Rochester school levy 'sustains what we have'

This November, Rochester school district's operating referendum is the sole item on the ballot.

An operating levy override passed in 2006 is set to expire after the 2016-17 school year, and district leaders are looking to secure funding that would put the district in line with the state average for local levy funding to avoid budget cuts throughout the district.

The operating referendum will not go to finance special projects, new buildings or additional programming — it would simply sustain existing funding and programming levels. But some community members are questioning an additional tax that would sustain funding, not provide students with something extra.

"There's nothing extra for the students," said Cindy Maves, co-founder of the Rochester Tea Party. She said she wants to see improvements or extra programming if taxpayers are going to spend extra money on the schools.

Rochester Public Schools is asking for an operating levy override of $9.61 million per year for the next 10 years. The district is seeking an additional $527 per student, bringing the funding per pupil to $836 — in line with the state average for local levy funding. For property tax payers, this would mean about $15 more each month for someone living in a $200,000 home, according to the district.

But district officials say this amount is necessary to avoid looming budget cuts the district would be forced to make. If the referendum didn't pass, the district will need to make $3.8 million in reductions in the 2016-17 school year, and another $4.5 million in the 2017-18 school year to maintain the mandated 6 percent savings in the district's General Fund.

"Again, this referendum is really about sustaining what we currently have," said Assistant Superintendent Brenda Lewis at a Wednesday night community event to talk about the referendum.

The district runs on about a $200 million general fund operating budget each year, with funding from federal, state and local sources. The local levy provides about $23 million of that budget each year — or 12 percent. Eighty percent of its funding comes from the state. By its own calculations, the district said its costs rise about 3 percent each year, so the 2 percent increase from the Legislature this year isn't enough to keep up, Muñoz said.

Following the 2012-13 school year, the district began a planned spend down of its budget reserve, the equivalent to the district's savings account, because the district was spending more than it was taking in. Over time it had built up a significant general fund reserve.

The reserve fund will soon reach the 6 percent minimum limit set by the school board, so it can no longer draw funds from it. That leaves the district with two options — cut the budget or ask voters to approve an increased levy.

While no official decisions on cuts have been made, officials say things that could be cut or scaled back on include Career and Technical Center at Heintz, or CTECH programming, and non-required courses like robotics and accounting classes.

About 80 percent of the general fund budget goes to staffing costs, so officials say this could force staff cuts, including cuts of teachers, which could potentially drive up class sizes. In previous years during budget cuts, class sizes were increased by about three students, said Lewis.

The current levy, which was approved in 2006, funds the district at about $309 per student. This is well below the state average of local levy funding of $836.82, so the district is asking voters for an additional $527.03 per student to bring it in line with that number. The school board also has authority to levy a certain amount without voter approval and receives another $424 through local optional revenue, putting total funding at $1,260.82 per student.

The extra local funding would allow the district to run without cuts through the 2019-20 school year, said Lewis. But because education funding from the state is allotted every two years, and with politics can be inconsistent, Lewis said the district doesn't want to get ahead of itself with projections. She does expect the district and others will continue to lobby for additional funding, and hope for funding beyond what it receives now.

Lewis said with an education-friendly governor, the district is more likely to secure a greater amount of funding. The district predicts a 1 percent increase each year through the 2019-20 school year.

But even with this year's referendum, if the Legislature does not fund the district above and beyond its usual level, the district would be forced to consider cuts heading in the 2020-21 school year.

District leaders said this funding increase is needed and will benefit the community.

"It still benefits the community of Rochester in the long run," Muñoz said. "Really the community in Rochester needs all of our kids to be successful."

Taking issue with cuts

On the list of potential cuts is the recently funded CTECH a possibility that has sparked upset from community members.

Construction on the project broke ground in August and officials are threatening funding for the career and technical workforce development center for high school students and it has not brought positive reaction from the community.

The $6.5 million project was funded by a half-cent city-wide sales tax , but that amount only covered the physical building under construction at the Rochester Community and Technical College, not its programming. Programming for the career and technical center began this fall, with the district offering three sections of its eventual seven. This fall, programming was offered in three areas — agriculture, residential construction and engineering.

"The city doesn't just decide to build a CTECH building — that was negotiated with the school district," Maves said. "So if they didn't have the funding to run a program in that building they had no business talking to the city about putting up a building."

But district officials said funding would only be cut if class sizes weren't full enough to be economic to run.

Muñoz dodged blame Tuesday night, adding that planned conversations began before he took office as superintendent in 2011.

Comparing tax bases

The district compares itself with others in the state in the amount of money each school gets in local levy funding, and said that Rochester should be more in line with those schools.

Rochester's $309 per pupil funding is well below the $836 state average, but many say the district should consider the different tax bases of the locales.

Common comparisons include South Washington County Schools, North St. Paul-Maplewood-Oakdale and Osseo Area Schools.

Greg Gallas, board chair of the Rochester Tea Party Patriots, said the differing tax bases in the Rochester area and many schools it compares itself in and around the metro is an unfair comparison to make because of the largely different tax bases.

Rochester schools would still not be at the level of those schools. The median home price in Rochester is $163,700 — slightly below the state median is $187,900, according to the U.S. Census Bureau.

One comparable district is the Osseo School District, which includes the city of Maple Grove, where the median home price is $242,500, according to the U.S. Census Bureau. Osseo's district has about $1,700 in voter approved local levy money per student, according to the Minnesota Department of Education. Robbinsdale school district's voter-approved money per student is about $1,500 per pupil, according to Minnesota Department of Education district revenue history data. The city of Robbinsdale's median home price is about $172,200.

Tom Melcher, director of finance with the Minnesota Department of Education, said MDE provides equalization aid for this reason, because the levies are a larger burden on individuals where the tax base is smaller, or where the property values are lower.

But Lewis points to Rochester's expanding tax base -- because the area is growing -- that would spread out the burden. So when it is actually calculated it could be slightly lower.

"Rochester is actually in a situation where we have an expanding tax base, so we have more tax payers coming into the city, more businesses coming into the city, than we have people leaving," she said.