For residents wishing to vote early, an absentee ballot application can be obtained by mail by applying online at the Secretary of State’s website or here.  

• Completed applications can be dropped or mailed to: 

Byron School District Office

Attention Anne Ludvigsen, Elections Clerk 

630 1st Ave, NW

Byron, MN 55920

Over the past two years, the district engaged with community members to examine the district’s schools, building capacity, adequacy of educational spaces, and student enrollment.  That process identified areas where the district has opportunities to update current facilities and programs to accommodate growth and plan for the future. 

Based on this work, a number of areas were identified:

Enrollment Growth and School Capacity

Enrollment in the District increased by 486 students between 2010 and 2020. An enrollment study determined that growth in the district will likely continue, with up to 418 more students by 2030.

Byron High School and Byron Primary School are currently operating near capacity. According to these enrollment projections, the high school will be operating over capacity by 2021. At Byron Primary School, the District’s early childhood education programs are growing. If this bond referendum is approved, the district will construct additional classroom and educational spaces to accommodate this increased enrollment without increasing class sizes, using temporary facilities, or taking other steps to safely accommodate this enrollment.  

Additional and Renovated Spaces

Many classrooms and labs in the district’s High School are outdated and undersized for projected enrollment.  If this bond referendum is approved, the district will update classrooms and educational spaces with the infrastructure to support equipment and technologies for today’s school programming.  In addition, the district will add classrooms and educational spaces for student collaboration areas and project-based learning.

Byron High School (2006) was also constructed without an auditorium.  A portion of the bonds from this referendum will go towards constructing a space for presentations, performing arts, and additional educational opportunities.  This includes the auditorium itself, as well as seating, lighting and sound spaces and equipment, restrooms, and classroom space.  

Athletic fields were not built with the High School in 2006. As a result, the district’s High School athletic teams practice and compete at Byron Middle School, which creates additional transportation costs and supervision challenges.  A portion of these bonds will go towards constructing athletic fields and facilities at the High School to eliminate these transportation costs, improve conditions for student-athletes, and reduce supervision challenges. If passed, Byron Middle School athletic fields would also be updated. 

Byron Middle (1966) and Byron Intermediate School (1992) kitchens and cafeteria are outdated and undersized for current enrollment, with kitchen equipment that is operating beyond its service life.  The updates to these areas that would come from the passage of this referendum would replace and add cooler/freezer spaces, more efficient serving lines, improved dishwashing room, dry food storage, and increase efficiency to meet the demands of increased student enrollment. 

The District Administrative Services Center (DACS) was constructed in 1952. A portion of this building is leased out to Zumbro Education District until 2022. If the referendum is approved, the building would be renovated to create dedicated space for Community Education and serve the District’s growing Early Childhood Programs. This would consolidate all of the early childhood programs to one location and free up classrooms at the Byron Primary School (2016).

Through a public process and several community meetings, the Finance and Facility Committee provided input and information about which projects are most important to the school district. These are the projects that the bond is meant to address.  If the referendum does not pass, the District would need to find other ways to address these facilities and equipment issues. 

One option would be to address the most critical issues using general operating funds, which normally pay for classroom instruction, teachers, staff, and supplies. The district may need to consider changing or eliminating programs for students, eliminating or reducing technology and equipment purchases, imposing or increasing fees for extracurricular activities, and other budget decisions.  Some maintenance and repair work would have to be deferred, and most school renovation projects would be postponed indefinitely. If student enrollment increases as projected, the district may need to consider changes to class sizes or adding space in temporary classrooms.

If the proposed bond issue is approved by voters, the district anticipates receiving state aid to offset the cost to local taxpayers through two separate state programs.  

The Debt Service Equalization program, which began in 1993, offers state aid to certain school districts (about 10%) to help them repay debt used to construct or renovate school buildings and other facilities. This aid is intended to help offset or “equalize” variations in school district property taxes due to districts’ varying levels of property wealth.  Byron is one of the districts that qualify for this aid. If the voters approve the bonds, the bonds would be repaid over 20 years, through a combination of state aid and local property tax levies. The district estimates that state debt equalization aid will finance approximately 26.5 percent of the debt service payments on the bonds over the 20 year period if both questions pass.   

The School Building Bond Agricultural Credit (sometimes called the “Ag2 School Credit”) is a newer program.  The State initially approved this credit in 2017 and then approved a substantial increase in the credit in 2019.  It reduces the taxes on agricultural land and buildings for all school district bonds. For taxes payable in 2022, the credit reduces taxes for owners of agricultural property in an amount equivalent to 60% of the taxes attributable to school district debt service for all agricultural property, except for the house, garage, and one acre.  This credit is directly deducted from property taxes owed and applies to debt service levies for all types of existing and future bonds for construction and renovation projects.  For taxes payable in 2018 and 2019, the credit was equivalent to 40%. 

The State is phasing in an increase to the credit: it was 50% for taxes payable in 2020, 55% for taxes payable in 2021, 60% for taxes payable in 2022, and for taxes payable in 2023 and later the credit will be 70%.  The credit is paid through an open and standing appropriation, which means that no action by the Legislature is required each year for this credit to be paid from the state general fund.  The credit is automatically deducted on the tax statement and is included in the tax impact estimates provided by Ehlers.  These two programs together are anticipated to decrease the cost of the proposed bond to local taxpayers.

Yes. Debt Service Equalization Aid is intended to help offset or "equalize" variation in school district property taxes due to districts' varying property wealth levels. Byron is a district with lower property wealth per pupil (total property value of the district divided by total adjusted pupil units) and higher voter-approved debt for capital projects is eligible for aid. As the number of students served increases, including open enrolled students, property wealth per pupil is reduced, as more students can spread the total value. As property wealth per pupil is reduced, the level of state aid increases in Byron.

In fiscal year 2020, Byron Public Schools served 436.96 open enrolled opt-in students, which lowers the property wealth per pupil. This is measured against the state average adjusted net tax capacity to determine aid. The debt levy that qualifies for the equalization program must exceed 15.74% of a districts' tax base each year. Currently, Byron has sufficient debt payments that exceed this local effort and therefore qualifies for debt equalization aid.

With the passage of the proposed $41,485,000 million bond issue, a greater percent of Byron's debt payments will qualify for aid. As a result, the number of open enrolled students has a notable impact on the amount of debt equalization aid the district will receive. A loss in debt equalization aid results in a corresponding increase in debt service taxes, given that the principal and interest payments on the existing debt remain constant.

ESTIMATED DEBT EQUALIZATION AID EXAMPLE

Learn more about open-enrollment here.

Yes.  Districts primarily generate revenue through basic general education, categorical programs, the local optional revenue (LOR) program, and an operating referendum. The aid for both the LOR and operating referendum revenue sources is based on formulas that use resident pupil units. The number of open enrolled students, both in and out, impacts the total referendum and LOR revenue generated, but the aid/levy mix does not change as a result of open enrollment. 

In general, major components of the district's operating revenues are affected by open enrollment as more students generate more revenue. Conversely, for students who opt-out, the district loses revenue.

ESTIMATED OPERATING REVENUE EXAMPLE

Learn more about open-enrollment here.

The District currently serves the open enrolled students.  The impact on the amount of the District's tax levy would be immaterial, if any.  As such, open enrollment numbers are already included in the levy and aid calculations.  If they were to move to the District, making them residents, it would not materially impact the District's levy and aid since most of those calculations are based on students served, which does not change if an open enrolled non-resident child becomes a resident child.

The impact on individual taxpayers' property taxes would only be materially affected if the following two scenarios were true.

1. The open enrolled family moves to the District and builds a home on vacant property, which would not have occurred but for the moving of that family AND
2. The number of open enrolled students who become resident students is sufficient to impact the spread of the levy.

In other words, if a resident homeowner is already paying property taxes on a home, the fact that an open enrolled family purchases that existing home and moves into it does not change the spread of the levy.  Since the home currently exists and is taxed, the property value is already included in calculating the tax rate.  If a vacant lot is purchased and a home built, the spread of the levy is equally affected if the new owner had open enrolled children or did not have any children. 

It only affects the spread of the levy if a vacant lot is purchased and a home built by a family of open enrolled students, which would not have occurred but because those children were open enrolled.  This scenario would have to happen in sufficient numbers to impact the levy spread materially. 

Agriculture is considered the backbone of America. The Minnesota legislature has achieved some needed relief for our important agricultural lands and the farmers that cultivate them. This came in the shape of a new, permanent tax credit called Ag2School.

See: Ag2School Tax Credit video

Review the Tax Impact Schedules here.

Tax Impact Calculator

The bond structure used is a “wrap around” structure, commonly used when an issuer has existing debt. The concept is to keep annual taxes lower while the district is making payments on existing debt. It is a way of keeping the annual levy on total debt service lower while the district is still making payments on previously issued bonds. It also moderates the tax impact over the term of all the district’s bonds and levels it off, resulting in more predictable and manageable annual debt levies.

It is prudent for the District to consider all their debt when structuring new bonds to effectively incorporate the tax impact while considering the tax impact of existing debt on those residents. Likewise, the District considers the tax impact on current residents and future residents, given that the school facilities being proposed are a long-term community asset to be used for public education in the community for decades. 

With that in mind, a wrap-around structure benefits a lower tax impact on current residents. It also spreads more of the proposed bond's tax impact to future properties, which results in a moderating effect due to future economic and inflationary property valuation growth in the community. It also provides a structure whereby future property owners and families pay a share of the district’s total debt in the same manner that current residents are paying.

Ehlers estimates more than 90% of school districts in Minnesota uses a wrapped bond payment structure.

Assuming both questions pass, here is a general breakdown of the referendum debt structure between two debt schedules.

Wrapped Payment Schedule (used for the May 11, 2021 referendum)

Bond Amount:  $41,445,000

Term: 20 years

Estimated Interest Rate: 2.65%

Interest on new debt: $18,176,610

Monthly cost to the taxpayer on a $250,000 residential property value: $9.83

Level Payment Schedule

Bond Amount:  $41,445,000

Term: 20 years

Estimated Interest Rate: 2.5%

Interest on new debt: $12,332,784

Monthly cost to the taxpayer on a $250,000 residential property value: $23.25

Why did the District use a wrap-around debt schedule?

A wrap-around schedule is the most common way districts structure debt. The concept is to keep annual taxes lower while the District is making payments on existing debt. It is a way of keeping the annual levy on total debt service lower while the District is still making payments on previously issued bonds. It also moderates the tax impact over the term of all the District's bonds and levels it off, resulting in more predictable and manageable annual debt levies.

A level payment schedule is used when a voter-approved bond is issued when a district does not have any existing debt, so there is no current debt to wrap around.  Further, some non-voter-approved bonds have to be level payment because of either limit on annual revenue sources to make the bond payments or because there is no authority for an added tax levy to pay the bonds.  These include Capital Facilities Bonds, Facilities Maintenance Bonds (for deferred maintenance purposes), and Abatement Bonds.

It is prudent for the District to consider all their debt when structuring new bonds to effectively incorporate the tax impact while considering the tax impact of existing debt on those residents. Likewise, the District considers the tax impact on current residents and future residents, given that the school facilities being proposed are a long-term community asset to be used for public education in the community for decades. 

With that in mind, a wrap-around structure benefits current residents' lower tax impact. It also spreads more of the proposed bond's tax impact to future properties, which results in a moderating effect due to future economic and inflationary property valuation growth in the community. It also provides a structure whereby future property owners and families pay a share of the District's total debt in the same manner that current residents are paying.

Overall bonded indebtedness: General Obligation Debt Secured by Taxes

2014A:  Financed the construction and equipping of a Pre-Kindergarten through Grade 2 school facility, as authorized by the passage of a special election on March 11, 2014.  Bond payments would be paid from an additional tax levy and qualify for debt equalization aid and state ag credit. Principal and Interest Payment Schedule 

2016A:  Financed deferred maintenance projects included in the District's ten-year facility plan approved by the Commissioner of Education.  The bonds were board approved and debt payments are funded with LTFM revenue (no additional tax levy). Principal and Interest Payment Schedule 

2017A:  Financed indoor air quality and fire suppression systems, authorized by the passage of the November 8, 2016, special election.  The bond authority was issued as two separate bonds, the 2017A, and the 2018A bonds, to secure lower Bank Qualified interest rates.  Bond payments would be paid from an additional tax levy and qualify for debt equalization aid and state ag credit. Principal and Interest Payment Schedule 

2018A:  Financed projects approved by the voters during the November 8, 2016, special election.  The bonding authority was issued in 2 different bonds, with the 2018A bonds representing the second of the 2 bond issues.  The first being the 2017A bonds.   Bond payments would be paid from an additional tax levy and qualify for debt equalization aid and state ag credit. Principal and Interest Payment Schedule 

2019A: Refunded the 2011A bonds (2011A bonds refunded the 2004A bonds; the 2004A bonds were authorized by the passage of a special election held May 11, 2004, to construct a new high school and remodel the existing middle school.  Because this refunding tracks back to the 2004A bonds, the payments would be paid from an additional tax levy and qualifies for debt equalization aid and state ag credit. Principal and Interest Payment Schedule 

Note: The 2011A bonds, has been refunded and is not considered an existing bond issue.  

• 2011A was an advance refunding of the 2004A bonds that reduced debt service payments by approximately $1.3 million over the remaining term of the bonds.  
• 2019A is a current refund of the 2011A bonds which reduced debt service payments by approximately $600,000 over the remaining term of the bonds.

For the upcoming bond referendum, as well as for past elections, a ‘wrap-around’ debt structure was utilized.  This structure allows the district to keep annual debt payments lower while existing debt payments are higher.  When future existing debt payments decrease (are paid off), the annual payments on the new debt will increase.  This structure serves a few purposes.  

• First, it limits the immediate tax impact on the current taxpayers.  
• Second, it takes advantage of future property value growth by spreading out the tax impact to future years when property values are higher, more taxpayers are living in the community, and the future residents that receive the benefit of the assets/facilities that were constructed contribute to paying the taxes.  
• Third, it levels the tax impact over future years.  
• Fourth, it takes advantage of the very low-interest rates currently available.

Sufficient funding is not available to address all the improvements being proposed in the bond election.  Not only are funds limited, but the use of funds such as Long-Term Facilities Maintenance Revenue (LTFM) and Operating Capital is limited and the proposed projects exceed the allowable uses of these funds, as well as the availability of these funds.  

The 2015 Legislature created a new program to support facilities maintenance needs for school districts.  LTFM is a per-pupil, formula-driven revenue source that replaces health and safety revenue, alternative facilities revenue, and deferred maintenance revenue beginning with the fiscal year 2016-17.  The district is using LTFM and other district funds on deferred maintenance projects.

There is limited funding available to address the referendum objectives and if used, the projects do not qualify for debt service equalization aid.

Ehlers is an independent municipal advisor, and will not submit a bid to purchase the bonds.  Ehlers has a fiduciary duty to the district as an advisor and they do not purchase bonds, nor do they represent the purchaser of our bonds.  Rather, Ehlers will conduct a competitive sale of the bonds by soliciting proposals from any qualified underwriter in the country. Ehlers would advise on the financing options and structure, and conduct the bond sale on the district’s behalf.  For a bond issue of this size, Ehlers typically receives 6 to 12 bids for the purchase of the bonds.

No. It does not matter what attempt the bond election passes, Byron is eligible for debt equalization aid when the district issues voter-approved bonds.  Byron would get the same aid eligibility regardless of how many elections it takes to pass. However, depending on positive or negative enrollment and community tax capacity can lower/increase the level of aid.