Minnesota’s School Finance Work Group nearly completed a yearlong effort to evaluate the state’s school funding system and identified an extensive set of recommendations for Gov. Tim Walz and the Minnesota Legislature.

The group will deliver the final report to Minnesota Education Commissioner Mary Cathryn Ricker on Nov. 5.

Newly elected Minnesota governors in recent decades have put together education finance reform task forces or work groups, aimed at updating the myriad of education finance formulas that drive dollars to schools.

Following the model of Governors Tim Pawlenty and Mark Dayton, Gov. Tim Walz directed Commissioner Ricker to create a new School Finance Work Group. Commissioner Ricker convened the School Finance Working Group in September 2019 with a broad membership that includes Minnesotans who work in schools every day to ensure all perspectives are represented.

Dr. Fred Nolan, who retired as Executive Director of MREA in June, was among the members of this group. MREA hosted a series of webinars for members in October to review the preliminary findings and recommendations.

Focus of Group

The group was charged with addressing education-funding issues facing the state. The School Finance Working Group set out to review key funding streams, identify options for school finance reform, and seek consensus on recommendations for systemic change that will:

  • Improve the adequacy and stability of pre-K through grade 12 education funding
  • Prioritize equity
  • Simplify education funding
  • Preserve local control
  • Close the achievement gap
  • Promote high achievement for all students
  • Direct resources to high-quality teaching and learning


A little over a year later, the group has nearly completed their work. At their last meeting, members decided to move forward with 46 recommendations, coming in at a price tag of $2.75 billion in new investments in education programs and services.

The recommendations span the gamut of basic revenue, special education, student, and district categorial factors and facility issues. The recommendations fall into 9 categories with the highlights noted here.

A highlight summary of the School Finance Work Group recommendations are:

  1. Redefining the Basic Education formula

    • 80% is based on the Basic Revenue, 20% would be on a Local Educational Referendum (LER), and 10% can be above the basic formula with an operating referendum.
    • LER would be funded with a local property tax on RMV.
    • New combined basic revenue allowance would be $8,704 for FY 2023.  This would be adjusted for inflation at 2% per year over the base and would incorporate equity revenue, transitions revenue, gifted & talented revenue, literacy incentive aid, and telecommunications equity aid into the base.
    • 80% ($6964) would be fully state funded, 20% ($1740) would be LER.
  1. Special Education Funding

    • For FY 2022 increase cross subsidy reduction aid by $29 million.  Hold cross subsidy per student constant at the FT19-21 level.
    • For 2023 and later, simplify calculations by basing all calculations on total nonfederal special education expenditures and increasing cross subsidy reduction aid to 11.49% of unfunded cost.
    • Limit Special Education cost charged by charter schools used in calculating tuition rates paid by resident district for FY 23 to 200 percent of the cost per service hour in the cost per service hour.  This would decline in later years to 125 percent.
    • Allow Licensed School Social Workers to third party bill
    • Use current pupil transportation expenditures instead of prior year expenditures to calculate special education aid.
  1. English Learner Funding – Reduce EL cross subsidy from 67% to 50%

  2. Other General Education Revenue

    • Pupil Transportation- Increase cross subsidy reduction revenue from 18.2% to 70%
    • Extended Time- Increase the allowance from $5117 to $6964 in FY 23.
    • Small Schools- Restore the maximum allowance to 10% of the basic revenue allowance ($870 form $544)
    • Operating Capital- Equalizing factor reduced from approximately 300% of state average ANTC/APU to 150 % of state average ANTC/APU to hit overall zero target
    • Compensatory- consider replacing Free and Reduced eligibility percentage with new measure to allocate compensatory education revenue.
  1. New Location Adjustment Revenue

    • A component of the general education revenue for FY23 would be based off a Geographic Cost of Education Index (GCEI)
  1. Other Funding

    • Eliminate statewide cap on Q Comp basic aid; All districts would be eligible for $166 per pupil to do Teacher Development and Evaluation
    • Increase Safe school’s revenue allowance from $36 to $72 per student for districts, with a minimum per district of $30,000
    • Increase Achievement and Integration Revenue to 15 for FY 23
    • Increase American Indian education Aid from $20,000 to $60,000 for the first 20 students and increase the rate from $358 to $1212 for each student over 20.
    • Career and Tech Education, Capital Project Referendum, and Reemployment Insurance would be Equalized at 125% of state average ANTC/APU
    • Concurrent Enrollment Aid- Make if a forecasted program, eliminate proration, and link the allowance for FY24 and later to basic formula
    • New Tribal Contract School Aid- Provide additional state aid equivalent to chat school districts receive from Permanent School Trust Fund Endowment payments.
  1. Early Learning

    • Provide 4-year-olds with a minimum of 510 hours of preschool and provide Jump Start to learning for eligible 4 year-olds with a minimum of 510 hours of preschool
  1. Other Areas of Aid Recommended 

    • Racial Equity Aid
    • Student Support Personnel Aid
    • Full-Service Community Schools
    • Trauma Incentive Aid
    • Scholarships for Teacher Candidates of Color and American Indian Teacher Candidates
    • Teacher of color in greater Minnesota
    • Education Support Professionals
    • Funding semester long student-teaching experiences
    • Expand teacher loan forgiveness
    • Provide Special Education Training to Education Support Professionals
  1. Facilities Revenue

    • Close the funding gap between Alternative Facility districts and all other districts over 3 years by increasing maximum per pupil allowance for non-alternative facilities districts from $380 to $650 by FY25
    • Equalize the Building Lease levies at 125% of Average ANTC/APU
    • Lower the threshold to qualify for debt service equalization from 15.74% to 10 % of Adjusted Net Tax Capacity (ANTC).  Replace the two-tiered Equalization with a single tier.
    • Establish a new homestead bond credit.