Senate panel advances education omnibus with temporary decoupling of formula inflation and UI funding for hourly school workers

Senator Kunish and other education-finance authors presented Senate File 2255 to the Minnesota Senate Taxes Committee on April 23, outlining an omnibus K–12 package that temporarily decouples the basic formula from automatic inflation, raises several formula and categorical items and provides a $100 million appropriation for unemployment insurance for hourly school workers.

The bill would set a 2.7% increase in the general education formula for the 2026 school year and allow up to a 3% increase in 2027, expand funding for special education and English-learner cross-subsidy aides, double the base amount for student support aid, increase flexibility for school lunch funds and allow some districts to renew capital project levies by board vote rather than holding an election. Senator Kunish said the measure also adds long-term facilities maintenance (LTFM) eligibility for roof repairs statewide and makes a technical change to county auditor deadlines for tax increment financing districts.

Why it matters: committee members said the bill reshapes how state dollars follow schools across the next biennia and shifts one of the largest decisions — whether the formula allowance rises automatically with inflation — to future legislatures. The committee approved the bill on a 5–4 roll call and sent it to Finance.

Major provisions and fiscal details - Formula and categorical changes: Kunish described three articles and 13 sections that touch taxes and education funding, including the 2.7% formula increase for 2026 and up to 3% in 2027 and a doubling of the student support aid base dollar amount. She said the bill also increases flexibility in use of school lunch funds and student-support personnel authority. - Decoupling from inflation: Kunish told the committee the bill “decouple[s] the basic formula from inflation” for the biennia that fall under the committee’s budget targets, then returns the tie to inflation after several biennia. She said the decision was made to avoid “drastic cuts” to special education and English-learner programs if inflation were fully counted in the forecast. The transcript records that the decoupling is temporary and will be reinstated in a later biennium (the bill specifies the restart in a future biennium; the exact calendar date in the transcript is not specified). - Unemployment insurance for hourly workers: Kunish said the bill sets aside $100,000,000 “for unemployment for our hourly workers,” funding unemployment benefits for school-year hourly staff over summer months so districts will not need to levy or use general fund dollars for that purpose. - Long-term facilities maintenance (LTFM): The bill would allow roof expenses to be included in LTFM plans statewide and increase equalization aid so the change remains levy-neutral statewide. Nonpartisan fiscal analyst Jenna Holford told the committee the state-aid tracker shows LTFM equalization aid increases of $2,970,000 in FY2027, $4,920,000 in FY2028 and $5,010,000 in FY2029 tied to roof repair and replacement. - Capital project levies and referenda: Section language would let school boards extend capital project levies by board vote; proponents said that saves districts the tens of thousands of dollars required to run renewal elections and noted past renewal success (29 of 29 renewals passed in the last eight years, per Kunish). - Nonpublic student transportation: Committee discussion recorded a sizable reduction in state-funded transportation for students attending nonpublic schools in the next biennium; a member called the cut “over a hundred million dollars.” Committee proponents said districts could still contract to provide transportation but the state would not pay that aid.

Committee debate and concerns Members pressed the author about the decision to decouple the formula from inflation and about where reductions were made to meet budget targets. Senator Weber questioned how the formula could still rise while being decoupled from inflation; Kunish responded that the increases are set by the bill’s numeric formula-allowance amounts already included in the forward forecast. Senator Nelson and others pressed on impacts to districts and asked how much of the total K–12 budget is the per-pupil (basic) revenue; nonpartisan staff said the basic revenue is roughly 50% of school district general fund revenues (excluding nutrition and debt service).

Other concerns included: - Mandates and local stress: Senators in opposition said earlier biennial changes imposed mandates on districts and raised property-tax pressure; the author said the bill contains targeted support and that not all complaints represent mandates added by this bill. - Equity and constitutional limits: In response to questions about nonpublic school services, Kunish cited Article XIII, Section 2 of the Minnesota Constitution (prohibition on use of public money to support sectarian schools) in defense of removing state-paid nonpublic transportation aid.

Action and vote A motion to recommend Senate File 2255 as amended to the Finance Committee was made by Senator Klein and carried on a roll call. Vote_record captured at the committee roll call: Chair, Minnesota Senate Taxes Committee — yes; Senator Klein — yes; Senator Weber — no; Senator Dibble — yes; Senator Drazkowski — no; Senator Hauschild — yes; Senator Miller — no; Senator Nelson — no; Senator Putnam — yes. Tally: yes 5, no 4. Outcome: recommended to pass and referred to Finance.

What’s next The bill was recommended to the Finance Committee. Committee members asked for additional detail in future briefings and emphasized that some choices (notably the inflation decoupling) could be revisited by future legislatures.

Ending note Senator Kunish said the measures aim to preserve investments in special education and English-learner services while meeting statewide budget targets; opponents warned the changes could shift costs or priorities to local districts and to future lawmaking bodies.