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Office of the Revisor of Statutes

123B.53 DEBT SERVICE EQUALIZATION PROGRAM.
    Subdivision 1. Definitions. (a) For purposes of this section, the eligible debt service revenue
of a district is defined as follows:
(1) the amount needed to produce between five and six percent in excess of the amount
needed to meet when due the principal and interest payments on the obligations of the district for
eligible projects according to subdivision 2, including the amounts necessary for repayment of
energy loans according to section 216C.37 or sections 298.292 to 298.298, debt service loans and
capital loans, lease purchase payments under section 126C.40, subdivision 2, alternative facilities
levies under section 123B.59, subdivision 5, minus
(2) the amount of debt service excess levy reduction for that school year calculated according
to the procedure established by the commissioner.
(b) The obligations in this paragraph are excluded from eligible debt service revenue:
(1) obligations under section 123B.61;
(2) the part of debt service principal and interest paid from the taconite environmental
protection fund or Douglas J. Johnson economic protection trust;
(3) obligations issued under Laws 1991, chapter 265, article 5, section 18, as amended by
Laws 1992, chapter 499, article 5, section 24; and
(4) obligations under section 123B.62.
(c) For purposes of this section, if a preexisting school district reorganized under sections
123A.35 to 123A.43, 123A.46, and 123A.48 is solely responsible for retirement of the preexisting
district's bonded indebtedness, capital loans or debt service loans, debt service equalization aid
must be computed separately for each of the preexisting districts.
(d) For purposes of this section, the adjusted net tax capacity determined according to section
127A.48 shall be adjusted to include a portion of the tax capacity of property generally exempted
from ad valorem taxes under section 272.02, subdivisions 64 and 65, equal to the product of that
tax capacity times the ratio of the eligible debt service revenue attributed to general obligation
bonds to the total eligible debt service revenue of the district.
    Subd. 2. Eligibility. (a) The following portions of a district's debt service levy qualify for
debt service equalization:
(1) debt service for repayment of principal and interest on bonds issued before July 2, 1992;
(2) debt service for bonds refinanced after July 1, 1992, if the bond schedule has been
approved by the commissioner and, if necessary, adjusted to reflect a 20-year maturity schedule;
and
(3) debt service for bonds issued after July 1, 1992, for construction projects that have
received a positive review and comment according to section 123B.71, if the commissioner has
determined that the district has met the criteria under section 126C.69, subdivision 3, and if the
bond schedule has been approved by the commissioner and, if necessary, adjusted to reflect a
20-year maturity schedule.
(b) The criterion described in section 126C.69, subdivision 3, paragraph (a), clause (9), does
not apply to bonds authorized by elections held before July 1, 1992.
(c) For the purpose of this subdivision the department shall determine the eligibility for
sparsity at the location of the new facility, or the site of the new facility closest to the nearest
operating school if there is more than one new facility.
(d) Notwithstanding paragraphs (a) to (c), debt service for repayment of principal and interest
on bonds issued after July 1, 1997, does not qualify for debt service equalization aid unless the
primary purpose of the facility is to serve students in kindergarten through grade 12.
    Subd. 3. Notification. A district eligible for debt service equalization revenue under
subdivision 2 must notify the commissioner of the amount of its intended debt service revenue
calculated under subdivision 1 for all bonds sold prior to the notification by July 1 of the calendar
year the levy is certified.
    Subd. 4. Debt service equalization revenue. (a) The debt service equalization revenue of a
district equals the sum of the first tier debt service equalization revenue and the second tier
debt service equalization revenue.
(b) The first tier debt service equalization revenue of a district equals the greater of zero or
the eligible debt service revenue minus the amount raised by a levy of 15 percent times the
adjusted net tax capacity of the district minus the second tier debt service equalization revenue
of the district.
(c) The second tier debt service equalization revenue of a district equals the greater of
zero or the eligible debt service revenue, excluding alternative facilities levies under section
123B.59, subdivision 5, minus the amount raised by a levy of 25 percent times the adjusted net
tax capacity of the district.
    Subd. 5. Equalized debt service levy. (a) The equalized debt service levy of a district equals
the sum of the first tier equalized debt service levy and the second tier equalized debt service levy.
(b) A district's first tier equalized debt service levy equals the district's first tier debt service
equalization revenue times the lesser of one or the ratio of:
(1) the quotient derived by dividing the adjusted net tax capacity of the district for the year
before the year the levy is certified by the adjusted pupil units in the district for the school year
ending in the year prior to the year the levy is certified; to
(2) $3,200.
(c) A district's second tier equalized debt service levy equals the district's second tier debt
service equalization revenue times the lesser of one or the ratio of:
(1) the quotient derived by dividing the adjusted net tax capacity of the district for the year
before the year the levy is certified by the adjusted pupil units in the district for the school year
ending in the year prior to the year the levy is certified; to
(2) $8,000.
    Subd. 6. Debt service equalization aid. (a) A district's debt service equalization aid is
the sum of the district's first tier debt service equalization aid and the district's second tier debt
service equalization aid.
(b) A district's first tier debt service equalization aid equals the difference between the
district's first tier debt service equalization revenue and the district's first tier equalized debt
service levy.
(c) A district's second tier debt service equalization aid equals the difference between the
district's second tier debt service equalization revenue and the district's second tier equalized
debt service levy.
    Subd. 7. Debt service equalization aid payment schedule. Debt service equalization aid
must be paid according to section 127A.45, subdivision 10.
History: 1991 c 265 art 5 s 8; 1992 c 499 art 5 s 14-19; 1993 c 224 art 5 s 31-34; 1994 c
647 art 5 s 14,15; 1Sp1995 c 3 art 5 s 10-12; 1996 c 412 art 5 s 7; 1Sp1997 c 4 art 4 s 20; 1998 c
397 art 7 s 123,164; art 11 s 3; 1998 c 398 art 4 s 7; 1999 c 241 art 4 s 1-5; 1Sp2001 c 5 art 2 s
2-4; 2003 c 127 art 11 s 12; 1Sp2003 c 9 art 4 s 4; 2004 c 294 art 4 s 1; 1Sp2005 c 5 art 4 s 3