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Automatic inflation added to Minnesota basic school formula will raise state funding by roughly $179 million in fiscal 2026, staff estimate
Summary
Committee staff presented printouts showing that adding automatic inflation to the basic formula allowance raises the average general education revenue by about $194 per pupil (1.8% on average) and increases statewide funding by roughly $179 million for fiscal 2026, compared with no-inflation baseline.
Committee fiscal staff told the House Ways and Means education subcommittee that the legislature’s decision to add automatic inflation into the basic formula allowance is expected to increase school district funding for fiscal 2026 compared with a no-inflation baseline.
Mr. Strom, the committee’s fiscal analyst, presented a fiscal-year-2026 general-education printout that shows the basic formula allowance rising from $7,281 to an estimated $7,448 per pupil, a $167 increase. When the other components that link to inflation (compensatory revenue, operating sparsity and transportation sparsity) are included, the total average increase across general education categories was about $194 per pupil, which staff estimated equates to roughly $179 million statewide.
Nut graf: automatic inflation is now part of the base used to compute target budgets and printouts. Because Minnesota budgets using a base system, the inflation adjustment is baked into the starting point for committees and will affect how many dollars are available to distribute across programs in the 2025 legislative session.
Staff explained how the printouts are organized — pupil units, per-pupil columns and strata — and how inflation’s effect varies by district depending on the district’s mix of revenue categories. "For the Aiken School District, inflation increased their revenue by $208 per pupil," Strom said as an example, and staff walked members through percent change columns and statewide aggregates.
Members asked technical questions about which specific categories link to inflation. Strom answered that compensatory revenue, operating sparsity and transportation sparsity are keyed to increases in the basic formula allowance. Committee members also asked for clarifications about how the inflation adjustment appears on printouts and whether it will be treated differently in budget targets and tails for fiscal years 2028–29. Staff said they will continue to show the inflation portion on printouts so members can see how much of the base stems from inflation.
Ending: The committee will use the inflation-adjusted base as it sets targets for committees this session; staff will continue to supply printouts showing district-by-district impacts and the components that rise with inflation.
