| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to education finance; broadening the natural disaster debt service |
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| 3 | 3 | | 1.3 equalization aid program to assist school districts with a high percentage of property |
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| 4 | 4 | | 1.4 excluded from the tax rolls; amending Minnesota Statutes 2024, sections 123B.535; |
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| 5 | 5 | | 1.5 127A.49. |
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| 6 | 6 | | 1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 7 | 7 | | 1.7 Section 1. Minnesota Statutes 2024, section 123B.535, is amended to read: |
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| 8 | 8 | | 1.8 123B.535 NATURAL DISASTER ENHANCED DEBT SERVICE |
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| 9 | 9 | | 1.9EQUALIZATION. |
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| 10 | 10 | | 1.10 Subdivision 1.Definitions.(a) For purposes of this section, the eligible natural disaster |
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| 11 | 11 | | 1.11enhanced debt service revenue of a district is defined as the amount needed to produce |
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| 12 | 12 | | 1.12between five and six percent in excess of the amount needed to meet when due the principal |
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| 13 | 13 | | 1.13and interest payments on the obligations of the district that would otherwise qualify under |
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| 14 | 14 | | 1.14section 123B.53 under the following conditions: specified in paragraphs (b) and (c). |
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| 15 | 15 | | 1.15 (b) A school district qualifies for enhanced debt service equalization aid if: |
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| 16 | 16 | | 1.16 (1) the district was impacted by a natural disaster event or area occurring January 1, |
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| 17 | 17 | | 1.172005, or later, as declared by the President of the United States of America, which is eligible |
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| 18 | 18 | | 1.18for Federal Emergency Management Agency payments; |
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| 19 | 19 | | 1.19 (2) the natural disaster caused $500,000 or more in damages to school district buildings; |
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| 20 | 20 | | 1.20and |
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| 21 | 21 | | 1.21 (3) the repair and replacement costs are not covered by insurance payments or Federal |
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| 22 | 22 | | 1.22Emergency Management Agency payments. |
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| 23 | 23 | | 1Section 1. |
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| 24 | 24 | | REVISOR CR/DG 25-0086212/04/24 |
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| 25 | 25 | | State of Minnesota |
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| 26 | 26 | | This Document can be made available |
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| 27 | 27 | | in alternative formats upon request |
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| 28 | 28 | | HOUSE OF REPRESENTATIVES |
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| 29 | 29 | | H. F. No. 116 |
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| 30 | 30 | | NINETY-FOURTH SESSION |
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| 31 | 31 | | Authored by Bliss01/22/2025 |
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| 32 | 32 | | The bill was read for the first time and referred to the Committee on Education Finance 2.1 (c) A school district also qualifies for enhanced debt service equalization aid if at least |
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| 33 | 33 | | 2.230 percent of a district's property value is excluded from the district's taxable value. |
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| 34 | 34 | | 2.3 (b) (d) For purposes of this section, the adjusted net tax capacity equalizing factor equals |
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| 35 | 35 | | 2.4the quotient derived by dividing the total adjusted net tax capacity of all school districts in |
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| 36 | 36 | | 2.5the state for the year before the year the levy is certified by the total number of adjusted |
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| 37 | 37 | | 2.6pupil units in the state for the year prior to the year the levy is certified. |
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| 38 | 38 | | 2.7 (c) (e) For purposes of this section, the adjusted net tax capacity determined according |
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| 39 | 39 | | 2.8to sections 127A.48 and 273.1325 shall be adjusted to include the tax capacity of property |
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| 40 | 40 | | 2.9generally exempted from ad valorem taxes under section 272.02, subdivision 64. |
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| 41 | 41 | | 2.10 Subd. 2.Notification.A district eligible for natural disaster enhanced debt service |
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| 42 | 42 | | 2.11equalization revenue under subdivision 1 must notify the commissioner of the amount of |
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| 43 | 43 | | 2.12its intended natural disaster enhanced debt service revenue calculated under subdivision 1 |
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| 44 | 44 | | 2.13for all bonds sold prior to the notification by July 1 of the calendar year the levy is certified. |
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| 45 | 45 | | 2.14 Subd. 3.Natural disaster Enhanced debt service equalization revenue.The debt |
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| 46 | 46 | | 2.15service equalization revenue of a district equals the greater of zero or the eligible debt service |
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| 47 | 47 | | 2.16revenue, minus the greater of zero or the difference between: |
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| 48 | 48 | | 2.17 (1) the amount raised by a levy of ten percent times the adjusted net tax capacity of the |
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| 49 | 49 | | 2.18district; and |
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| 50 | 50 | | 2.19 (2) the district's eligible debt service revenue under section 123B.53. |
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| 51 | 51 | | 2.20 Subd. 4.Equalized natural disaster enhanced debt service levy.A district's equalized |
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| 52 | 52 | | 2.21natural disaster enhanced debt service levy equals the district's natural disaster enhanced |
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| 53 | 53 | | 2.22debt service equalization revenue times the lesser of one or the ratio of: |
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| 54 | 54 | | 2.23 (1) the quotient derived by dividing the adjusted net tax capacity of the district for the |
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| 55 | 55 | | 2.24year before the year the levy is certified by the adjusted pupil units in the district for the |
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| 56 | 56 | | 2.25school year ending in the year prior to the year the levy is certified; to |
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| 57 | 57 | | 2.26 (2) 300 percent of the statewide adjusted net tax capacity equalizing factor. |
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| 58 | 58 | | 2.27 Subd. 5.Natural disaster Enhanced debt service equalization aid.A district's natural |
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| 59 | 59 | | 2.28disaster enhanced debt service equalization aid equals the difference between the district's |
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| 60 | 60 | | 2.29natural disaster enhanced debt service equalization revenue and the district's equalized |
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| 61 | 61 | | 2.30natural disaster enhanced debt service levy. |
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| 62 | 62 | | 2Section 1. |
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| 63 | 63 | | REVISOR CR/DG 25-0086212/04/24 3.1 Subd. 6.Natural disaster Enhanced debt service equalization aid payment |
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| 64 | 64 | | 3.2schedule.Debt service equalization aid must be paid according to section 127A.45, |
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| 65 | 65 | | 3.3subdivision 10. |
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| 66 | 66 | | 3.4 EFFECTIVE DATE.This section is effective for bond issues approved on or after July |
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| 67 | 67 | | 3.51, 2025. |
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| 68 | 68 | | 3.6 Sec. 2. Minnesota Statutes 2024, section 127A.49, is amended to read: |
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| 69 | 69 | | 3.7 127A.49 AID ADJUSTMENTS. |
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| 70 | 70 | | 3.8 Subdivision 1.Omissions.No adjustments to any aid payments made pursuant to this |
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| 71 | 71 | | 3.9chapter or chapters 120B, 122A, 123A, 123B, 124D, 124E, 125A, and 126C resulting from |
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| 72 | 72 | | 3.10omissions in district reports, except those adjustments determined by the legislative auditor, |
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| 73 | 73 | | 3.11shall be made for any school year after December 15 of the next school year, unless otherwise |
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| 74 | 74 | | 3.12specifically provided by law. |
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| 75 | 75 | | 3.13 Subd. 2.Abatements.Whenever by virtue of chapter 278, sections 270C.86, 375.192, |
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| 76 | 76 | | 3.14or otherwise, the net tax capacity or referendum market value of any district for any taxable |
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| 77 | 77 | | 3.15year is changed after the taxes for that year have been spread by the county auditor and the |
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| 78 | 78 | | 3.16local tax rate as determined by the county auditor based upon the original net tax capacity |
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| 79 | 79 | | 3.17is applied upon the changed net tax capacities, the county auditor must, prior to February |
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| 80 | 80 | | 3.181 of each year, certify to the commissioner of education the amount of any resulting net |
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| 81 | 81 | | 3.19revenue loss that accrued to the district during the preceding year. Each year, the |
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| 82 | 82 | | 3.20commissioner must pay an abatement adjustment to the district in an amount calculated |
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| 83 | 83 | | 3.21according to the provisions of this subdivision. This amount must be deducted from the |
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| 84 | 84 | | 3.22amount of the levy authorized by section 126C.46. The amount of the abatement adjustment |
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| 85 | 85 | | 3.23must be the product of: |
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| 86 | 86 | | 3.24 (1) the net revenue loss as certified by the county auditor, times |
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| 87 | 87 | | 3.25 (2) the ratio of: |
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| 88 | 88 | | 3.26 (i) the sum of the amounts of the district's certified levy in the third preceding year |
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| 89 | 89 | | 3.27according to the following: |
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| 90 | 90 | | 3.28 (A) section 123B.595, if the district received long-term facilities maintenance aid |
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| 91 | 91 | | 3.29according to that section for the second preceding year; |
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| 92 | 92 | | 3.30 (B) section 124D.20, if the district received aid for community education programs |
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| 93 | 93 | | 3.31according to that section for the second preceding year; |
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| 94 | 94 | | 3Sec. 2. |
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| 95 | 95 | | REVISOR CR/DG 25-0086212/04/24 4.1 (C) section 142D.11, subdivision 3, if the district received early childhood family |
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| 96 | 96 | | 4.2education aid according to section 142D.11 for the second preceding year; |
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| 97 | 97 | | 4.3 (D) section 126C.17, subdivision 6, if the district received referendum equalization aid |
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| 98 | 98 | | 4.4according to that section for the second preceding year; |
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| 99 | 99 | | 4.5 (E) section 126C.10, subdivision 13a, if the district received operating capital aid |
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| 100 | 100 | | 4.6according to section 126C.10, subdivision 13b, in the second preceding year; |
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| 101 | 101 | | 4.7 (F) section 126C.10, subdivision 29, if the district received equity aid according to |
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| 102 | 102 | | 4.8section 126C.10, subdivision 30, in the second preceding year; |
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| 103 | 103 | | 4.9 (G) section 126C.10, subdivision 32, if the district received transition aid according to |
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| 104 | 104 | | 4.10section 126C.10, subdivision 33, in the second preceding year; |
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| 105 | 105 | | 4.11 (H) section 123B.53, subdivision 5, if the district received debt service equalization aid |
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| 106 | 106 | | 4.12according to section 123B.53, subdivision 6, in the second preceding year; |
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| 107 | 107 | | 4.13 (I) section 123B.535, subdivision 4, if the district received natural disaster enhanced |
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| 108 | 108 | | 4.14debt service equalization aid according to section 123B.535, subdivision 5, in the second |
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| 109 | 109 | | 4.15preceding year; |
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| 110 | 110 | | 4.16 (J) section 124D.22, subdivision 3, if the district received school-age care aid according |
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| 111 | 111 | | 4.17to section 124D.22, subdivision 4, in the second preceding year; |
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| 112 | 112 | | 4.18 (K) section 126C.10, subdivision 2e, paragraph (b), if the district received local optional |
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| 113 | 113 | | 4.19aid according to section 126C.10, subdivision 2e, paragraph (c), in the second preceding |
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| 114 | 114 | | 4.20year; and |
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| 115 | 115 | | 4.21 (L) section 122A.415, subdivision 5, if the district received alternative teacher |
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| 116 | 116 | | 4.22compensation equalization aid according to section 122A.415, subdivision 6, paragraph (a), |
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| 117 | 117 | | 4.23in the second preceding year; to |
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| 118 | 118 | | 4.24 (ii) the total amount of the district's certified levy in the third preceding December, plus |
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| 119 | 119 | | 4.25or minus auditor's adjustments. |
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| 120 | 120 | | 4.26 Subd. 3.Excess tax increment.(a) If a return of excess tax increment is made to a |
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| 121 | 121 | | 4.27district pursuant to sections 469.176, subdivision 2, and 469.177, subdivision 9, or upon |
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| 122 | 122 | | 4.28decertification of a tax increment district, the school district's aid and levy limitations must |
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| 123 | 123 | | 4.29be adjusted for the fiscal year in which the excess tax increment is paid under the provisions |
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| 124 | 124 | | 4.30of this subdivision. |
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| 125 | 125 | | 4.31 (b) An amount must be subtracted from the district's aid for the current fiscal year equal |
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| 126 | 126 | | 4.32to the product of: |
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| 127 | 127 | | 4Sec. 2. |
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| 128 | 128 | | REVISOR CR/DG 25-0086212/04/24 5.1 (1) the amount of the payment of excess tax increment to the district in the preceding |
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| 129 | 129 | | 5.2year, times |
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| 130 | 130 | | 5.3 (2) the ratio of: |
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| 131 | 131 | | 5.4 (i) the sum of the amounts of the district's certified levy in the third preceding year |
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| 132 | 132 | | 5.5according to the following: |
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| 133 | 133 | | 5.6 (A) section 123B.57, if the district received health and safety aid according to that section |
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| 134 | 134 | | 5.7for the second preceding year; |
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| 135 | 135 | | 5.8 (B) (A) section 124D.20, if the district received aid for community education programs |
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| 136 | 136 | | 5.9according to that section for the second preceding year; |
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| 137 | 137 | | 5.10 (C) (B) section 142D.11, subdivision 3, if the district received early childhood family |
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| 138 | 138 | | 5.11education aid according to section 142D.11 for the second preceding year; |
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| 139 | 139 | | 5.12 (D) (C) section 126C.17, subdivision 6, if the district received referendum equalization |
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| 140 | 140 | | 5.13aid according to that section for the second preceding year; |
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| 141 | 141 | | 5.14 (E) (D) section 126C.10, subdivision 13a, if the district received operating capital aid |
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| 142 | 142 | | 5.15according to section 126C.10, subdivision 13b, in the second preceding year; |
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| 143 | 143 | | 5.16 (F) (E) section 126C.10, subdivision 29, if the district received equity aid according to |
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| 144 | 144 | | 5.17section 126C.10, subdivision 30, in the second preceding year; |
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| 145 | 145 | | 5.18 (G) (F) section 126C.10, subdivision 32, if the district received transition aid according |
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| 146 | 146 | | 5.19to section 126C.10, subdivision 33, in the second preceding year; |
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| 147 | 147 | | 5.20 (H) (G) section 123B.53, subdivision 5, if the district received debt service equalization |
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| 148 | 148 | | 5.21aid according to section 123B.53, subdivision 6, in the second preceding year; |
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| 149 | 149 | | 5.22 (I) (H) section 123B.535, subdivision 4, if the district received natural disaster enhanced |
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| 150 | 150 | | 5.23debt service equalization aid according to section 123B.535, subdivision 5, in the second |
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| 151 | 151 | | 5.24preceding year; |
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| 152 | 152 | | 5.25 (J) (I) section 124D.22, subdivision 3, if the district received school-age care aid |
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| 153 | 153 | | 5.26according to section 124D.22, subdivision 4, in the second preceding year; and |
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| 154 | 154 | | 5.27 (K) (J) section 122A.415, subdivision 5, if the district received alternative teacher |
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| 155 | 155 | | 5.28compensation equalization aid according to section 122A.415, subdivision 6, paragraph (a), |
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| 156 | 156 | | 5.29in the second preceding year; to |
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| 157 | 157 | | 5.30 (ii) the total amount of the district's certified levy in the third preceding year, plus or |
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| 158 | 158 | | 5.31minus auditor's adjustments. |
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| 159 | 159 | | 5Sec. 2. |
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| 160 | 160 | | REVISOR CR/DG 25-0086212/04/24 6.1 (c) An amount must be subtracted from the school district's levy limitation for the next |
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| 161 | 161 | | 6.2levy certified equal to the difference between: |
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| 162 | 162 | | 6.3 (1) the amount of the distribution of excess increment; and |
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| 163 | 163 | | 6.4 (2) the amount subtracted from aid pursuant to clause (a). |
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| 164 | 164 | | 6.5 If the aid and levy reductions required by this subdivision cannot be made to the aid for |
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| 165 | 165 | | 6.6the fiscal year specified or to the levy specified, the reductions must be made from aid for |
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| 166 | 166 | | 6.7subsequent fiscal years, and from subsequent levies. The school district must use the payment |
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| 167 | 167 | | 6.8of excess tax increment to replace the aid and levy revenue reduced under this subdivision. |
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| 168 | 168 | | 6.9 (d) This subdivision applies only to the total amount of excess increments received by |
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| 169 | 169 | | 6.10a district for a calendar year that exceeds $25,000. |
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| 170 | 170 | | 6.11 EFFECTIVE DATE.This section is effective for adjustments for fiscal year 2026 and |
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| 171 | 171 | | 6.12later. |
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| 172 | 172 | | 6Sec. 2. |
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| 173 | 173 | | REVISOR CR/DG 25-0086212/04/24 |
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