OWATONNA — Residents of the Owatonna Public School District will notice a sharp increase in their corresponding property tax levy next year, as the agency begins the process of paying off building bonds for a new high school in August 2020.

The school board unanimously approved a 33.58% levy increase Monday night, which will be collected during the coming calendar year and turned into revenue for the district during its fiscal year 2021, which runs from July 1, 2020 through June 2021. This percentage comes out to a dollar increase of $4.5 million, bringing the total property tax levy up to just under $18 million.

In addition to the increase caused by construction of the new high school — a project that voters approved Nov. 5 — the district is also projecting a 7% growth in the levy it’s requesting for its general fund, which goes to cover operating expenditures. In total, the district is projecting general fund expenditures of just over $64 million for the current fiscal year, and revenues of just under $62 million.

“If we look at fiscal year 2019, we had a pretty balanced budget for the general fund. We came out a little bit ahead in revenue by about $475,000,” said Amanda Heilman, the district’s director of finance and operations, at the meeting. “We’re going to be planning on seeing a deficit spend of about $2.1 million for our fiscal year 2020 budget.”

One of the main reasons for this funding gap, she noted, was the fact that state aid hasn’t kept pace with inflation. She added that, across Minnesota, special education is underfunded by roughly $822 million — or an average shortfall of $5,700 per student. According to Heilman, this has caused the district to need to subsidize some of those programs more heavily.

“Our cross subsidy that we are picking up from the general fund for special education is around $7 million every year,” she noted, in an interview.

General fund expenditures for 2020 are estimated to come in over $2 million higher than the previous year, and Heilman noted that the main growth — and another reason for the projected deficit — has to do with staff contracts and salaries.

“Over 80% of our budget comes from staff. Contracting increases and things like that happening with our staff are essentially what the difference is,” Heilman explained. “Our aid isn’t keeping up with that growth.”

The finance director added that a statewide teacher shortage has impacted Owatonna’s conversation around beginning salaries and benefits for potential new hires.

“In our last round of contracts, we really did examine the starting wage of teachers to try to attract them to our school district,” said Heilman. “We want to hire the most qualified people.”

While the district hasn’t calculated exactly what this total levy increase would mean for an average home in the area — in part, according to Heilman, because it will vary — it did break down what the new high school will mean in terms of tax impact. That increase should come out to around $17.59 per month on a median value, $175,000 home in the district for the 25-year duration of the bond.

The district is slated to break ground on the new facility in Spring 2021, and should have it completed in time for Fall 2023.

At the meeting, Heilman noted that there are a couple assistance programs for qualifying residents who may be experiencing a sharper increase in property taxes. For more information, visit the Minnesota Department of Revenue’s website at www.revenue.state.mn.us/property-tax-refund.

Reporter Bridget Kranz can be reached at 507-444-2376. Follow her on Twitter @OPPBridget. ©Copyright 2019 APG Media of Southern Minnesota. All rights reserved.

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