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DC levy fails, giving school district a chance to get it right
NOV. 11, 2013

By Jennifer Kotila
Staff Writer

DASSEL-COKATO, MN – The residents of the Dassel-Cokato School District voted down a proposed operating levy, which is probably the best thing for the district at this point, according to Superintendent Jeff Powers.

“I think the result of the levy is what should happen,” Powers said. “The issue became too confusing.”

With a 28 percent turnout, voters rejected the school support levy, with 1,281 voting against it and 337 voting for it.

At the Cokato polling place, 812 votes were cast, 665 “no” votes and 147 “yes” votes. Dassel had 806 voters, with 616 voting no and 190 voting yes.

Less than a week before the levy vote was to take place, the school district was informed the question on the ballot was wrong, and residents were sent a letter explaining the error.

The DC Levy Committee encouraged residents to vote “no” once the error was discovered in order to give the district a chance to get the ballot question correct.

“We’re frustrated that it turned out as it did,” said chairperson Kevin Dahlman. “On the other hand, it gives us the opportunity to get the correct information out to the citizens for next year and be able to vote on the proper dollar amounts.”

He noted the committee is thankful for the patience of the voters as the school district resolves the levy issue.

The question should have asked voters to approve the full levy amount of $650 per pupil unit, which the school board decided was the amount needed to maintain current programming.

Assuming that a non-voter-approved levy amount of $212 in Location Equity Aid enacted by the state legislature in 2013 would be above any voter-approved levy amount, the question on the ballot only asked citizens to approve a $438 per pupil levy.

However, it came to light that the $212 in location equity aid is subtracted from any voter-approved levy amounts.

If approved, the levy would have only generated a total of $438 per pupil unit, less than what the district needs to maintain current programming.

The failure of the levy referendum allows the district to have a do-over to get the wording on the ballot correct in order to receive the amount of money needed to continue the current programming within the school system.

Powers noted the district still needs to ask the community to pass a school support levy in the near future, but the failure of this request gives the district a chance to get the question right.

The school board will meet Wednesday, Nov. 13 at 7 p.m. to canvass the results of the election and discuss its next steps.

“I’m pleased,” Powers said of the election results. “I want the community to completely understand what they are voting for when they go out to vote. It was too confusing this time.”

Why so much confusion?

“As a representative of Northland Securities, I take full responsibility for this misinterpretation of these two funding mechanisms and the interaction of these two revenue categories within state law enacted in May of 2013,” said Mike Hoheisel, senior vice president of Northland Securities, the district’s consulting firm.

He noted that the message from the school district was consistent in discussing the need for $650 per adjusted pupil unit in order to provide a quality education to the students and community of DC.

The misunderstanding was in how location equity revenue interacted with a voter-approved levy.

“I hope we can assist in getting the circular formula removed from state law, fixing this error for [DC],” Hoheisel said. “If we can get the state law fixed, it would also ensure 96 other school districts in the state will not have to go through this very problem in the course of the next decade.”

The oversight occurred because Northland Securities was concentrating on getting the initial dollar amount of the request set at the appropriate level of $650 per adjusted pupil unit, and was not focused on the state’s circular formula created in the second year and beyond.

The circular formula was created by the tax bill through the Minnesota Legislature this year, and comes into play between the location equity revenue (DC qualifies for $212), a local school board referendum authority (up to $300), and the operating revenue authority approved by voters, all of which the DC School District qualifies.

Districts automatically receive the location equity revenue of $212, but the school board would have to pass a resolution to accept the local school board referendum amount of $300 – for a total non-voter-approved levy amount of $512.

Since the DC School District already has a voter-approved operating levy of $469 in place for the 2014-15 school year, $212 of that will now fall under the location equity revenue category.

The remaining $257 is the voter-approved operating levy amount. If the district chose to, it could have passed a resolution enacting its authority to levy an additional $43, to bring its total levy authority in 2014-15 to $512, without asking voters for approval.

However, the local school board discussed this option at a meeting earlier this year and did not think it was fair to the taxpayers.

Now, moving forward to 2015-16, when the current operating levy will expire, the district could levy residents $512 without voter approval through the legislation passed in 2013.

The district automatically qualifies for $212 location equity revenue, and the board can pass a resolution to enact its $300 local school board referendum authority.

If the district wants to collect dollars above $512, it has to include the total amount in a ballot question, which the Minnesota Department of Education is calling an “election gap phenomenon,” Hoheisel explained, noting he has called it a “phantom ballot request.”

Unless voters fail to approve an operating levy for the district, it is unlikely the board will ever enact its authority to levy district residents $300 without their approval, as stated in previous meetings.

Therefore, the total amount that should have been asked for on the ballot is $650, which would include the location equity revenue amount of $212, and the voter-approved levy amount of $438.

It is still unclear exactly why a non-voter-approved levy amount has to be included in a ballot question asking for a voter-approved levy amount, other than the fact that the state legislature might not include location equity revenue in future tax bills.

“Mike has always been a solid, solid guy for us,” Powers noted, regarding the mistake by Northland Securities. “This time, it just didn’t work out.”

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