DPI finance officer outlines how North Dakota funds K‑12; $2.3 billion flows through formula

Bismarck — Adam Tesher, school finance officer at the North Dakota Department of Public Instruction, told the Joint Education Committee the state’s integrated funding formula currently distributes roughly $2.3 billion on a per‑pupil basis to local school districts.

Tesher said the funding picture also includes about $58 million in transportation grants and roughly $24 million for special education contracts that function as a high‑cost “insurance” bucket for individual students. He told lawmakers the current per‑pupil payment set by the legislature is $11,072.

The fund mix has changed since the formula’s 2013 start, Tesher said. General fund contributions have stayed roughly flat over the last decade while increases in the state tuition fund, driven largely by the Common Schools Trust Fund, have been a major source of growth. The Foundation Aid Stabilization Fund, intended as a rainy‑day reserve for schools, was amended by constitutional measure to require maintaining 15% of the total appropriation and permit use of amounts above that level in the formula.

Tesher described transition minimums and maximums put in place when the 2013 formula created winners and losers. He said transition maximums were eliminated and the state has been phasing out transition minimum payments with a legislative schedule that started in 2019; 50 districts remained on transition minimums at the time of his presentation, down from 98 in 2013–14. He said the 15% annual reduction schedule moves districts closer to the formula but increases in the per‑pupil payment are the fastest path to bringing districts fully onto the formula.

On timing and cash flow, Tesher said districts receive an estimate for August–October payments, with final data reconciled before Nov. 1 and 60% of the yearly appropriation front‑loaded in the first four months to align with local property tax revenue timing.

Transportation funding is paid at 52 cents per mile for vehicles with capacity greater than 10 and $1.11 per mile for larger buses; state law classifies vehicles with capacity greater than 10 as buses and requires bus‑specific safety standards, Tesher said. He also summarized how Regional Education Associations (REAs) receive a separate weighting and some REA grant payments are redirected to REAs when districts elect to participate.

Why it matters: Tesher said committee members will receive worksheets showing how proposed changes in any school funding policy bill would affect districts in their legislative districts. He emphasized the committee’s role in writing policy that determines distribution of the $2.8 billion K‑12 funding pool and urged members to study formula worksheets when the policy bill arrives.

Asked by Representative Longmeir, Tesher said REAs are regional groups of districts that provide services such as professional development and Medicaid billing assistance and receive dedicated funding when districts participate. Chair Heinert and other members asked clarifying questions about the number of districts still on transition minimums and on the formula’s overall student coverage.

The presentation concluded with Tesher turning to the next DPI presenter.