School Funding & Legislative Impact | June 8, 2023

Funding from recent legislative action is helpful, but budget deficit still projected
Posted on 06/08/2023
School Funding & Legislative Impact | June 8, 2023

Funding from recent legislative action is helpful, but budget deficit still projected

Now that the Minnesota Legislature has completed its work, more information is becoming available on how recent legislative action will affect Farmington Area Public Schools and districts throughout the state. The provisions included in the bill that was approved by the Legislature and signed by Governor Walz outlines funding for the next two years and also includes fiscal and policy provisions that will impact districts for several years.

“We do not yet have all the details on how this legislation will affect our district, but based on preliminary numbers our district is projecting a budget deficit of about $2 million for the 2024-2025 school year,” said Farmington Area Public Schools Superintendent Jason Berg. “We certainly appreciate the work of our legislators and the funding that will be provided, but it is important to remember that this funding did not fully address the financial issues of most Minnesota districts.”

The most significant funding provisions included in the recent Omnibus Education Bill include the following:

  • A general education funding formula increase of 4% for 2023-2024 and 2% for 2024- 2025.
  • The general education funding formula will be linked to inflation beginning in 2025-2026, which means funding for schools will increase in future years as inflation rises.
  • Funding to reduce the “special education cross subsidy,” which means that districts will need to use less general education funding to cover part of required special education costs. The current proposal reduces the cross subsidy for districts to 44% for the next two years. Districts will still need to cover 56% of the costs that should be covered by the state.

As noted in the legislative-related stories we shared throughout the spring, there are also numerous provisions in the bill that increase mandates and expenditures for districts. These unfunded and underfunded mandates could significantly affect the district’s financial projection for 2024-2025 as well as for future years. The three most costly provisions are:

  • Unemployment insurance for non-certified hourly employees
  • Implementation of the Read Act, an initiative to improve reading achievement
  • Paid family leave for district employees

The cost for these provisions is estimated to be about $2 million for our district for the 2023-2024 school year with the likelihood that future costs will increase. Additional mandates, including curriculum requirements, professional development and compliance with new state reporting demands will drive those costs higher.

While more than 70% of the district’s funding comes from the state, district leaders have begun exploring options for increasing revenue in other ways including an increase in our district’s operating levy. The district’s current operating levy generates $623.71 per pupil and will expire after the 2025-2026 school year.

More information on the impact of the bill for Farmington Area Public Schools and other finance-related issues will be shared in the coming weeks. To learn more about this, school finance, and the budgeting process please visit our Budget Info & FAQ webpage.