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School board reviews 2021 budget

New London anticipates 3% tax rate cut

By John Faucher


The New London School District presented its preliminary budget estimates for the 2020-21 school year at a Sept. 14 budget hearing.

In the proposed budget, property owners can anticipate a 1.5 percent reduction in the tax levy, or a 3% decrease in the mill rate from $7.94 to $7.63 per $1,000 of equalized value.

District Administrator Scott Bleck said budget estimates were based on the latest data available and in anticipation of a formal approval, typically occurring at the October special board meeting.

Business Services Director Joe Marquardt then gave an overview of the proposed budget.

Marquardt explained this year’s budget projected a 1.5% reduction in the tax levy and a 12.1 percent increase in overall spending.

He said spending is higher because it includes the Parkview and Readfield project expenditures that were not paid out before June 30.

“These expenditures do not impact the levy or mill rate figures,” said Marquardt.

He explained the 2020-21 projected decrease reflects the board’s decision last year to levy an additional $470,000 as a low revenue limit district.

“Equalization aid follows on the next year’s spending,” said Marquardt. “So if you spend more in the prior year, you get more equalization aid from the state in the next year.”

He noted that the state’s revenue limit formula put in place during the 1992-93 school year assigned all districts in the state with a per pupil amount for that year.

“That’s where you stood and stayed until either the community passed referendums to allow you to either increase that revenue limit authority or there were state statutory increases,” Marquardt explained. This year, $10,000 per pupil is the low revenue limit ceiling. New London is below that $10,000 so there are additional dollars to spend.

“Last year was below $9,700, so the board was then eligible to again levy more,” said Marquardt.

Last year in the state’s biennium budget, any school district spending below the state threshold [$10,000] had the authority to levy up to that increase and receive additional equalization aid the next year.

Marquardt said the district can levy an additional $281,930 in the 2020-21 school year because the district still qualifies as a low spending district. Equalization aid is received on that spending in the 2020-21 school year if levied by the board.

He reminded the audience that the budget hearing numbers were based on projections as of mid-August and can change up until levy certification on Oct. 26.

Variables that can change the numbers include finalized pupil counts, Department of Revenue certification of property valuations and actual state equalization aid numbers made available on Oct. 15.

“Equalization aid is very important to the New London School District because we are aided at about 60 percent,” Marquardt said.

That equalized aid offset the amount paid by local property tax owners in the district.

Revenues, expenditures

Marquardt said based on July 1 DPI estimates the district could assume a $613,000 increase in state aid and a 2.5 percent increase in state property valuations.

Valuation changes do impact the mill rate but does not provide more revenue to the district.

Marquardt noted that there are 16 taxation jurisdictions within the school district. He said where you live can determine property valuations and other factors beyond district’s control.

The 2020-21 proposed New London school budget assumes a $300 increase in revenue authority, Marquardt said.

The biennium state budget allows all school districts to increase their revenue limit authority by $171 per pupil, and New London is eligible for an additional $129 per student because its low revenue limit eligibility.

“This is because we are below that $10,000 per student ceiling,” said Marquardt.

Increasing expenditures within the budget include an anticipated 8% increase in health and dental insurance plans.

An increase of 2.1 full-time equivalent certified staff.

A .75 FTE support staff increase and a 1.81 percent wage increase.

The proposed budget also includes an additional $75,000 for supplemental compensation and years of service stipends for certified staff.
The budget anticipates a membership reduction of 33 FTE students and a net loss of 111 FTE students to open enrollment.

COVID-19 related assumptions

Marquardt said the district received $220,847 in CARES Act Funding, of which $20,000 is shared with three private schools in the district.

He said other revenue adjustments are possible from local, state and federal entities as the fiscal year progresses.

So far the district has paid or encumbered COVID-19 supply and equipment expenditures of $157,721 as of Sept. 9.

The district hired two long term substitutes for high school programming related to virtual instruction and one long term substitute for intermediate/middle school programming related to virtual instruction.

Marquardt also said the district could expect temporary increases to support staff hours resulting in a daily increase of 63 hours across the district. If maintained for the school year, these expenses could exceed $200,000 excluding benefits.

The district also budgeted $40,000 for its contracted cleaning services and anticipates an increase in supplies, curriculum resources, substitute staffing, utilities and PPE-related expenditures.

Marquardt said those expenditures are being closely monitored and an estimated impact ranges from $500,000 to $1 million depending on the duration of the pandemic.

Board debates underlevy options

The board discussed the possibility of underlevy options within the board’s authority for this year’s budget.

Board members Chris Martinson, John Heideman and Terry Wegner were in support of underlevying the Fund 10 tax levy amount by $250,000.
Marquardt explained the impact of the requested underlevy.

In comparison he said if the board levied to their maximum authority the levy would be projected to drop by 1.5 percent and reduce the mill rate by 30 cents over last year’s $7.94 per $1,000 rate.

If the board would underlevy by $250,000 the levy projection would drop to 4.2 percent and reduce the mill rate by 51 cents over last year’s 7.94 per thousand rate.

He said the projected impact of the underlevy would result in $110,000 less in state equalization aid. It would result in an increase in taxes by 8 cents due to the prior year underlevy. The net impact of the $250,000 underlevy would equal 13 cents, or a $13 dollar reduction in taxes on a $100,000 home.

Marquardt noted that the board would not have the authority to re-levy for the $250,000 in future years.

He said further analysis shows a larger increase in the levy the following year.

Other board members shared concerns about unknown factors at this time and felt it was too risky to reduce the allowable levy limit.

Board members Connie Neely, Tina Ruckdashel, Pete Bosquez and Mark Grossman voted against the underlevy option because they felt that if state funding is not favorable, the district could put itself at future risk by reducing the allowable levy.

Board members Chris Martinson, John Heideman and Terry Wegner voted in favor of underlevying Fund 10 by $250,000.

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