District monitoring legislative proposals and assessing potential impact on financial health
Because more than 70% of our district’s funding comes from the state of Minnesota, district leaders regularly monitor legislative proposals to determine how the district will be affected. Legislative action can have an impact on both the district’s revenue and expenditures, as well as the financial planning for future years.
While the legislature is still working on the details that will be included in the final education bill, some information is being shared about how school districts will be affected, including the following:
- Governor Walz has proposed increasing the general education funding formula by 4% for 2023-2024 and 2% for 2024-2025. The House and Senate bills will also likely include increases in the formula.
- Proposals are being considered that would reduce the “special education cross subsidy,” which means that districts need to use general education funding to cover part of required special education costs. The state does not provide enough funding to districts to cover the costs of serving the needs of special education students so districts need to use part of the general education funding to cover these costs. While there are proposals that would cover 100% of the special education cross subsidy, the governor proposed reducing the cross subsidy by about 50%.
Along with the proposals noted above that would increase revenue for districts, there are also numerous proposals that would increase mandates and expenditures for districts. In some cases, the costs of these proposals could potentially exceed the revenue provided by the state and put additional pressure on district finances in coming years.
The state is projecting a budget surplus and it is likely that public schools will receive some level of additional funding. However, the final determination of state educational funding is not anticipated until the end of the legislative session, which is May 23, 2023. District leaders will continue to monitor legislative discussions and will continue to review options for maintaining the district’s financial health.
To learn more about this, school finance, and the budgeting process please visit our Budget Info & FAQ webpage.