(Page Updated 7/27/20)
Please check out the FAST FACTS sheet available for download at the bottom of this page. If you’re still looking for answers to questions you may have, please contact Superintendent Jeff Horton by phone or email.
Phone: (507)207-2200
eMail: jeff.horton@gfwschools.org
GFW Operating Levy Referendum Information Sheet
New FAQs, July 24, 10 a.m.
Why was the Fairfax school closed, instead of one of the others?
The district’s architect RA Morton completed an assessment of the three buildings and found that Fairfax would have been more expensive to renovate, taking both primary and secondary needs into consideration. The school board chose the option that would cost the district the least in future capital expenses.
New FAQs, July 23, 2 p.m.
What if the school district is dissolved?
In the worst case scenario, the district could face dissolution or closure. The assumption is that no single neighboring school district has space for all of our students, so they would likely be split among many districts. Taxpayers would pay the higher taxes of the neighboring district to which they are assigned, and would still have to pay off GFW’s existing operating and facility debt. The dissolution process is seen as a last resort by the Minnesota Department of Education; as a result, it could take years to go through this process. The decision on where students would go to school would be made at the county level with little input from local school boards. It’s impossible to calculate what the specific tax impact would be to each GFW resident, as no one knows which school district you would be assigned to, but since all neighboring districts taxes are higher, GFW residents would pay higher taxes.
Why is the district selling the Fairfax building?
The new superintendent has decided to postpone the sale of the building to coincide with his 100 day plan in the district to assess all options and hear from the Fairfax community.
After the failure of the building bond referendum in 2019, the district needed to address facility and operations issues by closing one of the three buildings. After much discussion, the Fairfax building was chosen to be closed with students from the intermediate school being accommodated by the other two buildings. The closure allowed for the elimination of several positions resulting in lower operating expenses. The district can sell the building and use that money for other projects so that option was approved by the board.
What are the savings from closing the Fairfax school?
The school district is saving funds for maintenance and overhead of the facility itself. That savings will increase if the building is sold. A number of staff positions were consolidated as students were combined into the two remaining buildings. In total, pre-sale savings are anticipated to be $207,416 annually.
Didn’t the district propose to reduce the superintendent position to half-time?
Yes, it did. But then the previous superintendent took a new position, and in order to attract a quality superintendent candidate who could lead the district through the current challenges, the school board felt there was enough work that needed to be done to justify a full-time position. Since the new superintendent began, the district reorganized administration, saving almost the same amount as was proposed to be saved with a half-time superintendent.
New FAQs, July 23, 8 a.m.
How can school boards save taxpayers money?
There are two options: to restructure bond debt or to “under-levy” or levy less than what the board is authorized to levy. In the case of restructuring bond debt, the school district’s financial advisors closely monitor the bond market. When interest rates fall, debt can be restructured, which decreases interest costs, which saves taxpayers money by decreasing the bond levy used to pay off the debt. School boards can also choose to levy less than the amount authorized. In the case of GFW’s operating levy referendum, the board could choose to levy less than what voters authorized. GFW is currently in statutory operating debt, and it will take many years to build an acceptable fund balance, so decreasing the levy would not be advisable. In addition, the current board cannot dictate what a future board can or cannot do.
What budget reductions have been made and what reductions are planned?
Budget reductions in Fiscal Year 2020 totaled more than $317,000; budget reductions for FY21 (the upcoming school year) total $469,000, including an administrative reorganization that will save the district more than $70,000 annually. Some combination of additional revenue related to one-time COVID-19 funds or additional budget reductions that equal $400,000 will be necessary in FY22 if the referendum is not approved. A list of reductions that have been made so far is in the charts below.
What services does GFW provide to home, private and charter school students?
GFW is a proud partner with local home, private and charter schools. State law requires public schools to offer services to students who are homeschooled, or who attend private and charter schools. The services can include: food service, transportation, special education services and afterschool activities and athletics. GFW spends in excess of $60,000 on support for these students annually.
Is there a plan for renovating the remaining schools?
We have a plan to maintain our schools. Voters have turned down two bond referenda: one that would have renovated three schools, the other that would have built a new campus. There is a plan to engage the community in a process to develop academic and facility priorities. With a new superintendent and a school board election this fall, it will be a perfect opportunity to re-evaluate what is important to community members when it comes to their public schools.
New FAQs, July 22
New FAQs, July 21, 11 a.m
How are local businesses affected?
Businesses are impacted the same as homeowners for the Operating Levy. Agricultural land beyond the dwelling value (house, garage and one acre) and seasonal recreational property is exempt from this levy. All other like valued property is taxed at the same rate. A $250,000 commercial/industrial property is asked to pay the same $215.01 as a $250,000 homestead residential property for this question
Can I deduct the taxes paid on my State and Federal Income Taxes?
If you itemize deductions for federal income taxes, you may deduct all property taxes paid.
What is the current budget deficit?
The unaudited estimated unassigned fund balance for fiscal year 2020, which just ended June 30, is a more than negative $1 million. After a number of cost cutting measures, the fund balance is expected to improve beginning in 2022 (see the chart below). If the referendum is approved, the fund balance can recover more quickly. Having a fund balance, or district savings account, is important so money is available to address unexpected expenditures (such as distance learning costs related to the COVID-19 pandemic). Once we emerge from SOD, we will also avoid short-term interest costs related to borrowing money to pay payroll and other expenses.
What is Statutory Operating Debt?
GFW Schools is now in SOD because of deficit spending. What does SOD mean? Minnesota Statute 123B.81 defines a district as in SOD when its operating debt is more than 2.5% of the most recent fiscal year’s general fund expenditure. As of June 30, 2019, this figure was -5.8% (-$509,068 / $8,777,787). Because this figure exceeded -2.5%, it triggered the District requirement to submit a SOD plan to the MN Commissioner of Education by January 31, 2020. The plan must provide for the reduction of expenditures as well as provide evidence the District will continue to meet all high school graduation requirements. The filing of an updated SOD plan is required annually until the District is out of SOD. In the event the Commissioner disapproves the District’s SOD plan, much of the general fund State Aid the District receives would be discontinued.
Did COVID-19 impact district finances?
The District cannot predict costs associated with the outbreak of COVID-19 such as operational costs to clean, sanitize and maintain its facilities, or costs to hire substitute employees, or costs to operate remotely and support students, faculty, and staff during the outbreak, or any resulting impact those costs could have on the District’s operations. The extent to which the coronavirus impacts the District and its financial condition will depend on future developments, which are highly uncertain and cannot be predicted by the District, including the duration of the outbreak and measures taken to address the outbreak.
What is current enrollment, are we losing a lot of students?
As the chart below shows, enrollment last year was 697 students. Of the 697, 29 enrolled into the school district from another district. There were 148 students that chose another option, including private schools, charter schools, home schools, and other public schools. The district retained about 79% of its resident students, which is comparable to the state average. Enrollment has been declining at an average rate of 2.34% annually over the past eight years. While we don’t believe the sky is falling, we do want to increase our enrollment and increase the percentage of retained resident students.
FAQs posted July 15
What happens if the referendum is approved?
We would be able to retain priority programs while focusing on class sizes and continuing to provide quality programming for our students. Increasing our revenue would allow us to stabilize our finances and we would conduct a community process that helps understand priorities and focuses on strengthening our district. The school district would collect $1,104 per student in additional revenue through property taxes.
What happens if the referendum is not approved?
Our negative fund balance will grow larger, and we’ll have to balance our budget through larger budget reductions and try to increase revenue through another operating levy referendum. We’ve been reducing budget already, but since most of our cost is in staffing, we’ll need to reduce staff. The result is higher class sizes and reduced educational programs. We can assume that this will lead to families sending their children to other options, which further decreases our revenue. In the worst case scenario, the district could face dissolution or closure. No neighboring school district has space for all of our students, so they would be split among many districts. Taxpayers would pay the higher taxes of the neighboring district to which they are assigned, and would still have to pay off GFW’s existing debt.
What if the school district is dissolved?
In the worst case scenario, the district could face dissolution or closure. No single neighboring school district has space for all of our students, so they would be split among many districts. Taxpayers would pay the higher taxes of the neighboring district to which they are assigned, and would still have to pay off GFW’s existing debt.
How do GFW taxes compare to our neighbors?
GFW has the lowest school taxes among all of its neighbors for residences and businesses, and second lowest for homestead and non-homestead farms.
How would the operating levy affect farmers?
Agricultural property will pay taxes for the proposed referendum based only on the value of the house, garage and one acre.
How does the tax impact vary for different types of property?
Tax rates are set by the state of Minnesota on all types of property, including residential, agricultural, seasonal recreational, and business. An operating levy is spread on Referendum Market Value. Agricultural property beyond the dwelling value (home, garage and one acre) and Seasonal Recreational property are exempt from this levy.
Bond and capital project levies are spread on Net Tax Capacity. All property is subject to tax. GFW is not proposing a bond levy. View sample tax impacts for the GFW Schools referendum.
What is the difference between a bond and an operating levy?
An operating referendum is an election asking voters to provide funds that the district uses to run and operate its schools. An operating levy is for running the educational programs at the school and goes to the district’s general fund.
Bond levies are for funds that the school district uses for new construction, updates to existing facilities, and other additions to school properties. GFW ran a bond referendum in November 2019 for a building project. The 2020 referendum is entirely for funds dedicated to learning and addressing the district’s financial situation. Each fund remains separate and cannot be used for another purpose.
How do schools impact the community?
According to the National Bureau of Economic Research, there is a definite correlation between school expenditures and home values in any given neighborhood. A report titled, “Using Market Valuation to Assess Public School Spending,” found that for every dollar spent on public schools in a community, home values increased $20. These findings indicate that additional school expenditures may benefit everyone in the community, whether or not those residents actually have children in the local public school system.
