SF 1612

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/21/2025 09:23 a.m.

A bill for an act
relating to education; education finance; increasing school district funding;
increasing the general education basic formula allowance; increasing special
education cross subsidy aid; increasing funding for the school unemployment aid
account in the special revenue fund; increasing English learner cross subsidy aid;
increasing safe schools revenue; linking extended time revenue to the general
education basic formula allowance; increasing equalization aid for debt service
levies, local optional revenue, and the operating referendum; calculating a school's
compensatory revenue eligibility on the basis of both direct certification and the
application of education benefits; authorizing a school board to renew a
voter-approved operating referendum more than one time; appropriating money;
amending Minnesota Statutes 2024, sections 123B.53, subdivision 5; 124D.65,
subdivision 5a; 125A.76, subdivision 2e; 126C.10, subdivisions 2, 2a, 2e, 3b;
126C.17, subdivisions 6, 9b; 126C.44, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 123B.53, subdivision 5, is amended to read:

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) deleted text begin $3,400 in fiscal year 2016, $4,430 in fiscal year 2017, and the greater of $4,430 or deleted text end
55.33 percent of the initial equalizing factor deleted text begin in fiscal year 2018 deleted text end new text begin for fiscal years 2025 and
2026 and ... percent of the initial equalizing factor for fiscal year 2027 new text end and later.

(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) deleted text begin $8,000 in fiscal years 2016 and 2017, and the greater of $8,000 or deleted text end 100 percent of
the initial equalizing factor in fiscal deleted text begin year 2018 deleted text end new text begin years 2025 and 2026 and ... percent of the
initial equalizing factor for fiscal year 2027 new text end and later.

(d) For the purposes of this subdivision, the initial equalizing factor equals the quotient
derived by dividing the total adjusted net tax capacity of all school districts in the state for
the year before the year the levy is certified by the total number of adjusted pupil units in
all school districts in the state in the year before the year the levy is certified.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2027 and later.
new text end

Sec. 2.

Minnesota Statutes 2024, section 124D.65, subdivision 5a, is amended to read:

Subd. 5a.

English learner cross subsidy aid.

(a) deleted text begin For fiscal year 2027 and later, deleted text end A
district's English learner cross subsidy aid equals deleted text begin 25 percent of deleted text end new text begin the English learner cross
subsidy aid percentage for that year times new text end the district's English learner cross subsidy
calculated under paragraph (b).

(b) A district's English learner cross subsidy equals the greater of zero or the difference
between the district's expenditures for qualifying English learner services for the second
previous year and the district's English learner revenue under subdivision 5 for the second
previous year. For the purposes of this subdivision, "qualifying English learner services"
means the services necessary to implement the language instruction educational program
for students identified as English learners under sections 124D.58 to 124D.65. Only
expenditures that both address the English language development standards in Minnesota
Rules, parts 3501.1200 and 3501.1210, which may include home language instruction, and
are supplemental to the cost of core content instruction may be included as expenditures
for qualifying English learner services. Expenditures do not include costs related to
construction, indirect costs, core content instruction, or core administrative personnel.

new text begin (c) The English learner cross subsidy aid percentage equals 90 percent for fiscal year
2027 and later.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2027 and later.
new text end

Sec. 3.

Minnesota Statutes 2024, section 125A.76, subdivision 2e, is amended to read:

Subd. 2e.

Cross subsidy reduction aid.

(a) A school district's annual cross subsidy
reduction aid equals the school district's initial special education cross subsidy for the
previous fiscal year times the cross subsidy aid factor for that fiscal year.

(b) The cross subsidy aid factor equals 6.43 percent for fiscal year 2023; 44 percent for
fiscal years 2024, 2025, and 2026; and deleted text begin 50 deleted text end new text begin 90 new text end percent for fiscal year 2027 and later.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2027 and later.
new text end

Sec. 4.

Minnesota Statutes 2024, section 126C.10, subdivision 2, is amended to read:

Subd. 2.

Basic revenue.

(a) The basic revenue for each district equals the formula
allowance times the adjusted pupil units for the school year. deleted text begin The formula allowance for
fiscal year 2023 is $6,863. deleted text end The formula allowance for fiscal year 2024 is $7,138. The formula
allowance for fiscal year 2025 is $7,281.

(b) The formula allowance for fiscal deleted text begin year deleted text end new text begin years new text end 2026 and deleted text begin later deleted text end new text begin 2027 new text end must be rounded to
the nearest whole dollar and equals the formula allowance for the previous fiscal year times
the greater of:

(1) deleted text begin 1.02 deleted text end new text begin 1.04 new text end ; or

(2) one plus the rate of change in inflation calculated in paragraph deleted text begin (c) deleted text end new text begin (d) new text end but not to
exceed deleted text begin 1.03 deleted text end new text begin 1.05 new text end .

new text begin (c) The formula allowance for fiscal year 2028 and later must be rounded to the nearest
whole dollar and equals the formula allowance for the previous fiscal year times the greater
of:
new text end

new text begin (1) 1.02; or
new text end

new text begin (2) one plus the rate of change in inflation calculated in paragraph (d) but not to exceed
1.03.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end In January of the calendar year in which the formula allowance begins, the
commissioner of education must calculate the rate of change in inflation equal to the change
in the Consumer Price Index for all urban consumers as published by the Bureau of Labor
Statistics of the Department of Labor for the average of the fourth calendar quarter of the
second prior fiscal year compared to the average of the fourth calendar quarter of the
immediately prior fiscal year.

deleted text begin (d) deleted text end new text begin (e) new text end The commissioner must publish the formula allowance by the end of February
of each year.

deleted text begin (e) deleted text end new text begin (f) new text end It is the policy and purpose of the legislature to fund its public schools consistent
with its constitutional obligations. To this purpose, the legislature may enact additional
increases in the general education basic formula allowance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for fiscal year 2026 and later.
new text end

Sec. 5.

Minnesota Statutes 2024, section 126C.10, subdivision 2a, is amended to read:

Subd. 2a.

Extended time revenue.

(a) new text begin For fiscal year 2026 and later, new text end a school district's
extended time allowance equals $5,117 deleted text begin for fiscal year 2023 and later deleted text end new text begin times the basic formula
allowance for the current school year to $7,281 new text end .

(b) A school district's extended time revenue is equal to the product of the extended time
allowance in paragraph (a) and the sum of the adjusted pupil units of the district for each
pupil in average daily membership in excess of 1.0 and less than 1.2 according to section
126C.05, subdivision 8.

(c) Extended time revenue for pupils placed in an on-site education program at the Prairie
Lakes Education Center or the Lake Park School, located within the borders of Independent
School District No. 347, Willmar, for instruction provided after the end of the preceding
regular school year and before the beginning of the following regular school year equals
membership hours divided by the minimum annual instructional hours in section 126C.05,
subdivision 15, not to exceed 0.20, times the pupil unit weighting in section 126C.05,
subdivision 1, times the extended time allowance in paragraph (a).

(d) A school district qualifies for extended time revenue for instruction provided after
the end of the preceding regular school year and before the beginning of the following
regular school year for (1) every pupil attending a day treatment program, and (2) every
pupil placed in a children's residential facility, whether the education services are provided
on-site or off-site. Extended time revenue under this paragraph equals total membership
hours in summer instruction divided by the minimum annual instructional hours in section
126C.05, subdivision 15, not to exceed 0.20, times the pupil unit weighting in section
126C.05, subdivision 1, times the extended time allowance.

(e) For purposes of this subdivision, "children's residential facility" means a residential
facility for children, including a psychiatric residential treatment facility, licensed by the
Department of Human Services or the Department of Corrections and subject to Minnesota
Rules, chapter 2960, or an inpatient hospitalization that includes mental health services.

(f) For purposes of this subdivision, "day treatment program" means:

(1) a site-based structured mental health program consisting of psychotherapy for three
or more individuals and individual or group skills training provided by a team, under the
treatment supervision of a mental health professional; or

(2) any other day treatment program designated by the commissioner of education
consistent with the Minnesota Automated Reporting Student System manual, procedure 27.

(g) A school district's extended time revenue may be used for extended day programs,
extended week programs, summer school, vacation break academies such as spring break
academies and summer term academies, and other programming authorized under the
learning year program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2026 and later.
new text end

Sec. 6.

Minnesota Statutes 2024, section 126C.10, subdivision 2e, is amended to read:

Subd. 2e.

Local optional revenue.

(a) deleted text begin Local optional revenue for a school district equals
the sum of the district's first tier local optional revenue and second tier local optional revenue. deleted text end new text begin
A school district's local optional allowance for fiscal year 2027 and later equals $957.
new text end

new text begin (b) new text end A district's deleted text begin first tier deleted text end local optional revenue equals deleted text begin $300 deleted text end new text begin the local optional allowance new text end
times the adjusted pupil units of the district for that school year. deleted text begin A district's second tier local
optional revenue equals $424 times the adjusted pupil units of the district for that school
year deleted text end .

deleted text begin (b) A district's local optional levy equals the sum of the first tier local optional levy and
the second tier local optional levy.
deleted text end

(c) A district's deleted text begin first tier deleted text end local optional levy equals the district's deleted text begin first tier deleted text end local optional
revenue times the lesser of one or the ratio of the district's referendum market value per
resident pupil unit to deleted text begin $880,000 deleted text end new text begin $....... new text end .

deleted text begin (d) For fiscal year 2023, a district's second tier local optional levy equals the district's
second tier local optional revenue times the lesser of one or the ratio of the district's
referendum market value per resident pupil unit to $548,842. For fiscal year 2024, a district's
second tier local optional levy equals the district's second tier local optional revenue times
the lesser of one or the ratio of the district's referendum market value per resident pupil unit
to $510,000. For fiscal year 2025, a district's second tier local optional levy equals the
district's second tier local optional revenue times the lesser of one or the ratio of the district's
referendum market value per resident pupil unit to $626,450. For fiscal year 2026, a district's
second tier local optional levy equals the district's second tier local optional revenue times
the lesser of one or the ratio of the district's referendum market value per resident pupil unit
to $642,038. For fiscal year 2027 and later, a district's second tier local optional levy equals
the district's second tier local optional revenue times the lesser of one or the ratio of the
district's referendum market value per resident pupil unit to $671,345.
deleted text end

deleted text begin (e) deleted text end new text begin (d) new text end The local optional levy must be spread on referendum market value. A district
may levy less than the permitted amount.

deleted text begin (f) deleted text end new text begin (e) new text end A district's local optional aid equals its local optional revenue minus its local
optional levy. If a district's actual levy for deleted text begin first or second tier deleted text end local optional revenue is less
than its maximum levy limit deleted text begin for that tier deleted text end , its aid must be proportionately reduced.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2026 and later.
new text end

Sec. 7.

Minnesota Statutes 2024, section 126C.10, subdivision 3b, is amended to read:

Subd. 3b.

Free and reduced-price meals.

Beginning October 1, 2024, the commissioner
shall determine the number of children eligible by means of direct certification new text begin and through
the application of educational benefits new text end to receive either a free or reduced-price meal on
October 1 each year. Children enrolled in a building on October 1 and determined to be
eligible by means of direct certification new text begin or through the application of educational benefits new text end
to receive free or reduced-price meals by December 15 of that school year shall be counted
as eligible on October 1 for purposes of subdivision 3. The commissioner must use federal
definitions for these purposes. The commissioner may adopt reporting guidelines to assure
accuracy of data counts and eligibility. Districts must use any guidelines adopted by the
commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid for fiscal year 2026 and later.
new text end

Sec. 8.

Minnesota Statutes 2024, section 126C.17, subdivision 6, is amended to read:

Subd. 6.

Referendum equalization levy.

(a) A district's referendum equalization levy
equals the sum of the first tier referendum equalization levy and the second tier referendum
equalization levy.

(b) A district's first tier referendum equalization levy equals the district's first tier
referendum equalization revenue times the lesser of one or the ratio of the district's
referendum market value per resident pupil unit to $567,000 new text begin for fiscal years 2025 and 2026
and $....... for fiscal year 2027 and later new text end .

(c) A district's second tier referendum equalization levy equals the district's second tier
referendum equalization revenue times the lesser of one or the ratio of the district's
referendum market value per resident pupil unit to $290,000 new text begin for fiscal years 2025 and 2026
and $....... for fiscal year 2027 and later new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2027 and later.
new text end

Sec. 9.

Minnesota Statutes 2024, section 126C.17, subdivision 9b, is amended to read:

Subd. 9b.

Renewal by school board.

(a) Notwithstanding the election requirements of
subdivision 9, a school board may renew an expiring referendum by board action if:

(1) the per pupil amount of the referendum is the same as the amount expiring, or for
an expiring referendum that was adjusted annually by the rate of inflation, the same as the
per pupil amount of the expiring referendum, adjusted annually for inflation in the same
manner as if the expiring referendum had continued;

(2) the term of the renewed referendum is no longer than the initial term approved by
the voters; new text begin and
new text end

(3) the school board, having taken a recorded vote, has adopted a written resolution
authorizing the renewal after holding a meeting and allowing public testimony on the
proposed renewal deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (4) the expiring referendum has not been previously renewed under this subdivision.
deleted text end

(b) The resolution must be adopted by the school board deleted text begin by June 15 of any calendar year
and deleted text end new text begin on or after July 1 of the second fiscal year prior to the fiscal year in which the referendum
expires, but no later than June 15 of the fiscal year prior to the fiscal year in which the
referendum expires. The resolution new text end becomes effective 60 days after its adoption.

(c) A referendum expires in the last fiscal year in which the referendum generates revenue
for the school district. A school board may renew an expiring referendum under this
subdivision not more than two fiscal years before the referendum expires.

(d) A district renewing an expiring referendum under this subdivision must submit a
copy of the adopted resolution to the commissioner and to the county auditor no later than
deleted text begin September 1 deleted text end new text begin August 15 new text end of the deleted text begin calendar year in which the written resolution is adopted deleted text end new text begin fiscal
year prior to the fiscal year in which the referendum expires new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 10.

Minnesota Statutes 2024, section 126C.44, subdivision 1, is amended to read:

Subdivision 1.

Safe schools revenue for school districts.

A school district's safe schools
revenue equals deleted text begin its safe schools levy deleted text end new text begin $....... times its adjusted pupil units for the current school
year new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2027 and later.
new text end

Sec. 11. new text begin APPROPRIATIONS; DEPARTMENT OF EDUCATION.
new text end

new text begin Subdivision 1. new text end

new text begin Department of Education. new text end

new text begin The sums indicated in this section are
appropriated from the general fund to the Department of Education in the fiscal years
designated.
new text end

new text begin Subd. 2. new text end

new text begin Debt service equalization aid. new text end

new text begin For additional debt service equalization aid
under Minnesota Statutes, section 123B.54:
new text end

new text begin $ new text end

new text begin ....... new text end

new text begin ..... new text end

new text begin 2027 new text end

new text begin Subd. 3. new text end

new text begin Additional general education aid. new text end

new text begin For additional general education aid:
new text end

	new text begin $ new text end	new text begin ....... new text end	new text begin ..... new text end	new text begin 2026 new text end
	new text begin $ new text end	new text begin ....... new text end	new text begin ..... new text end	new text begin 2027 new text end

new text begin Subd. 4. new text end

new text begin Special education aid. new text end

new text begin For special education aid under Minnesota Statutes,
sections 125A.76 and 125A.79:
new text end

new text begin $ new text end

new text begin ....... new text end

new text begin ..... new text end

new text begin 2027 new text end

new text begin Subd. 5. new text end

new text begin Safe schools aid. new text end

new text begin For safe schools aid under Minnesota Statutes, section
126C.44:
new text end

new text begin $ new text end

new text begin ....... new text end

new text begin ..... new text end

new text begin 2027 new text end

new text begin Subd. 6. new text end

new text begin Unemployment aid for hourly workers over the summer term. new text end

new text begin (a) For school
unemployment aid for fiscal years 2026 and 2027 under Minnesota Statutes, section
124D.995:
new text end

new text begin $ new text end

new text begin ....... new text end

new text begin ..... new text end

new text begin 2026 new text end

new text begin (b) This appropriation is subject to the requirements under Minnesota Statutes, section
124D.995.
new text end