Deadline Looms with Two Weeks to Finalize Budget
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Deadline Looms with Two Weeks to Finalize Budget

Two Weeks Remaining in Session

The legislature must adjourn two weeks from today, and the race is on to see if they will complete the state’s budget in time. A special session is not out of the question, but some legislators remain hopeful that they’ll finish on May 19. Legislative leaders are committed to on-going budget negotiations with hopes of reaching a comprehensive agreement soon. Following several in-depth meetings last week, Governor Tim Walz indicated that the group is working productively toward the final budget framework. Still, House Speaker Lisa Demuth warned that a finalized deal may take longer to come together. Once finalized, the budget targets will serve as a roadmap for conference committees to craft legislation on major issues including education, health care, transportation, and public safety.

House Education Finance Omnibus Bill in Limbo 

The omnibus education finance bill hit a snag on its way to full House floor debate last week. The deal worked out between GOP and DFL leaders would sunset unemployment insurance benefits for noncertified staff on September 8, 2028. However, in the face of intense lobbying pressure from SEIU and Education Minnesota, DFLers voted against “calendaring” the bill for full House floor debate during a Rules committee procedural motion. A day later the bill was added to the House calendar for floor debate this week, but it remains unclear if the bill has enough votes to pass out of the House.

In 2023, when the UI mandate was put in place, the legislature created a fund with $135 million to pay for the costs of summer UI benefits. To date, $102 million of the original $135 million was distributed for UI costs during the 2023 and 2024 summer terms. Estimates for this summer are closer to $63 million and the current House bill would pump in another $30 million to augment the fund so schools aren’t required to bear the cost locally. However, without a long term funding solution, eventually school districts would be responsible for the costs. 

SEIU and Education Minnesota and their legislative supporters argue that UI benefits are necessary to retain staff, ensuring continuity of services for students. An amendment to continue unemployment insurance for hourly school staff failed along party lines. School governance and administrative groups have argued that without a state funding source the program should be terminated. Some have argued that noncertified staff compensation should be determined fully through the local collective bargaining process without the external pressure and obligations that the UI system requires. School districts self-insure for unemployment whereas the construction industry, which is often used as the example for why school staff should have UI benefits, pays into the UI system.

Senate Waits for the House

The Senate Education Finance omnibus bill has cleared all committee hurdles and sits ready to be taken up for a floor debate. Both bodies originally planned to take up their respective bills last Friday, but with the stalemate in the House, Senate leaders decided to hold off on the Education floor debate. We hope to see some action on it this week, and anticipate lengthy discussions and many amendments to be offered.

Snapshot of the House Education Finance Bill, HF 2433

  • Renaming Local Options Revenue (LOR) to Basic Supplemental Revenue (BSR), and creating a new first tier of $40/pupil, which is  all state aid.
  • $30M one-time infusion into the Unemployment Insurance fund for school hourly workers
  • The UI mandate is sunset on September 9, 2028. 
  • School Library Aid is repealed, and some of the revenue growth in Student Support Personnel Aid is captured, to pay for the new first tier of BSR and the one-time infusion of UI funding.
  • Special Education Transportation reimbursements are reduced from 100% of eligible costs to 95%, but transportation of homeless and highly mobile students remains at 100 percent of eligible costs. 
  • LTFM expanded to allow districts to levy “above the $100,000” line for roof replacement and repair.
  • $40M for the READ Act
  • Modest flexibility in the Nutrition Account 
  • No changes to Compensatory

Snapshot of the Senate E-12 Bill, SF 2255

  • Blinks off the formula inflator for the “tails” period or FY 28-29: a loss of $600M in planning money for schools
  • Repeals nonpublic school aids, including nonpublic transportation aid
  • Increases the EL cross subsidy aid from 25-33%
  • Increases the Special Education cross subsidy aid from 50-53%
  • Modifies Literacy Incentive Aid
  • $39M for a one-time Compensatory Aid hold harmless effort
  • LTFM Roof “above the line” levy expansion
  • Expanded nutrition account flexibility and allowable uses
  • $80k minimum for Student Support Personnel Aid for all districts
  • New distribution formula for the cooperative student support personnel aid
  • School Board authority to renew a previous capital levy previously approved by referendum
  • Consolidation transition aid increase 

Education Committees & Schedules

Debate Intensifies Over Education Reforms
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