy Klassen, finance director for the city of Cloquet, had noted that the city's tax capacity has risen, so if a homeowner has no classification change or change in the value of the house, the city's portion of their taxes should be nearly the same as last year and possibly even a little bit lower even with a proposed 3 percent levy increase.)

"The $4 million [levy] would be divided into the taxable valuation of the district," Josephson said. "As that goes up, there is less impact on the individual taxpayer."

The bulk of the increase would go to the district's General Fund, Josephson said, explaining that the primary reason is something called "Location Optional Revenue (LOR)."

LOR was passed by the State Legislature last spring and signed into law by Governor Dayton in March, and gives school districts greater levy authority. According to the Minnesota Rural Education Association website, the idea behind LOR is the notion that all school districts should have the same opportunity to generate program funds off the Referendum Market Value tax base up to a maximum of $424 per pupil.

Cloquet Board members approved a $300 (per pupil unit) levy plus the $424 LOR levy (per pupil unit) Monday.

The school district needs the increased funds, Josephson said, explaining that the district has experienced a 12 percent increase in its health insurance costs over each of the last two years, which he expects to actually increase, because the district will be forced to offer health insurance to more employees under the Affordable Care Act.

In answer to a question from Board member Ted Lammi, Josephson explained that the local levy pays only a portion of the school district's budget, which is actually over $34 million next year. The remainder comes from federal, state and other local sources, Josephson said.

The Board set a public meeting to discuss the final levy and budget numbers for 6 p.m.Dec. 8 in the Board Room at Garfield School, 302 14th St., Cloquet.

Scarbrough said he hopes residents understand the difference between the levy dollars and the building bond referendum up for a vote in February.

"The building bond referendum is based on the extreme need we have to replace an aging middle school and find room for our increasing enrollments at the elementary schools," the superintendent explained. "Factors such as slight increases in our elementary enrollment and needing more classrooms to implement all-day/every-day kindergarten are causing us to run out of room for our elementary children."

He explained that the tax levy the Board and district staff are considering now and finalizing in December is for operating the district's educational programs.

"To under-levy state-authorized property taxes would leave us without enough dollars to run current programs," Scarbrough said, adding that the state's funding plan for schools is a mix of state aid combined with local levy.

"Not only has the state been relying more on the levy portion to help equalize school funding, an under-levy for something like Local Options Revenue means that we lose the levy dollars AND the state aid dollars associated with that levy."

Roughly 19 percent of the property taxes in Cloquet go to the school district, while 23 percent of the property taxes in Cloquet go to the city. Carlton County gets the biggest share of the property taxes, at 47 percent, and Cloquet Area Fire District at 11 percent.

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