SF 4022
Introduction - 94th Legislature (2025 - 2026)
Posted on 03/03/2026 09:12 a.m.
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A bill for an act
relating to education finance; modifying the calculation of compensatory aid for
fiscal year 2027; appropriating money: amending Minnesota Statutes 2025
Supplement, sections 126C.05, subdivision 3; 126C.10, subdivisions 3, 3c; 126C.15,
subdivision 2; Laws 2023, chapter 55, article 1, section 37, as amended.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2025 Supplement, section 126C.05, subdivision 3, is amended
to read:
Subd. 3.
Compensation revenue pupil units.
Compensation revenue pupil units must
be computed according to this subdivision.
(a) The compensation revenue concentration percentage for each building in a district
equals the product of 100 times the ratio of:
(1) the sum of the number of pupils enrolled in the building eligible to receive free meals
plus one-half of the pupils eligible to receive reduced-priced meals on October 1 of the
previous fiscal year; to
(2) the number of pupils enrolled in the building on October 1 of the previous fiscal
year.
(b) The compensation revenue pupil weighting factor for a building equals the lesser of
one or the quotient obtained by dividing the building's compensation revenue concentration
percentage by 80.0.
(c) The compensation revenue pupil units for a building equals the product of:
(1) the sum of the number of pupils enrolled in the building eligible to receive free meals
and one-half of the pupils eligible to receive reduced-priced meals on October 1 of the
previous fiscal year; times
(2) the compensation revenue pupil weighting factor for the building; times
(3) .60.
(d) Notwithstanding paragraphs (a) to (c), for voluntary prekindergarten programs under
section 142D.08, charter schools, and contracted alternative programs in the first year of
operation, compensation revenue pupil units shall be computed using data for the current
fiscal year. If the voluntary prekindergarten program, charter school, or contracted alternative
program begins operation after October 1, compensatory revenue pupil units shall be
computed based on pupils enrolled on an alternate date determined by the commissioner,
and the compensation revenue pupil units shall be prorated based on the ratio of the number
of days of student instruction to 170 days.
(e) The percentages in this subdivision must be based on the count of individual pupils
and not on a building average or minimum.
(f) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2025 only, the
compensation revenue pupil units for each building in a district equals the greater of the
building's actual compensation revenue pupil units computed according to paragraphs (a)
to (e) for revenue in fiscal year 2025, or the building's actual compensation revenue pupil
units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.
(g) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2026 only, the
compensation revenue pupil units for each building in a district equals the greater of the
building's actual compensation revenue pupil units computed according to paragraphs (a)
to (e) for revenue in fiscal year 2026, or the building's actual compensation revenue pupil
units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.
new text begin
(h) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2027 only, the
compensation revenue pupil units for each building in a district equals the greater of the
building's actual compensation revenue pupil units computed according to paragraphs (a)
to (e) for revenue in fiscal year 2027 or the building's actual compensation revenue pupil
units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.
new text end
Sec. 2.
Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 3, is amended
to read:
Subd. 3.
Compensatory education revenue.
(a) A district's compensatory revenue
equals the sum of its compensatory revenue for each building in the district and the amounts
designated under Laws 2015, First Special Session chapter 3, article 2, section 70, subdivision
8, for fiscal year 2017. Revenue shall be paid to the district and must be allocated according
to section 126C.15, subdivision 2.
(b) For fiscal years 2024deleted text begin , 2025, and 2026deleted text end new text begin through 2027new text end , the compensatory education
revenue for each building in the district equals the formula allowance minus $839 times the
compensation revenue pupil units computed according to section 126C.05, subdivision 3.
(c) For fiscal year deleted text begin 2027deleted text end new text begin 2028new text end and later, the compensatory education revenue for each
building in the district equals its compensatory pupils multiplied by the building
compensatory allowance.
(d) When the district contracting with an alternative program under section 124D.69
changes prior to the start of a school year, the compensatory revenue generated by pupils
attending the program shall be paid to the district contracting with the alternative program
for the current school year, and shall not be paid to the district contracting with the alternative
program for the prior school year.
(e) When the fiscal agent district for an area learning center changes prior to the start of
a school year, the compensatory revenue shall be paid to the fiscal agent district for the
current school year, and shall not be paid to the fiscal agent district for the prior school year.
(f) Notwithstanding paragraph (c), for fiscal year 2026, if the sum of the amounts
calculated under paragraph (c) is less than $838,947,000, the commissioner must
proportionately increase the revenue to each building until the total statewide revenue
calculated for each building equals $838,947,000.
(g) Notwithstanding paragraph (c), for fiscal year 2027 and later, if the sum of the
amounts calculated under paragraph (c) is less than $857,152,000, the commissioner must
proportionately increase the revenue to each building until the total statewide revenue
calculated for each building equals $857,152,000.
Sec. 3.
Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 3c, is amended
to read:
Subd. 3c.
Statewide compensatory allowance.
For fiscal year deleted text begin 2027deleted text end new text begin 2028new text end , the statewide
compensatory allowance is deleted text begin $6,936deleted text end new text begin $7,129new text end . For fiscal year deleted text begin 2028deleted text end new text begin 2029new text end and later, the statewide
compensatory allowance equals the statewide compensatory allowance in effect for the
prior fiscal year times the ratio of the formula allowance under section 126C.10, subdivision
2, for the current fiscal year to the formula allowance under section 126C.10, subdivision
2, for the prior fiscal year, rounded to the nearest whole dollar.
Sec. 4.
Minnesota Statutes 2025 Supplement, section 126C.15, subdivision 2, is amended
to read:
Subd. 2.
Building allocation.
(a) A district or cooperative must allocate at least 80
percent of its compensatory revenue to each school building in the district or cooperative
where the children who have generated the revenue are served unless the school district or
cooperative has received permission under Laws 2005, First Special Session chapter 5,
article 1, section 50, to allocate compensatory revenue according to student performance
measures developed by the school board.
(b) A district or cooperative may allocate no more than 20 percent of the amount of
compensatory revenue that the district receives to school sites according to a plan adopted
by the school board. The money reallocated under this paragraph must be spent for the
purposes listed in subdivision 1, but may be spent on students in any grade, including
students attending school readiness or other prekindergarten programs.
(c) For the purposes of this section and section 126C.05, subdivision 3, "building" means
education site as defined in section 123B.04, subdivision 1.
(d) Notwithstanding section 123A.26, subdivision 1, compensatory revenue generated
by students served at a cooperative unit shall be paid to the cooperative unit.
(e) A district or cooperative with school building openings, school building closings,
changes in attendance area boundaries, or other changes in programs or student demographics
between the prior year and the current year may reallocate compensatory revenue among
sites to reflect these changes. A district or cooperative must report to the department any
adjustments it makes according to this paragraph and the department must use the adjusted
compensatory revenue allocations in preparing the report required under section 123B.76,
subdivision 3, paragraph (c).
(f) For fiscal years 2026 deleted text begin anddeleted text end new text begin ,new text end 2027new text begin , and 2028new text end only, notwithstanding the percentages
specified in paragraphs (a) and (b), a district may allocate up to 40 percent of the amount
of compensatory revenue that the district receives to school sites according to a plan adopted
by the school board, consistent with the purposes listed in subdivision 1.
Sec. 5.
Laws 2023, chapter 55, article 1, section 37, the effective date, as amended by
Laws 2025, First Special Session chapter 10, article 1, section 25, is amended to read:
EFFECTIVE DATE.
Paragraph (a) is effective for revenue for fiscal year deleted text begin 2027deleted text end new text begin 2028new text end .
Paragraph (b) is effective May 28, 2023. Paragraph (c) is effective the day following final
enactment.
Sec. 6. new text begin APPROPRIATION.
new text end
new text begin
$....... in fiscal year 2027 is appropriated from the general fund to the commissioner of
education for additional general education aid.
new text end