SF 4368

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/20/2026 02:07 p.m.

A bill for an act
relating to education finance; modifying the calculation of compensatory aid for
fiscal year 2027; modifying the allocation of compensatory aid for fiscal year
2028; appropriating money; amending Minnesota Statutes 2025 Supplement,
sections 126C.10, subdivision 3; 126C.15, subdivision 2.

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

Section 1.

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 2024, 2025, and 2026, 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 2027 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 deleted text begin (c) deleted text end new text begin (b) new text end , for fiscal year 2026, if the sum of the amounts
calculated under paragraph deleted text begin (c) deleted text end new text begin (b) new text end 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.

new text begin (h) Notwithstanding paragraph (c), for fiscal year 2027 only, the compensatory education
revenue for each building equals the greater of:
new text end

new text begin (1) the amount calculated for the building under paragraphs (c) and (g); or
new text end

new text begin (2) the building minimum amount calculated under paragraph (i).
new text end

new text begin (i) For purposes of paragraph (h), the building minimum amount equals the product of:
new text end

new text begin (1) the compensatory education revenue for the building for fiscal year 2026;
new text end

new text begin (2) the lesser of one or the ratio of the number of pupils enrolled in the building on
October 1, 2025, to the number of pupils enrolled in the building on October 1, 2024; and
new text end

new text begin (3) 0.90.
new text end

Sec. 2.

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 and deleted text end new text begin , new text end 2027 new text begin , and 2028 new 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. 3. 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