Senate taxes committee advances K‑12 omnibus that pauses inflation adjustment to formula

The Minnesota Senate Taxes Committee recommended passage of Senate File 2255 on April 23, voting to send the K‑12 omnibus education finance bill to the Finance Committee by a 5–4 margin.

Sponsor Senator Kunish, presenting the bill, described it as a three‑article education omnibus with provisions touching taxes: a temporary pause of the automatic inflation linkage for the general education formula, increases to several categorical aids, and changes affecting referendum and capital levy rules. "There are 3 articles and a total of 13 sections that make changes under the tax jurisdiction," Kunish said during her opening remarks.

The bill sets the general education formula allowance to rise by 2.7 percent in the 2026 fiscal year and by up to 3 percent in the following biennium, while decoupling the formula’s automatic inflation adjustment for the period covered by the committee’s budget target. Senator Kunish described the change as a short‑term measure to meet budget targets: "We decouple the basic formula from inflation ... rather than holding those dollars hostage, we thought it was best to temporarily decouple the tax." She said the tie to inflation would be reinstated in a future biennium specified in the bill.

The package contains multiple tax‑jurisdiction items: clarifying authority for consolidated districts to reauthorize operating referendums (responding to a Department of Education denial under 126C.7, subd. B); a long‑term facilities maintenance (LTFM) change allowing roof repair and replacement to be included in LTFM plans statewide; an increase to equalization aid tied to that LTFM change; authority for boards to extend capital project levies; and a requirement for review and public comment on projects funded with building lease levy proceeds. Jenna Holford, the committee’s nonpartisan fiscal analyst, said the equalization aid increases for roof repair/replacement total approximately $2.97 million in FY2027, $4.92 million in FY2028 and $5.01 million in FY2029.

The bill also doubles the base dollar amount for student support aid, expands flexibility for school lunch funds and student support personnel, and adds funding for special education and English learner cross‑subsidy aids.

Lawmakers raised several concerns in committee. Senator Weber questioned the bill’s decision to remove the inflation adjustment from the formula and said the proposal appeared to cut transportation aid for nonpublic (private and parochial) schools by more than $100 million over the biennium; Kunish said the state would no longer pay that aid but that nonpublic schools could still contract with public districts for transportation. Kunish cited the Minnesota Constitution, Article 13, Section 2, explaining concerns about using public money for sectarian schools.

Senator Nelson and others pressed on workforce and program impacts. Kunish said the bill includes a $100,000,000 set‑aside for unemployment insurance for hourly school employees — workers such as bus drivers and paraprofessionals — to avoid districts having to levy local dollars for those costs. Nelson and other senators also questioned the bill’s priorities and whether certain state mandates remain in place.

On governance of capital projects, Kunish argued the board‑renewal authority would reduce the cost of frequent local elections (she cited a recent 29 of 29 renewals passing) and lower the districts’ election expenses; opponents said local voter approval helps ensure projects reflect community priorities.

The committee approved the bill and will send SF 2255 to the Finance Committee. The roll call in committee produced a 5–4 recorded margin in favor of recommending passage.

What happens next: SF 2255 goes to the Senate Finance Committee for further consideration; the bill contains a mix of near‑term budget choices and technical changes that members said may be revisited in later negotiations.