What is the difference between an operating levy and a building referendum?

Levies are for learning, bonds are for building. When communities support an Operating levy, they are providing the district general funds to use for teachers’ salaries, textbooks, co‐curricular programs, transportation, computers, utilities and the general operation of the district.

 

On the other hand, a bond referendum provides districts dollars to make improvements to facilities and building infrastructure only. For example, bonds can be used for major construction such as renovation, building an addition, building new schools or for general building projects such as addressing deferred maintenance and ventilation deficiencies. Bonds, however, cannot be used to hire teachers, buy textbooks, or for the operation of the district such as utilities.

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What are the district’s operational needs?

The Chisholm Public Schools currently has an operating levy in place that is set to expire in 2024. The district has used these funds for a variety of purposes, including equipment and supplies, teacher and staff salaries, co-curricular programs, and student technology. 

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Without a replacement levy, the district would lose about $200,000 per year in funding. This would lead to a reduction of programs and services for students. 

 

What are the district's facility needs?

Vaughan Steffensrud School, Chisholm Elementary, and Chisholm High School each have pressing facility and deferred maintenance needs that require the attention of our entire community. 

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Built in 1958, Vaughan Steffensrud School has about $7 million in deferred maintenance. The schools facility needs include:

• Ventilation and temperature control issues

• Lack of dehumidification

• Gym doubles as cafeteria

• Undersized kitchen and storage areas

• Basement flooding

• Flooring needs replacement

• Lack of developed field space

 

Chisholm Elementary School was built in 1913 and has an estimated $18 million in deferred maintenance. The school’s facility needs include:

• More secure entrance

• Kitchen & cafeteria is undersized and also serves the high school

• Safety concerns with parent pick-up/drop-off on city street

• Students must cross street to access playground

• Limited ventilation systems & lack of dehumidification

• Plumbing systems & building envelope need upgrades

 

Chisholm High School, built in 1924, has about $17.5 million in deferred maintenance. The schools facility needs include:

• Needed improvements to plumbing systems, building envelope, boiler system, temperature control & flooring/windows in classrooms

• No dedicated kitchen/cafeteria

• No adjacent field space for athletics, activities & phys ed

• Swimming/diving pool too small/shallow for competitions; filtration system needs upgrades

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Why is there not an option to maximize our bonding capacity by investing in all three buildings?

The district, when assessing and developing projects considered several factors including, operational impact, future required investment, age of equipment that would remain, current code and guidelines set forth by the Minnesota Department of Education (MDE) for building construction.

 

There was approximately $55 million in identified needs at the three buildings. If the maximum $32 million of bonding capacity were used on the existing buildings, approximately $23 million in additional investment would be needed in the near-term and the district will have limited resources to address these needs. This includes renovation and new construction.

 

A few specific MDE guidelines play a factor in the development of the options the district is currently considering. For example, if the cost of renovation for a building approaches 60% of the cost to building new, MDE recommends that a district seriously consider replacing the facility. This is the case for Chisholm Elementary.

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Additionally, the district is operating more square footage than is needed and is well above suggested MDE ranges for square footage per student. Chisholm Elementary is significantly under the suggested 90% utilization at 44%, resulting in numerous unused classrooms.  “Right-sizing” district square footage would result in substantial operational savings while meeting the educational needs of our students.

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Isn't our enrollment declining?

The Chisholm Public Schools currently has an enrollment of 675 students. Our enrollment has been steady and above the regional average. However, we are operating significantly under capacity at 44% at Chisholm Elementary. The proposed project would right-size the district by closing both elementary schools and adding an elementary school to the high school which reduces the overall current square footage of the district by roughly 80,000 square feet. This would save about $310,000 annually.

 

Has the district considered consolidation?

Yes. Consolidation is an option our district and board carefully considered. We found that joining with a neighboring district would lead to increased taxes. Neighboring districts also do not have the capacity to serve students at our lower grade levels.

 

What is the district doing about programming?

Our planning process started two years ago with academic and financial strategic planning. We outlined several goals to achieve over a 3-5 year period. We have accomplished more than 50% of our academic goals to date. We also collaborate with neighboring districts on several services and programs to provide additional opportunities to students.

 

If Chisholm Public Schools consolidate, will my school taxes go away?

There unfortunately isn’t a scenario where property owners will not pay school taxes. The Chisholm School districts understands the tax burden of a potential operating and bond election and district leaders are not only working with IRRRB and pursuing assistance from the state through legislation, but also seeking Covid Relief Funds from the county and early childhood support from the Minnesota Head Start Association.

 

If the Chisholm School District is forced to consolidate, current Chisholm District property owners would get re-districted and would not only be accountable for existing Chisholm Public School debt until maturity, but also any new debt generated and all other school levies of the new consolidated district.

 

Why wasn’t ventilation included in any of the options?

The district has a significant amount of high priority needs and included the worse of the highest priorities as the $32M cap would allow. If the district pursues option 3A, the only building remaining with ventilation needs would be the High School, as all the equipment in the proposed addition would be new.

 

While the ventilation systems in the High School have deficiencies, are inefficient and need improvement, some of the equipment does meet ventilation rates and have years of service life left. The limited funding available necessitates prioritizing even the scopes that were categorized as high. The boiler plant and steam piping distribution rises above the ventilation needs because it is in worse shape and is critical to operating the school. 

 

What is the IRRRB School Consolidation and Cooperatively Operated School Account, and why didn’t we go after funding from the IRRRB earlier?

The Iron Range Consolidated & Cooperatively Operated School Account is available, subject to availability of funds, to support regional multi-district collaborative initiatives that result in increased availability and access to high quality education and training for students, teachers and communities.

 

• All school projects are subject to the availability of funds. At the present time (4/14/2022) the school account funding is allocated to current projects with no additional funding available.

• The account funds are sourced directly from the Taconite Production Tax and based upon yearly taconite tonnage produced and future estimates.

 

For projects that are a direct result of meaningful collaboration leading to consolidation between two or more school districts AND improve curriculum and education outcomes for students, the guidelines will allow for yearly bond payments for projects that build new facilities or renovate existing facilities.

 

Districts are given these dollars on a first come first serve basis and must follow a planning and facility assessment process to determine facility needs as well as opportunities for multi-district collaboration leading to consolidation. Once the assessment and planning process is complete, the community and school board must make the decision to move forward with a project. Districts that have received assistance from the IRRRB Consolidation Fund began the process 3-4 years prior to receiving the funds and had a plan in place leading to consolidation.

 

Are we getting any support from IRRRB?

The IRRRB has supported the district in working with a lobbyist and pursuing a bill in the current legislative session that if passed, would create a new IRRRB fund and allocate $7-8.5 million to the district over the next ten years (2024 through 2034) to assist with needed improvements. As of Thursday March 24, 2022, the bill passed through both the Senate and House Tax committees. The IRRRB could potentially assist with demolition costs from another IRRRB fund if needed.

 

What other potential funding sources are there?

The district has submitted a grant request to the county for COVID Relief Funds in the amount of $1.5 million to assist with ventilation and dehumidification projects. This fund is categorical and must be used only for operations expenses incurred related to COVID updates and modifications.

 

The district also submitted its name to the Minnesota Head Start Association (MHSA) list for $2.9 million in financial support for new early childhood facilities. This will most likely be a competitive grant-based program. If approved by the legislature, the district will take the necessary steps to submit a grant for new early childhood facilities.

 

Is the state debt equalization aid included in the projected property tax impact of the $32M?

Yes, however the 46.5% equalization is on the principal and interest payments of $56.5 million over the life of the bonds, which is 21 years. In this scenario, the state would provide aid to the district of $26 million and the voters would be accountable for $30 million.

 

Is our auditorium designated a historic building?

No. None of our buildings, including the auditorium, are on the National Register of Historic Places. If our buildings were designated historic, costs to repair or renovate could be significantly higher to satisfy requirements to keep the building in as original of a state as possible. With any of the options selected, it is the intent of the district to keep the original look and feel of the Auditorium. 

 

Why do we need to make a decision now?

The school district is facing significant maintenance challenges in our school buildings, which are over 100 years old, and unfortunately do not have the have the financial means to continue to make emergency repairs. We receive Long-term Facilities Maintenance Revenue (LTFMR) from the state however, the district has far more deferred maintenance needs than LTFM funds available. The district receives $300,000 of LTFMR annually. However, $200,000 of this budget is committed to current bonded facility projects leaving only around $100,000 per year available until those bonds mature in FY39.

 

The district has already spent more than $100,000 in the past year on emergency repairs. 

 

Why is the district holding a vote in the general election and not in spring 2023?

A district can only pursue an operating levy in a general election unless it is in Statutory Operating Debt (SOD) or does a mail ballot. Chisholm Public Schools is not in SOD, so a November election is the only option for pursuing a levy. On the other hand, there are five opportunities in a year to pursue a bond election – February, April, May, August, and November.

 

The district could move just the bond election to the spring, however, holding the bond election with the operating levy not only minimizes confusion between the two, but also minimizes the costs to the district, proposed project, and the taxpayers. When districts hold votes in the general election, the governing of the voting process, election duties and costs are the responsibility of local townships, city clerks and the county auditor. The district will have responsibilities in a general election, but those are limited.

 

On the other hand, if the district were to hold a special election, the district becomes responsible for the governing and managing all election duties which include hiring election judges, equipping and operating the polling places and compiling the results - all added expenses.

 

Moving the bond election to spring 2023 would also increase construction costs, as the district would need to account for inflation, as well as put the district at risk for an increase in interest rates, both which would increase the tax burden. 

 

I don't have kids in school. Why should I care about this?

Good school facilities are important to our neighbors who own a business or work at area companies, as well as to families considering a move to our community. Strong schools help support a strong and vibrant community. Local community and business leaders are active on our task force and will help guide future decisions.

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Is the district seeking additional funding sources to meet its needs?

Yes. The district is seeking or has the potential to receive additional funding from several sources. These include:

 

• IRRRB: The Iron Range Consolidated & Cooperatively Operated School Account is currently fully allocated to current regional school projects, with no additional funding available. However, if the facility bond referendum on November 8 is successful and the project moves forward, the district will look to partner with the city to apply to the IRRRB for assistance with infrastructure and demolition costs.

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• TACONITE FUNDING: The IRRRB has supported the district in working with a lobbyist and pursuing a bill in the 2022 legislative session. If passed, the bill would create a new IRRRB fund and allocate $7 to 8.5 million to the district over the next 10 years to assist with needed improvements.
  
  The bill passed through both the Senate and House Tax committees and made it into the final tax bill.  Unfortunately, the legislature adjourned and failed to enact the major tax bill during the regular 2022 legislative session, which ended May 23, 2022. At this point, no special session has been scheduled. If a special session is not called, there is still the potential that the tax bill could be passed in the spring during the regular 2023 session.

 

• COVID RELIEF FUNDS: The district has submitted a grant request to the county for COVID-19 Relief Funds in the amount of $1.5 million to assist with ventilation and dehumidification projects. This fund is categorical and must be used only for operations expenses incurred related to COVID-related updates and modifications. The district is still waiting for the county’s response to the grant request.

 

• MINNESOTA HEAD START ASSOCIATION: The district submitted its name to the Minnesota Head Start Association (MHSA) list for $2.9 million in financial support for new early childhood facilities. The State Legislature could not come to any agreement on Early Childhood facility funding during the last session, so currently there is no additional state funding to help with facilities. It is possible this request will be approved in the next legislative session. 

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