Yesterday, May 15, 2025 legislative leaders and Governor Walz announced the high level details of a global budget deal. The 2025 regular legislative session is set to adjourn on May 19, 2025 but a special session will likely follow to wrap up a few major budget bills, including the E-12 budget bill. The plan will keep E-12 funding at its forecasted levels for FY 26-27, but reduces E-12 spending by $420M in the “tails” budget or FY 28-29.
The tails reduction will likely result from reductions in either or both the forecasted increases on the basic formula or in special education cross-subsidy aid. GOP leaders said there won’t be cuts to nonpublic school aids, and DFL leaders said a plan to sunset Unemployment Insurance benefits won’t be a part of the final bill. These and all other E-12 changes will be hammered out over this coming weekend and into early next week.
Here is the Education Funding Comparison Snapshot as of 05.16.25
Snapshot of the House Education Finance bill, HF 2433:
- Renaming Local Options Revenue (LOR) to Basic Supplemental Revenue (BSR), and creating a new first tier of $40/pupil, which is all state aid.
- $30M one-time infusion into the Unemployment Insurance fund for school hourly workers
- The UI mandate is sunset on September 9, 2028.
- School Library Aid is repealed, and some of the revenue growth in Student Support Personnel Aid is captured, to pay for the new first tier of BSR and the one-time infusion of UI funding.\
- Special Education Transportation reimbursements are reduced from 100% of eligible costs to 95%, but transportation of homeless and highly mobile students remains at 100 percent of eligible costs.
- LTFM expanded to allow districts to levy “above the $100,000” line for roof replacement and repair.
- $40M for the READ Act
- Modest flexibility in the Nutrition Account
- No changes to Compensatory
Snapshot of the Senate E-12 bill, SF 2255:
- Blinks off the formula inflator for the “tails” period or FY 28-29: a loss of $600M in planning money for schools
- Repeals nonpublic school aids, including nonpublic transportation aid
- Increases the EL cross subsidy aid from 25-33%
- Increases the Special Education cross subsidy aid from 50-53%
- Modifies Literacy Incentive Aid
- $39M for a one-time Compensatory Aid hold harmless effort
- LTFM Roof “above the line” levy expansion
- Expanded nutrition account flexibility and allowable uses
- $80k minimum for Student Support Personnel Aid for all districts
- New distribution formula for the cooperative student support personnel aid
- School Board authority to renew a previous capital levy previously approved by referendum
- Consolidation transition aid increase
Senate Tax bill includes Seasonal Recreational Tax Base Replacement Aid
The Senate’s omnibus tax bill includes a Seasonal Recreational Tax Base Replacement Aid proposal. To reduce the immediate cost to the state the bill sets a 15% threshold of SR property before a school district qualifies for property tax relief. Voters would still be required to approve an operating levy for new funding to flow in.
