Increased property wealth, less state help and higher taxes

by Trinity Gruenberg

trinity@inhnews.com

    Bertha-Hewitt Superintendent Eric Koep held a meeting at the Eagle Bend City Hall on November 16. 

    “Obviously, now you are a part of our district and we want to welcome you. It’s been a tough transition and a tough subject, but it is time to move forward. Welcome to our school district, it’s nice to have you,” said Koep.

    He presented the annual Truth in Taxation meeting that is held at the school in December. He held this special meeting for Eagle Bend.

    The funds for the school are broken up into four separate funds for food service, general fund, community service and debt service.

    The revenue for fiscal year 2017 was $6,766,224. Of that, 55.84 percent is aid and payments (state aid), 9.6 percent is property taxes, program revenue (special ed, title one, bond) was 31.81 percent and other revenue (shared sports and activities) was 2.68 percent. 

    Expenditures were $6,264,914. Community education was 2.97 percent of that, property was 12.28 percent, fiscal and fixed were 4.58 percent, administrative was 4.74 percent, support services (paras, cooks) were 16.70 percent and direct instruction was 58.16 percent. They finished in the black with $501,310. 

    “It’s extremely good for a district our size,” said Koep.

    This year they offered free breakfast and lunch. They had a total revenue of $350,868 with $298,559 in expenditures and came out ahead with $55,310. Koep attributed it to more kids eating, which brings in more money from the state to fund the food service. 

    Community service brought in $172,868 with expenditures of $182,564 ending with $9,696 in the red due to the day care that receives roughly 50 kids per day.

    “It’s hard to have that program run in the black with our day care center in the school.  The board has committed to that and provides that service to the community,” said Koep.

    The fund balance for the school is nearly two million dollars. 

    The enrollment has increased at the school since 2014. Bertha-Hewitt received 30 students from the dissolved Eagle Valley district and 15 from other districts this year.

    In the dissolution, Wykeham Township and the northern half of Eagle Valley Township were added into the Bertha-Hewitt District. The district received 48 percent of the referendum market value.

    “When you get that much market value and not many kids, that hurts with the assistance from the state. Now that we are ‘property wealthy’ with less kids, it caused taxes to go up because we are getting less state help,” explained Koep.

    The district received $1.5 million grant for demolition of the Eagle Bend School building. 

    “The committee is working to see if the money can be used for fixing and updating the building or other uses. The committee has a year to look at options for the building and at that time they will decide if it will be fixed up or torn down,” said Koep.

    Koep has been in discussion with Senator Paul Gazelka and the DEED company to decipher the language for the grant money and its intended purpose.

    “Eagle Bend School Building-$1.5 million for a grant to Independent School District 786, Bertha-Hewitt, or other independent school district to which that portion of the territory of the former Independent School District No. 2759, Eagle Valley, containing the Eagle Bend school is attached by action of the Todd County Board, to prepare and develop the Eagle Bend High School building site, inducing demolition of the buildings and infrastructure, to remove life safety hazards and to facilitate the redevelopment and reuse of the site. This appropriation does not require a nonstate contribution.”

    The way Koep was informed of the grant, they could tear it down and use the remaining money to build something else as long as it stays a public entity. They can have the grant for two-three years. One bid he received for demolition was done through looking at the building online and structural information was $600,000. DEED, who holds the grant, interpreted it that if there is any money left over, it goes back to the state.

    They bonded the Eagle Valley debt of $1.2 million with a low interest rate of two percent the first four years. The bond was spread out over six years starting with $116,639 the first year and $101,150 the last year. This is only paid by the Eagle Bend taxpayers. 

    Their market value in 2015 was $185,920,393 and increased to $285,757,973 in 2016. 

    “We gained that much property value with 30 kids and that’s why taxes went up,” said Koep.

    Two years ago they passed a referendum for $120,000 per year. The state paid $80,000 and the district paid $40,000. Due to the increased market value, the state is paying closer to $40,000. The bond for the heating, ventilation and air conditioning equipment received no state help. 

    The referendum increased over $17,000, at $760 per student due to more students and less state aid. Local optional revenue increased over $11,000 for the same reason. The board approved an additional $424 per student and now they are not receiving that money because Eagle Bend already paid their taxes for this year. The commissioners are deciding on what to do with that tax money if it should go to the Eagle Valley debt or follow the students to Bertha-Hewitt and Browerville. 

    The total increase for the levy is $208,406 (over 28 percent).

    The district’s building debt is approximately $3.15 million that will be paid off in 2029. The school board voted to no have Eagle Bend pay on the building debt, but the statute would not allow it.

    A $100,000 home will increase in taxes $346 per year, a $200,000 home will increase over $800 per year.

    “It’s a big hit for a small community with fixed incomes,” said Koep. 

    One man said his taxes are going to increase $2000. Another shared his is going up $12 per acre for a total of $37 per acre.

    Brian Prather asked about the assets of the Eagle Valley district, where it went and if they sold it could it be put on the debt?

    The Minnesota Department of Education statutes said that the Browerville and Bertha-Hewitt schools received the contents of the buildings as well. Both schools divvied up the supplies to be used at the schools, such as lighting equipment that went to Bertha-Hewitt for use in their plays. If they choose to sell any of the assets, it would go towards the debt. 

    Prather inquired about the machines in the wood shop that nobody knew what happened to them. Neither school got anything out of the shop. It was either employee’s property or was donated to a veterans group before the dissolution was concluded.

    The district spent $12,425 in fiscal year 2016 per student that is reflected in their high test scores, graduation rate and college attendance. 

    The up coming tax statements from the county are incorrect, and new ones will not be sent out until spring. The county accidentally put the Eagle Valley debt onto Bertha, Hewitt and Browerville residents as well, which they do not have to pay on. Call the county treasurer if you have questions. 

    If they sold the parcels of the Eagle Bend school property to anyone, the funds would go towards the Eagle Valley debt and lower taxes by that amount.

    “Say the parcels sold for $20,000. That would go towards the Eagle Valley debt that would be spread across Eagle Bend and Clarissa residents, you’d only save dollar bills,” said Koep.

    The city of Eagle Bend has paid for the fees associated with the Hilltop Kitchen. The public has not been affected tax wise for the kitchen. The city owns the parcel for the kitchen that will be made official in the next few weeks. 

    “We can’t take the school building from Bertha until we know what we are going to do with it, otherwise Bertha looses that grant money. That money can only be used by the school district,” said John Rachuy. 

    “There is a process. We need to find something that can pay its way. People don’t want to see it torn down. It’s a local landmark. If we can’t find anything to do with it, we have to tear it down,” said Rachuy. 

    Rachuy would like to see more housing come in. He thinks bringing in more senior living/retirement housing, would open up the housing market in town. They have been told an industrial park is not real viable in northern Todd County. 

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