ISD 696: Ely Public Schools
The Goal
Ely Independent School District 696 is about 110 miles northeast of the City of Duluth and 260 miles north of the Twin Cities metropolitan area. The District encompasses about 250 square miles and has a population of about 5,000 residents, while providing education for about 460 students in grades kindergarten through twelve.
The District has experienced declining enrollment, putting a strain on the operating budget as the District’s largest revenue source, General Education Aid, is calculated based on enrollment. To maintain programs and staffing ratios and reduce cuts, the School Board sought additional revenue sources.
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The Solution
When the Board initially explored options to address ongoing funding needs, it first considered pursuing an operating referendum. The District engaged Ehlers’ School Finance Team for Financial Planning and Ehlers subsequently educated the Board on the two voter-approved annual revenue mechanisms available under state law: operating referendums and capital project levies. Ehlers highlighted key differences in the funding mechanisms, including the distinct tax bases on which they are calculated, referendum market value (RMV) versus net tax capacity (NTC), and the contrast between a per-pupil revenue request and a fixed tax-rate request. As part of this analysis, Ehlers reviewed the District’s property tax base and identified a large share of seasonal recreational property. Because seasonal recreational property is excluded from RMV, the Board recognized that an operating referendum would significantly reduce the taxable base and shift a greater tax burden onto year-round residential property owners. In addition, a capital project levy is imposed as a tax rate and is not dependent on student enrollment, providing more stable revenue. Although some districts limit capital project levies to technology expenditures, Ely sought and received Review and Comment approval from the Minnesota Department of Education, allowing the levy to support a broader range of district needs.
The Outcome
The District had a successful election on November 5, 2024 with voters approving a capital project levy authorization of 3.445% times the net tax capacity of the school district. The additional revenue from the proposed capital project levy authorization is used to provide funds for technology (including personnel), school buses and school-related transportation vehicles, as well as curriculum, textbooks and materials.