MARSHALL — The Marshall school board is looking at a recommended certification levy increase of 1.11% for 2025 to an amount of $7,971,809.32, the board presented last week. The 2024 levy was $7,884,609.49, so it would be an increase of $87,199.83.

Director of Finance for Marshall Public Schools Sarah Kirchner gave the levy presentation.

Based on the 2024 estimate of market value for property tax rates, farms would see a .048% tax increase, residential homesteads would see a 1.14% increase and apartments could expect a 1.43% increase.

The Ag2School tax credit is a state-wide credit that districts utilize, and gives farmers tax relief while providing schools with building funding, which could offer some relief.

Ag2School will remain at 70% total credit for 2025, meaning agricultural owners will receive a 70% tax credit on the market value of their land.

Residential homesteads could also expect some tax relief.

“The Minnesota State Legislature in 2023 passed laws that affect property taxes for taxes payable in 2025,” Kirchner said. “These provide a benefit to homeowners by increasing the homestead exclusion for valuations of houses between $76,000 up to $517,000 with a maximum exclusion amount of $38,000. This does reduce the property’s taxable value by that credit amount that is given.”

Kirchner also mentioned that the first tier of the Ag Homestead land did increase. The net tax capacity is at .50%, from $2.5 million up to $3.5 million.

“If a land owner has, say $4.5 million, that difference is $10,000 based on that .50%, so they’re receiving a significant tax credit,” Kirchner said.

There are several factors that play into how property taxes are determined, Kirchner said.

“The legislature for Minnesota also sets formulas for the tax capacity, which basically determines how this tax burden is going to be split between the different types of property in your jurisdiction,” Kirchner said, among one of the factors. “That can be residential properties, commercial, agriculture, seasonal recreation.”

Kirchner added that the county auditor then calculates the tax capacity for each parcel.

“You should recall that the school board did vote to certify the maximum levy authority back in September,” Kirchner said. “These limits are also set by the legislature. This is what the vast majority of school districts do, unless they choose to under-levy. That’s typically for a specific program that they are not planning to or choose to implement.”

The Equalization Aid, which is set by the state, and student body count also continues to influence tax amounts.

“Some of those formulas (for the Equalization Aid) have been stagnant for many, many years, and aren’t keeping up with what things are looking like now,” Kirchner said. “We’ve seen a pretty significant shift between state aid and levy funding. So, we are seeing there is less state aid, and we are having to depend more on property tax levies to cover the expenses we are looking at.”

The school district also monitors the trend of inflation, and how the general education fund allowance, the district’s largest funding stream, currently does not keep up.

“Back in 2003, you can see that they were the same. So, inflation was right at the same amount of our funding formula,” Kirchner said. “Over the last 20 plus years now, those are moving further and further apart. At this point in 2025, it is the furthest apart that we’ve seen it.”

Kirchner detailed that the funding formula is trailing inflation rates by $1,364 per pupil, or 18.7%.

The major funds the levy provides to is increases to the long-term facilities maintenance, basic community education, early childhood family education, home visits and total general service debts, which the district is projecting a $766,925 total debt for fiscal year 2025.

“If we would look at Marshall public schools, and say we have approximately 2,400 students, that would result in an increase to our funding of just over $3.2 million,” Kirchner said. “That is a significant amount of money that we could do a lot with, but that formula for general education has just not changed to keep up with inflation.”

There are about 2,666 students enrolled in Marshall public schools for 2024.

“They’re (the state) constantly adjusting for our levies. All of these levies are set based on predictions for what is going to happen in the next year,” Kirchner said. “Even at the end of each fiscal year as final numbers come in, as audits are completed, they are making adjustments to our funding based on the true numbers at the end of each year.”

The school district and other local governments must submit their final 2025 property tax levies by December 30, and the Minnesota Department of Revenue will release property tax levy information in February 2025.