By MaryHelen Swanson

When school districts "levy to the max," so to speak, it sounds ominous to taxpayers. But levying the maximum really has less to do with a resident's tax increase than what his or her property has been valued at each year.

What a district is really doing is levying what the state allows as determined by a formula approved by the legislature. In the case of Rush City, that's a little over a 9 percent increase.

On Dec. 5, the Rush City School Board held its Truth in Taxation public hearing.

Two members of the public showed up.

At the meeting, Dist. Superintendent Vern Koepp noted that the biggest chunk of increase comes from district property values going up.

As market values go up, he said, property owners pay more.

Business Manager Laureen Frost opened the meeting by talking about the six funds in the school district budget:

• General Fund, which accounts for most of the daily operating expenses and now also includes former transportation and capital expenditure funds;

• Food Service Fund, all expenses for the breakfast and lunch programs;

• Community Service Fund, accounts for expenses of educational and recreational programs not part of the regular k-12 and special ed programs (i.e. Early Childhood Family Education, preschool program, programs for adults and the aquatic center);

• Building Construction Fund, accounts for expenses of the construction projects voter-approved in spring 2002;

• Debt Service Fund, accounts for principle and interest payments on the district's voter-approved bonds;

• Trust Fund, accounts for funds established to generate interest to offset operating costs of aquatic center and scholarship accounts.

Law requires all of these accounts, Frost noted.

Frost also pointed to seven steps that are key in the property tax process. The school district has control over only one - the adoption of the levy based on the limits set by the Department of Education.

Others include valuations set by the county assessor, formulas set by the state legislature, and calculations by the county auditor on the tax capacity of each parcel.

Frost noted that if the district doesn't levy the maximum allowed, the budget will be short. The district would lose the matching part of the state's funding, the equalization portion.

Frost also pointed to the district's history in the debt service levy and state aid. For taxes payable 2002, the state paid 17.80 percent of the debt payment. In 2003, the state paid 27.97 percent, by 2005, the state was paying 16.73 percent. For taxes payable in 2007, the state is paying 4.45 percent of the total payment needed for debt service.

The RC school board expects to adopt the final levy tomorrow night at $1,975,051.08, which is the maximum allowed by the state.

Individual parcel statements will reflect a 9.23 percent increase. But in cases where property valuation has increased the tax increase will also be noted.