State of MN Financing Local Government in the 1980's

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Special Report of VRT & CO. Page 11 The preceding schedule clearly illustrates a major component of how the State resolved its budget "balancing" situation. The June 30, 1983 State /School year ended generally refers to local property taxes payable in calender 1982. State -wide school district property taxes payable in 1982 increased by $256,308,000 or 29% over 1981. A substantial portion of this increase was the direct result of State action changing the property tax /State aid split from 45 %/55% to 57 %/43% for the June 30, 1983 Foundation Aid Formula plus the additional education aids for the same period. This State action occurred during the early part of 1982 which was the latest date by which the State could make such a change to be effective for its 1981 -83 biennium. The 57 %/43% split for F.Y. 1983 will change to 58 %/42% for F.Y. 1984 and 61 %/39% for F.Y. 1985 which will be the end of the current State biennium. State -wide school district property taxes increased by an additional 11% in 1983 and 11% in 1984 to finance this policy change by the State. Local school district property taxes for the school year ended June 30, 1986 will be certified /levied by local school districts in 1984. As such, the property tax /State aid split for F.Y. 1986 is already tentatively set. That split is tentatively set to be 56% local property tax and 44% State aid. Accordingly, the State has already committed itself to increase Education Aids during its next biennium. Any change from this com- mitment will require action of the 1985 Legislature. More important, such commitment places Education Aids a step ahead of other aids in priority. EDUCATION RETIREMENT AIDS Minnesota local government jurisdictions generally finance the retirement plans of their employees. One major exception is teachers working for Minnesota local school districts. Retirement benefits for Minnesota local school teachers are financed by the State of Minnesota as shown on page 9 of this Report. Education Retirement Aids - Teachers /Cities 1st Class include St. Paul ($14,947,300); Minneapolis ($18,893,200); and, Duluth ($3,435,300).