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What is Truth in Taxation?
Each year, school boards like ours are required to hold two meetings—one in September to propose the local levy (the amount of funding raised through property taxes) for the next year, and another in December to officially approve it. While school boards have some say in the levy, they are mostly following state guidelines. Interestingly, the December meeting usually doesn’t result in a change; it’s just a formality to ratify what was proposed in September.
In the past, local levies were a bigger part of school funding. However, today, the majority of a school district’s budget comes from the State of Minnesota. Local levies make up a smaller portion, with Pierz's levy accounting for about 18% of our total budget.
How Does Pierz Compare to Other Districts?
Pierz’s local levy is much smaller than the state average. Last year, the local levy per student in Pierz was $1,037, while the state average was $2,545. This difference of $1,500 per student means Pierz could be receiving an additional $1.8 million in funding if our local levy were closer to the state average.
Why is this the case?
- No Voter-Approved Excess Levy: Pierz is one of only 90 districts in Minnesota without a voter-approved excess levy referendum.
- Lower Debt Payments: Our debt payments for past construction projects are lower compared to many other districts.
- State Support: The State of Minnesota helps fund a portion of local levies, but this varies based on the property wealth of each district. Wealthier districts with higher property values often receive no state support, which places Pierz below the state average.
What is Equalization, and Why Isn’t It Working as Well?
Equalization was designed to make school funding more equitable by helping districts with lower property values (like ours) get more state support for their levies. This system helps districts without major industries or high property values by offering a larger percentage of funding from the state. However, there’s a flaw in the system: the state formula hasn’t kept pace with inflation or rising land values. As property values increase, the state pays a smaller portion of the levy, shifting the burden onto local taxpayers. In some districts, there is no state support at all. In Pierz, while our levy dollars have decreased, property values have gone up, causing slight increases in local taxes. It’s an unintended consequence of a formula that hasn’t adjusted for changing land values over time.
In Summary
Over the past five years, any increases in property taxes for Pierz taxpayers are a direct result of the state's portion of school funding not keeping pace with rising property values. While the district’s revenue has remained the same, the local portion has had to cover more as the state’s contribution shrinks.
That said, Pierz school taxes are still much lower per student compared to most districts across Minnesota. We’ve worked hard to build an exceptional school system while keeping taxes among the lowest in the state. However, this balancing act has become increasingly difficult in recent years due to rising costs—staffing, fuel, equipment, utilities, and more.
We are committed to maintaining the quality of education while being mindful of the financial impact on our community. We hope this helps clarify how Truth in Taxation works and why it matters for our community. Thank you for your continued support of Pierz Public Schools!
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