1.1 	A bill for an act
1.2 	relating to education finance; restoring lease levy authority for space necessary 
1.3 	for graduation ceremonies;amending Minnesota Statutes 2025 Supplement, section 
1.4 	126C.40, subdivision 1.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2025 Supplement, section 126C.40, subdivision 1, is amended 
1.7 	to read:
1.8 		Subdivision 1.To lease building or land. (a) When an independent or a special school 
1.9 	district or a group of independent or special school districts finds it economically 
1.10 	advantageous to rent or lease a building or land for any instructional purposes, for high 
1.11 	school graduation ceremonies, or for school storage or furniture repair, it may apply to the 
1.12 	commissioner for permission to make an additional capital expenditure levy for this purpose. 
1.13 	An application for permission to levy under this subdivision must contain the terms and 
1.14 	conditions of the proposed lease, and a description of the space to be leased and its proposed 
1.15 	use. Projects funded under this subdivision that require an expenditure in excess of $500,000 
1.16 	per school site if the school district has a capital loan outstanding, or $2,000,000 per school 
1.17 	site if the school district does not have a capital loan outstanding, are subject to review and 
1.18 	comment under section 123B.71, subdivision 8, in the form and manner prescribed by the 
1.19 	commissioner.
1.20 	(b) The criteria for approval of applications to levy under this subdivision must be 
1.21 	annually prescribed by the commissioner, and must include but are not limited to: the 
1.22 	reasonableness of the price, the appropriateness of the space to the proposed activity, the 
1.23 	feasibility of transporting pupils to the leased building or land, conformity of the lease to 
2.1 	the laws and rules of the state of Minnesota, the appropriateness of the proposed lease to 
2.2 	the space needs of the district, the financial condition of the district, and a review of the 
2.3 	statutory operating debt percentage applicable to the district. The commissioner must not 
2.4 	authorize a levy under this subdivision in an amount greater than the cost to the district of 
2.5 	renting or leasing a building or land for approved purposes. The proceeds of this levy must 
2.6 	not be used for operating costs. A district may not levy under this subdivision for the purpose 
2.7 	of leasing or renting a district-owned building or site to itself.
2.8 	(c) For agreements finalized after July 1, 1997, a district may not levy under this 
2.9 	subdivision for the purpose of leasing: (1) a newly constructed building used primarily for 
2.10 	regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed 
2.11 	building addition or additions used primarily for regular kindergarten, elementary, or 
2.12 	secondary instruction that contains more than 20 percent of the square footage of the 
2.13 	previously existing building.
2.14 	(d) Notwithstanding paragraph (b), a district may levy under this subdivision for the 
2.15 	purpose of leasing or renting a district-owned building or site to itself only if the amount is 
2.16 	needed by the district to make payments required by a lease purchase agreement, installment 
2.17 	purchase agreement, or other deferred payments agreement authorized by law, and the levy 
2.18 	meets the requirements of paragraph (c). A levy authorized for a district by the commissioner 
2.19 	under this paragraph may be in the amount needed by the district to make payments required 
2.20 	by a lease purchase agreement, installment purchase agreement, or other deferred payments 
2.21 	agreement authorized by law, provided that any agreement include a provision giving the 
2.22 	school districts the right to terminate the agreement annually without penalty.
2.23 	(e) The total levy under this subdivision for a district for any year must not exceed $212 
2.24 	times the adjusted pupil units for the fiscal year to which the levy is attributable.
2.25 	(f) For agreements for which a review and comment under section 123B.71, subdivision 
2.26 	8, have been submitted to the Department of Education after April 1, 1998, the term 
2.27 	"instructional purpose" as used in this subdivision excludes expenditures on stadiums.
2.28 	(g) The commissioner of education may authorize a school district to exceed the limit 
2.29 	in paragraph (e) if the school district petitions the commissioner for approval. The 
2.30 	commissioner shall grant approval to a school district to exceed the limit in paragraph (e) 
2.31 	for not more than five years if the district meets the following criteria:
2.32 	(1) the school district has been experiencing pupil enrollment growth in the preceding 
2.33 	five years;
2.34 	(2) the purpose of the increased levy is in the long-term public interest;
3.1 	(3) the purpose of the increased levy promotes colocation of government services; and
3.2 	(4) the purpose of the increased levy is in the long-term interest of the district by avoiding 
3.3 	over construction of school facilities.
3.4 	(h) A school district that is a member of an intermediate school district or other 
3.5 	cooperative unit under section 123A.24, subdivision 2, or a joint powers district under 
3.6 	section 471.59 may include in its authority under this section the costs associated with leases 
3.7 	of administrative and classroom space for programs of the intermediate school district or 
3.8 	other cooperative unit under section 123A.24, subdivision 2, or joint powers district under 
3.9 	section 471.59. This authority must not exceed $65 times the adjusted pupil units of the 
3.10 	member districts. This authority is in addition to any other authority authorized under this 
3.11 	section. The intermediate school district, other cooperative unit, or joint powers district may 
3.12 	specify which member districts will levy for lease costs under this paragraph.
3.13 	(i) Notwithstanding paragraph (a), a district may levy under this subdivision for the 
3.14 	purpose of leasing administrative space if the district can demonstrate to the satisfaction of 
3.15 	the commissioner that the lease cost for the administrative space is no greater than the lease 
3.16 	cost for instructional space that the district would otherwise lease. The commissioner must 
3.17 	deny this levy authority unless the district passes a resolution stating its intent to lease 
3.18 	instructional space under this section if the commissioner does not grant authority under 
3.19 	this paragraph. The resolution must also certify that the lease cost for administrative space 
3.20 	under this paragraph is no greater than the lease cost for the district's proposed instructional 
3.21 	lease.
3.22 	(j) Notwithstanding paragraph (a), a district may levy under this subdivision for the 
3.23 	district's proportionate share of deferred maintenance expenditures for a district-owned 
3.24 	building or site leased to a cooperative unit under section 123A.24, subdivision 2, or a joint 
3.25 	powers district under section 471.59 for any instructional purposes or for school storage.

3.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.27 	Sec. 2. GRADUATION FACILITIES; 2026 GRADUATION.
 3.28 	The Department of Education must approve as part of the lease levy under Minnesota 
3.29 	Statutes, section 126C.40, subdivision 1, for taxes payable in 2027, the costs of any leases 
3.30 	for graduation ceremony facilities for high school students graduating at the end of the 
3.31 	2025-2026 school year, regardless of whether the lease was received by the Department of 
3.32 	Education prior to the district's graduation ceremony.

3.33 	EFFECTIVE DATE. This section is effective the day following final enactment.