[{"_1":2,"_100":-5,"_101":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,76,88],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6640741,"mediaKeyId","2549862-33606e64b7955b571b5eb125450c12d1","parentId",2549862,"title","Compensatory revenue review: direct‑certification changes, concentration rules and measurement challenges","audioSeconds",1172,"startMs",3522000,"endMs",4694000,"viewUrl","/Search/View?dp=1&key=2549862-33606e64b7955b571b5eb125450c12d1&start=3522&end=4694","thumbnailUrl","https://assets.pipeline.soar.com/2549862-33606e64b7955b571b5eb125450c12d1/thumbnail_3522000.jpg","articleUrl","/articles/6640741/Minnesota/Compensatory-revenue-review-directcertification-changes-concentration-rules-and-measurement-challenges","mediaUrl","https://secure.pipeline.soar.com/6640741-c7072c021d18d20e630a1ff2d4cce3e5/orig.mp4?Expires=1775631330&Signature=hF83RSeKcMTzeg2~gY7NFWYE4oiqR1pNRpCkM5YxN2XQ5pp1cP1pNofg9vjLbfF8naUDHR1cOZuZS7PK6q~tzhZq7i-o~syoWHeCSAfWKSOgiji8vrHl1I-Sznp7SGVY3D9qAcUhmMdyG2C7byS~nQmatunCaAmfqUPPZaKtuX-Aqyj0hJ9-JKRw8EktSYOwDUUJZDgF-uZ01ba9KziWoCdv6eKo6FdljUEFMZUcVvflUX~OsaPmvXSf9EJwzo1S~6FF9OrDfjM6lQGNpPt3nP0wkm4TZMsOqMUyBNGJhO0z-UJ5W89HQmYRIHcVOGxZKO409TAXhTNGoR0UklJ6fw__&Key-Pair-Id=KUT5TJCACFTXG","author","Minnesota Legislature","date","2025-03-11T23:37:41.497Z","article","On March 11, 2025, the House Education Finance Committee considered compensatory revenue, the state formula that provides additional general education funding to sites that serve higher concentrations of students eligible for free or reduced-price school meals. House fiscal staff said compensatory revenue is the second‑largest component of the general education formula after the basic formula allowance.

Staff reviewed the measure Minnesota has used since 1996: a proxy based on the federal free and reduced‑price meal (FRPM) eligibility count. Staff explained that eligibility has two federal categories: free meals (household income at or below 130% of the federal poverty level) and reduced‑price meals (income between 130% and 185% of the federal poverty level). The committee was shown a chart of historic FRPM counts: the FRPM share rose through the early 2010s, drifted down in mid‑decade and fell sharply in 2021 (when COVID‑era enrollment and federal universal meals affected reporting). The count rose in 2022 after the Department of Education included medical‑assistance (MA) eligibility matches in the direct‑certification count.

House fiscal staff explained that for fiscal 2026 and forward the department will use the direct‑certification (DC) count only (the paper application totals are no longer used statewide), which reduces comparability with earlier years. Staff warned that the data series is not strictly comparable across the 2010s and post‑2022 counts because the 2022 inclusion of MA direct matches materially increased identified eligible students. Staff said the DC count for 2024 is the input the department will use for compensatory revenue calculations in the next biennium, and that the DC count is substantially lower than combined DC+application counts used prior to the change.

The committee discussed how compensatory revenue is distributed. Staff said compensatory revenue is a site‑based, concentration formula: every site receives some funding, but sites with higher concentrations of eligible students receive additional per‑student funding; the “concentration” design means the marginal compensatory student in a high‑concentration site generates more revenue than the marginal student in a low‑concentration site. Staff also noted statutory requirements that a large share of compensatory revenue remain at the school site (the packet cited an 80% site‑stay requirement in current law).

Staff pointed committee members to the Office of the Legislative Auditor’s 2020 review for deeper analysis and to Minnesota Statutes §126C.15 for the statutory list of 11 allowable uses of compensatory revenue; staff said those uses are broadly written to support strategies primarily meant to improve academic performance. The legislative auditor’s report, staff said, found that isolating compensatory revenue’s separate effect on outcomes is difficult because the funding is deeply interwoven with other district resources.

Members discussed policy options that have been proposed in prior years, including measures to adjust the proxy for poverty, to alter the site‑stay requirement, or to change concentration bands. Several members emphasized the difficulty of making year‑to‑year comparisons after the 2022 change and asked staff for additional district‑level detail so the committee can assess winners and losers under different calculation approaches.

Staff said compensatory revenue will be a policy focus for the committee given its size in the formula and the data‑driven changes to the DC counts introduced in recent years. The committee did not take formal action on compensatory policy during the meeting.","mediaType","Video","parentTitle","House Education Finance Committee 3/11/25","oneSentenceSummary","House fiscal staff and committee members discussed how compensatory revenue is calculated, the recent inclusion of medical‑assistance direct certification in counts, the site‑based concentration formula and the difficulty of tracking program effects.","taxTitle","2025 Legislature MN, Minnesota","taxId",77817,"location","Minnesota","headline","","shortSummary",{"_33":77,"_35":36,"_37":38,"_39":78,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":84,"_53":85,"_55":56,"_57":58,"_59":86,"_61":62,"_63":64,"_65":87,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6640746,"Committee reviews school property tax levies: operating referendums, equalization, bond credits and OPEB",1039,1041000,2080000,"/Search/View?dp=1&key=2549862-33606e64b7955b571b5eb125450c12d1&start=1041&end=2080","https://assets.pipeline.soar.com/2549862-33606e64b7955b571b5eb125450c12d1/thumbnail_1041000.jpg","/articles/6640746/Minnesota/Committee-reviews-school-property-tax-levies-operating-referendums-equalization-bond-credits-and-OPEB","https://secure.pipeline.soar.com/6640746-0179333510f4270311da941dca86311b/orig.mp4?Expires=1775631330&Signature=QHctwcZvJSZaYP60kROamVnWkVzwd7nDBDQGy6NQs9j8llwM6c78UDVFJ1vQ3tkDYXvxQuBS5ruSXexjctexf60AZSki1CJP0E5Ft8eACG32K0hT4g0IKh9h1gtqxaX1P4U85qU24CPbAJ-E~pxJBMqa4gOQ3aJB26oROypcrkvGtvj9-6szNyMCchPk6loUL24XGDJ9SijGZLdUdZoAdkL8beVOwFVm625mUA9oB8a7gb6C1-z189iS7FXrDR5T2Sy~oC6PxpoU8KK21WpAq1-9vij5MoZramuCyeRFfDkEkzSPCcTa2mJ1umUEv3rKZ9HNhYBsXU-Fq79TrsGJrg__&Key-Pair-Id=KUT5TJCACFTXG","On March 11, 2025, the House Education Finance Committee reviewed a property tax levy tracking spreadsheet prepared by House fiscal staff that updated November 2024 levy estimates to February 2025. Staff said the packet shows general fund levies, community service fund levies, debt service levies, OPEB/pension debt levies and the credits that reduce school property tax levies.

Staff reported that the total certified levies for school districts for the year paid in 2024 (pay 25) were about $3,867,000,000 statewide, according to the spreadsheet. The packet includes line items for commonly used levies: operating referendums, long‑term facilities maintenance (LTFM) levies, capital/technology levies and debt service levies that repay voter‑approved bonds.

House fiscal staff explained how referendum financing and equalization work. The operating referendum is the largest single component of many districts’ levies; voters can approve an operating referendum to raise an additional per‑pupil amount, subject to statutory caps. For lower property‑wealth districts the state provides equalization aid designed to reduce the property tax rate necessary to raise a given revenue amount; staff noted equalization makes a large difference in tax rates between high‑ and low‑property‑value districts.

Staff said districts may also use debt levies to repay voter‑approved bonds for building projects and that most districts go to voters for bond approval. The packet documents a growing use of capital/technology levies in some metro districts that have reached referendum caps.

House fiscal staff pointed out credits on the last page of the worksheet, including the school building bond agricultural credit. Staff said that credit, which started about a decade ago, reimburses roughly 70% of the school building bond tax impact on qualifying agricultural property so that farmers pay less of the school bond levy burden directly; the state provides the credit amount instead.

Staff also reviewed OPEB (other post‑employment benefits) levies and a one‑time 2008 bonding window that allowed districts to issue bonds to prefund OPEB liabilities. Staff said those bond repayments are winding down: one line in the packet showed the remaining bonded OPEB obligation falling to a small amount (staff noted about $17,000,000 remaining by pay 29) while other districts that use a pay‑as‑you‑go OPEB levy show increasing annual pay‑as‑you‑go costs.

Committee members asked how districts legally set levies and whether some levies can be extended by board action rather than voter approval. House fiscal staff explained that operating referendum authority can be extended by school‑board action for up to 10 years in many cases, while debt (bond) levies and technology/capital levies require voter reauthorization if the board wishes to continue them beyond their original approval.

House fiscal staff emphasized the district‑by‑district variability: some districts’ levies fall when bonds are paid off; others rise when voters approve new bonds. Staff said the department produces November reports showing referendum election history that the committee can use to track pass/fail rates and amounts.

Committee members raised equity questions about metro districts’ higher tax bases making it easier for some districts to fund larger construction projects and noted the long‑standing metro/Greater Minnesota differences in referendum passage rates. Staff and members also discussed operating sparsity and long‑term facilities maintenance as distinct mechanisms to assist small or geographically isolated districts.

The levy discussion will inform the committee’s drafting decisions because the House’s informal levy target instructs education committees to avoid producing bills that increase statewide levies without corresponding tax committee adjustments.

The committee’s property tax levy review was presented by House fiscal staff; no formal action was taken on policy in the meeting.","House fiscal staff detailed the February property tax levy tracking for school districts — covering operating referendums, equalization aid, capital and debt levies, the school building bond agricultural credit and OPEB bonds and levies — and explained how local votes and tax base affect district levies.",{"_33":89,"_35":36,"_37":38,"_39":90,"_41":91,"_43":92,"_45":93,"_47":94,"_49":95,"_51":96,"_53":97,"_55":56,"_57":58,"_59":98,"_61":62,"_63":64,"_65":99,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6640750,"February forecast shows short-term K–12 surplus, larger longer-term deficit as inflation raises formula costs",3472,162000,3634000,"/Search/View?dp=1&key=2549862-33606e64b7955b571b5eb125450c12d1&start=162&end=3634","https://assets.pipeline.soar.com/2549862-33606e64b7955b571b5eb125450c12d1/thumbnail_162000.jpg","/articles/6640750/Minnesota/February-forecast-shows-short-term-K12-surplus-larger-longer-term-deficit-as-inflation-raises-formula-costs","https://secure.pipeline.soar.com/6640750-1a842bdabc473342170103591e1126af/orig.mp4?Expires=1775631330&Signature=gBjzBnqNNHuVcwoKvrq8ieOHoX0X4Z3Pvsb5b1hvRdfBYvvQblscolyOyEgsodJp7gUSeBDYPwVidvXa9ZyNznqY-baLX4x35alKB1QeXmgm5b0g2ts3glOm~rsw3cPpmR6MhLErL557jaiovYoxlm4sEh0fodx1qlOEO-GM-vU5ztoFaE66aLnzLIiBfM~CV5BFh4DOL8MsQNMqeeP9tjTpYkoqF3Pk3i09YmWobeYZ6IVwaOYipH90sZ~idg2M24V8mDV6dHNsAsXIq8EScTD8qoTxYKEaNRdj4TdcOmVeWxBvUojRYi8THT3L1yVMmwRf~~UhvUHC6yFUGI6KgA__&Key-Pair-Id=KUT5TJCACFTXG","On March 11, 2025, the Minnesota House Education Finance Committee heard a presentation from nonpartisan House fiscal staff on the February 2025 K–12 education finance forecast, which committee staff said members should use as the base for constructing the education finance bill.

The staff presentation said the state’s projected general-fund balance for fiscal 2026–27 is $455,777,000 under the February forecast; staff noted that if inflation is excluded from that calculation the balance would be $1,601,000,000. Staff also showed that for fiscal 2028–29 the forecasted balance is substantially negative: including inflation the February forecast shows a $5,995,000,000 shortfall for FY 2028–29 and without inflation a $2,379,000,000 shortfall, according to the materials presented to the committee.

Committee members were given an eight‑page spreadsheet titled “K through 12 education finance February 2025 forecast aid appropriation summary.” House fiscal staff said the sheet is structured as a base budget: left to right it lists line numbers, program names, prior (November 2024) forecast columns, February 2025 forecast columns, and change columns that highlight activity driven by entitlements such as adjusted pupil units and other enrollment-linked calculations.

Nonpartisan staff emphasized that the biggest drivers of change from the November forecast were inflation assumptions and enrollment/entitlement updates. The general education base (line 8 on the packet) rose modestly in the current biennium but materially in later biennia: staff noted an increase of about $3.4 million for fiscal years 2024–25 compared with November, about $129 million for fiscal 2026–27, and about $245 million for fiscal 2028–29. Staff connected those increases to the change in the CPIU used to compute the formula allowance.

House fiscal staff explained how the general education formula allowance is indexed to inflation under current law: the allowance increases by at least 2% and at most 3% annually, with the inflation factors the commissioner of the Minnesota Department of Education determines. Staff reported the allowance inflation factors used in the February forecast were 2.7% for fiscal 2026 and 3% (capped) for fiscal 2027 and fiscal 2028; the fiscal 2029 factor was below 2% and therefore floored at 2%.

Staff walked the committee through program‑level changes recorded in the forecast. Notable items flagged in the presentation included: small adjustments to nonpublic pupil education and transportation aids based on more recent data; a decline in charter school building lease aid compared with the November forecast; reductions in inter‑district desegregation transportation grants tied to updated fiscal‑year data; and a relatively large reduction in projected take‑up for the paraprofessional paid orientation reimbursement program (the program was created in 2023 and of roughly 500 eligible local education agencies only 208 had sought that reimbursement in the data used). The packet also showed changes to achievement and integration aid, minor enrollment-driven adjustments to American Indian and tribal contract school aid, and a mixed picture for the school meal programs (school breakfast expectations rose while school-lunch costs were shown lower).

The presentation called special education a major cost driver. Staff said special education costs are growing because more students are eligible for services; staff also described the special‑education reimbursement structure in the forecast, noting state reimbursement rates of 44% in the near term and a scheduled rise to 50% in 2027 reflected in the materials.

House fiscal staff flagged that early‑childhood costs have been shifted in some accounts to the new Department of Children, Youth and Families and that some early‑childhood items therefore appear as zeros in the K–12 packet for FY 2024–25 because they are reported in another committee’s materials.

The chair closed the forecast portion by reminding members that the forecast materials are the baseline for bill drafting and that the committee would next review compensatory revenue and the formula overview.

The committee approved the meeting minutes at the start of the session by a voice vote following a motion from Representative Baker; no roll-call vote was recorded.

Next steps: staff said members should use the February forecast spreadsheet as the base for the education finance bill and that committee work will continue on compensatory revenue and the general‑education formula in coming meetings. The committee’s next scheduled meeting is March 13, 2025.","House Education Finance Committee review of the February 2025 K–12 forecast showed a modest projected balance for fiscal 2026–27 but substantial projected shortfalls for fiscal 2028–29; committee staff said formula inflation assumptions and enrollment-driven entitlements drive most of the change.","actionData","errors"]

Article not found

Compensatory revenue review: direct‑certification changes, concentration rules and measurement challenges

Committee reviews school property tax levies: operating referendums, equalization, bond credits and OPEB

February forecast shows short-term K–12 surplus, larger longer-term deficit as inflation raises formula costs