DPI official walks lawmakers through K‑12 funding formula, key buckets and transition rules

Adam Tesher, school finance officer at the North Dakota Department of Public Instruction, told the Joint Education Committee the state funds K‑12 education primarily through a per‑pupil funding formula and a mix of state and local revenue.

Tesher said the “integrated formula payments” for the current biennium total about $2,300,000,000 and that the formula is supplemented by transportation grants (about $58,000,000) and special education contracts (about $24,000,000). He described the state’s approach as a per‑pupil payment model and said the current legislatively set per‑pupil payment is $11,072.

The briefing explained why state contributions have risen while the general fund contribution has been relatively stable. Tesher said the common schools trust fund and other dedicated revenue — gathered in what the presentation called the state tuition fund — have accounted for much of the growth in per‑pupil dollars. He also described the Foundation Aid Stabilization Fund as a rainy‑day resource that was constitutionally capped at 15% of total appropriation, with excess dollars being used in the funding formula.

Tesher walked committee members through several programmatic features that affect district payments: weighting for students with special needs and English learners; an “on‑time funding” adjustment based on the September 10 count with a year‑end true‑up; transportation reimbursements paid per mile (52¢ per mile when vehicle capacity is greater than 10; $1.11 per mile for buses, he said); and special rules about open enrollment and reimbursements.

He reviewed the transition protections that accompanied the 2013 funding formula. Those protections included transition minimums and maximums to soften abrupt winners and losers when the formula changed; Tesher said the number of districts on transition minimums has declined from 98 in 2013–14 to about 50 today. He explained a statutory phase‑in the Legislature adopted in 2019 that reduced transition payments by 15% per year over a multiyear period and that the committee is now in year four of that schedule.

Tesher also described Regional Education Associations, or REAs, as legislatively authorized regional groups of districts that provide shared services — professional development, Medicaid billing assistance and other centralized supports. He noted that districts that participate in an REA generate a weighting factor in the formula but that those dollars are automatically redirected to the REA rather than to the district’s checking account.

The presentation concluded with operational notes about payment timing (DPI front‑loads roughly 60% of annual entitlement during the first four months to align with local school revenue timing), the timing of enrollment certification (finalized prior to Nov. 1) and the schedule for payments of student contract reimbursements and gifted and talented distributions.

Tesher answered committee questions about how many districts remain off the full formula (about 50, he said) and the effect of per‑pupil rate increases as the fastest path to bringing districts onto the formula.