While the Grand Forks School Board is preparing to vote on a 28 percent property tax increase Monday, other North Dakota school districts are preparing their budgets for similar scrutiny.

While the Grand Forks School Board is preparing to vote on a 28 percent property tax increase Monday, other North Dakota school districts are preparing their budgets for similar scrutiny.

This year, the state Legislature voted to provide school districts with more state funding in an attempt to cut taxes at local levels.

Each school district received a 50-mill buydown from the state to be passed on as tax relief for property owners. One mill is equal to one-tenth of a penny and is used to determine property taxes.

To residents, this meant there should be no mention of tax increases for 2014.

In Fargo and Minot, taxpayers won’t have to worry about an increase, according to school officials in those cities.

That’s not the case in all districts. Growing enrollment, rising property values and increasing school needs have other districts reporting tax increases.

Scott Privratsky, superintendent of Devils Lakes Public Schools, acknowledges taxpayers were looking for a lot of relief when the state changed its school funding formula to place more financial burden on the state rather than local entities.

“But the state didn’t provide districts with any new money,” he said.

While the state will be picking up a larger portion of Devils Lake’s tab, Privratsky said the amount the district will have to work with would be about the same because the school couldn’t raise as much money from local property taxes.

That’s because of a levy cap put in place by a state law passed earlier this year.

‘False increase’

The tax increases that have residents up in arms are more complicated than they seem, according to school officials.

Many taxpayers found out about their school district’s plan to increase taxes through a mandatory newspaper ad or letter sent to them because the value of their property is expected to increase by more than 10 percent.

According to school officials in several districts, the increase size that appears in the papers and letters is misleading. Often, though an increase is announced, the overall amount of taxes property owners will pay would still be less than the previous year.

In Grand Forks Public Schools’ case, the increase comes from the district passing on 28 mills worth of tax cuts instead of 50 mills in the state buydown. Letters mailed to taxpayers highlighted the increase but also noted the owner of a $165,795 home would still see a decrease of $208 on his or her tax bill.

Not every tax increase is caused by the district holding on to mills.

West Fargo Public Schools plans to decrease its levy by the full 50 mills, but had to announce a tax increase because property values in the district increased 2.1 percent, according to its business manager Mark Lemer.

The story is the same at other districts where mills were bought down but property values increased, including Jamestown Public Schools, which, according to business manager Sally Ost, announced a 1.41 percent increase.

Building new

Tax increases may have been a surprise to residents in some districts, but they were expected in others.

Bismarck Public Schools is seeking a 23.3 percent tax increase for the school year. Most of the increase stems from a public vote in September 2012 authorizing the district to build three new schools to keep up with growing enrollment.

A $86.5 million bond will pay for two elementary schools and a high school. Ed Gerhardt, business manager for the district, said the district already had 327 more students in its system than last year — a trend that’s expected to continue.

Across the Missouri River, Mandan Public Schools also is seeking a tax increase for similar reasons. The voter-supported 10.94 percent increase proposed by the district will pay for a $12.5 million elementary school.

“We had to notice a 10.94 percent increase,” business manager Christi Schaefbauer said. “However, if our voters had not given approval to take on debt to build the new school, we would have a zero percent increase.”


Mandan and Bismarck, like other districts adding students, could receive additional money from the state if they’re growing fast enough.

According to Gerhardt, Bismarck will likely be “just a hair under” the rapid-growth threshold of 4 percent. Mandan, with 130 additional students, could hit the mark.

“We may qualify this year,” Schaefbauer said. “It will be very close.”

West Fargo Public Schools anticipates making the cut with about 500 additional students coming into its system this year.

“We won’t have any difficulty qualifying,” Lemer said. He estimates the district will see an extra $1 million when everything shakes out.

Privratsky said Devils Lake would see growth, but the problem is the district — like Grand Forks and Bismarck — isn’t growing fast enough to capture that extra money.

Last month, Grand Forks officials placed much of the blame for their tax increase on paying for students they say the state should be funding.

The state’s formula pays schools per student using the previous year’s fall enrollment numbers. Schools with growing student populations end up paying for additional students not captured in the previous year’s enrollment.

Privratsky estimates his district will grow by about 48 kids this year — about $423,000 in state money it won’t receive for the students.
“We’ll just have to live with it for now,” he said of the formula change.