Panel backs raising local optional revenue by $250 per pupil; bill projects net state aid increases and small net property tax reduction

Senator Kupik introduced Senate File 2239 to increase the first-tier local optional revenue (LOR) allowance by roughly $250 per adjusted pupil unit beginning in fiscal year 2027. The Education Finance Committee heard testimony from school business officials, superintendents and school board members and laid the bill over for possible inclusion in the omnibus process.

The sponsor and fiscal staff presented top-line fiscal estimates: in fiscal 2028 the bill would increase general education revenue by approximately $244,000,000 and increase state aid entitlements by approximately $268,000,000, yielding a net estimated reduction in property tax levies of about $24,000,000. In fiscal 2029, estimates shown to the committee projected roughly $259,000,000 in increased general education revenue, $284,000,000 in increased state aid entitlements and a net $24,000,000 reduction in property taxes.

Paul Bourgeois testified on behalf of multiple associations (Association of Metropolitan School Districts, Minnesota Association of School Business Officials, Minnesota Rural Education Association and Schools Advocating for Fair Funding). Bourgeois said cumulative inflation has stripped about $250 per pupil of purchasing power from the existing first-tier LOR allowance and argued the change is necessary to prevent staff reductions statewide; he and other witnesses cited projected district budget shortfalls and potential job losses.

District leaders gave local examples. Brenda Lewis, superintendent of Fridley Public Schools, said an increase of $250 per pupil would generate an estimated $750,000 annually for Fridley (about 3,000 pupil units) — roughly a 1.875 percent boost to a $40,000,000 general fund — and would reduce the depth of planned cuts (Fridley reported $3,600,000 in budget reductions for 2025–26 and a potential $4,800,000 shortfall if compensatory revenue is cut). Saint Michael–Albertville superintendent Anne Marie Fuoco said an increase would yield around $1,800,000 for her district — the equivalent of about 22.5 staff positions — and noted her district’s repeated failed operating levies and limited local tax base.

Charter schools raised equity concerns. Shannon Mitchell (Minnesota Association of Charter Schools), speaking remotely, asked the committee to consider a phased approach to help charters access an equivalent aid amount (charter schools cannot levy and currently receive roughly 70 percent of comparable district funding). Mitchell suggested a phased state-aid equivalent of the proposed $250 per pupil increase to reduce widening funding inequities.

Other testimony included board and business perspectives from Minnetonka and Morehead representatives and support from committee members representing districts that would benefit. Supporters framed SF 2239 as a targeted step to restore purchasing power lost to inflation and to provide a stable funding stream for basic operations, class-size reduction efforts and teacher compensation. Opponents — not prominent in this hearing record — would likely raise concerns about overall state budget trade-offs; witnesses acknowledged the bill’s cost and the larger state budget context.

Senate File 2239 was laid over for possible inclusion in a future omnibus bill.