A two-decimal error spelled the difference in the Greenbush-Middle River District receiving $204,782.63 in levy funds from Kittson and Marshall counties over the last two payable tax years—fiscal year 2022 and 2023. At the GMR School Board’s January 22 meeting, Roseau County admitted the mistake on its end. The board approved receiving these under-levied funds from Roseau County in one payment as soon as possible—not spread-out over time, as was another option.
GMR Superintendent Barb Muckenhirn recommended the board approve recapturing these funds all at once right away before the board made its final approval. Pending Roseau County approval at its January 23 meeting, the county planned to send these funds to the GMR School directly. Roseau County will then work with the other two counties to recapture those funds, and these two counties would pay Roseau County.
“The good news, the recapture of these, of the levy shortage does go back into general fund,” Muckenhirn said, “so that is a positive for our financial situation.”
This news comes as the district is facing a $578,520 deficit—based on its approved audit report. It also comes as the district has begun to work through the statutory operating debt process, authorized the superintendent to make recommendations for reductions to staffing and programming due to its enrollment decline, and approved a $399,000 line of credit with Border Bank.
Brady Martz and Associates caught the levy error. The district didn’t find out about this error until its auditor pointed it out in mid-November. Presenting the district’s audit report, Sara Neimela, P.C., of Brady Martz and Associates suggested the district keep an eye out to catch these things sooner, but did explain how it’s next as straightforward as it seems.
“You’re kind of in the middle of a property tax year, so what you're recognizing in revenue is delayed by like six months from what you certified in the levy, just because the county’s levying on a calendar year and you're on a fiscal year,” Neimela said. “… It's not quite as straightforward as if you were a city and if you were levying on a calendaryear basis. But it did jump out to us, again, looking at that 50% collections in May-June settlements and then looking at the property tax receivable.”
Board member Brandon Kuznia asked Neimela if they had run into this type of tax trouble with any other counties or school districts. Neimela said they had not run into this specific instance where the rate was incorrect. She mentioned the decimal place error made by Roseau County, the district’s home county, when it communicated the tax rate to Marshall and Kittson counties.
“I have not seen that at another district. However, we do consider property taxes to be a riskier area, just due to the errors,” Neimela said. “… It's important, I think, to watch what you're getting in from the county, and even maybe ask them to share what they levied to make sure that it's what you guys certified… There's just many things that can go wrong.”
According to the board meeting agenda, in 2022, Kittson County should have levied $610.69, but only levied $6.11, and Marshall County should have levied $101,718.98, but only levied $1,017.19, for a total levy shortage of $101,306.37. In 2023, Kittson should have levied $590.67, but only levied $5.91, and Marshall should have levied $101,862.29, but only levied $1,018.62, for a total levy shortage of $101,428.43. In total, Kittson under levied by $1,201.36 and Marshall by $203,581.27.
Muckenhirn highlighted how the decimal point error was made when Roseau County communicated the levy rate totals to Marshall and Kittson County, leading to the levy shortage. She explained how the district has been working with these respective counties and the Minnesota Department of Education—the latter then working with the Minnesota Department of Revenue to determine “how, if, when” this shortage can be fixed.
“This has been quite a lengthy process. And I would say that the employees of the three respective counties have been nothing but helpful and forthright,” Muckenhirn said, “and they regret this error. Certainly, errors do happen, so now we have to rectify.”
County Commissioner Daryl Wicklund and County Treasurer Martie Monsrud attended the January 22 meeting, representing Roseau County, to talk about this issue. As Monsrud explained, when her county staff sent the letter for Marshall and Kittson to put their rates into their tax systems, her staff didn’t move the decimal two to the right.
“When those two counties put that information into their tax system, their tax system automatically moves them two more decimal points to the left,” Monsrud said. “So, when we certified, we should have certified it as 0.16, whatever it was. We certified it as .0016 and when they put it in their tax system, it came out .000016.”
As Monsrud explained, Marshall’s and Kittson’s tax systems are different from Roseau County’s. When Roseau County certified its tax rate in its system, the rate came out correctly. When Marshall and Kittson put the rate into their tax system, it automatically added on two zeros—just based on the way their systems are programmed.
“When we certified it, we should have moved the decimal point to the right two spots instead of we didn't,” Monsrud said. “So, when they (Marshall and Kittson) got it, they put it in that way and it moved, the tax system moved (the decimal point two spots.)” Kuznia asked if this mistake went further back and Monsrud said no and that the county could prove that, later adding how it was just these two years.
“It was a hopeful question,” Board Chairperson Kurt Stenberg said, garnering laughs. Monsrud expressed regret over the situation. “There's nothing you can do about it,” Monsrud said, “now that it's over and done.” She said the county is taking steps to ensure this doesn’t happen to any other school, adding how its home to Badger, Roseau, and Warroad school districts too.
“We are sending and changing our letter to say here's your rate, here's the value, here's what we expect you as the other counties, this is what you should be raising,” Monsrud said. “And then they can verify that with the reports coming out of their tax system.”
She added how Roseau County, when it completes its certified levy sheets, will also send them to each of the schools, so each can see what it should be expecting in terms of tax/levy funds.
As the board was making a motion to recapture these funds in one payment right away, Wicklund asked if this issue would go on the county’s board agenda the next day. Monsrud said yes.
“I would ask it to be made a payment of forthwith,” Monsrud said, “which means the check can be cut and mailed on Thursday (January 25).”
She added how Roseau County would figure out how the other two counties would reimburse them.
“This is Marshall County and Kittson County dollars, not Roseau County dollars because ours (levy numbers) were correct, but we are the home county,” Monsrud said. “… I'm taking responsibility for my staff’s error.”
The school board thanked both Monsrud and Wicklund. As she left, Monsrud thanked the board for its understanding.
As for that line of credit from Border Bank, Muckenhirn doesn’t anticipate the district using all of it, highlighting how doing so would be “disastrous.” She added how the district may use $20,000 of it for payroll, but no more. Muckenhirn highlighted how the district can’t continue to operate like this.
Stenberg said it will be nice to get those funds from the county. Muckenhirn responded that these funds would be significant, but wouldn’t get the district out of statutory operating debt—an issue she is hearing about across the state. Before the board approved this line of credit, Stenberg said there was no question that it had to approve this.
Next Meeting: The board’s next regular meeting takes place on Monday, February 19 at 6:30 pm. Please note the change in time from 7:30 pm to 6:30 pm, as the board formally approved, at its January meeting, this meeting time change moving forward.
