The centerpiece of the agreement is the proposed increase in the basic formula of 4% for the 2023-24 school year and 2% for the 2024-25 school year with future increases tied to inflation. The inflationary increase beyond this biennium will have a 2% floor and a 3% ceiling. Tying the formula to inflation has long been a priority in the education community and this action should go a long way towards ensuring a greater level of funding stability for school districts. The estimated cost of the formula increase is $705 million in this biennium and $1.35 billion in the next biennium.

The bill also provides a significant reduction in the special education cross-subsidy of $663 million in this biennium and $821 million in the next biennium. The Governor set the baseline of this initiative with his recommendation that the cross-subsidy be reduced by 50%. The conference committee sets the amount at 44% for the next three years before it is increased to 50% in the second year of the next biennium. It’s always difficult to discern where money goes when the final agreement comes together, but both legislative bodies put more money into the newly established student support personnel categorical revenue stream and the English Learner cross-subsidy than did the Governor in his recommendations and the final agreement reflects that slight difference in priorities.

An item where the Governor’s influence clearly held sway was in the treatment of the expanded Unemployment Insurance provision that was funded by a separate budget line of $134 million in his recommendations, but was not clearly funded in either the House or Senate omnibus bills.  It’s not that the Senate and House did not fund it, they simply did not fund it directly with a revenue stream dedicated to assuming the increased costs related the expanded eligibility for “between-term” school employees (bus drivers, food service workers, paraprofessionals), but instead suggested these costs be absorbed through the increase in districts’ general funds resulting from the basic formula increase and the reduction of the special education cross-subsidy. Going with the Governor’s recommendation is the most transparent way to deal with the issue and while there will be issues as the program is implemented, at least districts will not be draining the general funds to meet the new requirements.

The $134 million is an estimate of what it will require to hold districts harmless for the increased Unemployment Insurance claims that will result from greater eligibility. The program will be administered through the Minnesota Department of Education in coordination with the Minnesota Department of Economic Development with districts submitting their costs to be reimbursed. The bill also contains $64 million in each year of the next biennium to cover costs related to Unemployment Insurance costs for special education paraprofessionals. It’s important to note that we are voyaging into uncharted territory and the cost estimates are just that—estimates. We will obviously know more about costs after the program takes effect this summer. Speaking of this summer, this is the immediate challenge because we simply do not know how many individuals slated to work summer school this summer will opt to file for unemployment instead, which could threaten the stability of already-offered summer learning opportunities, school-based childcare, and mandated care for students with IEPs. As the program takes root, there may be a need to look for other ways to provided school districts funding to maintain the integrity of their general funds, but that is a task for another day.

Here are other funding highlights of the final agreement:

• $86.9 million in FY 24-25 and $171.8 million in FY 26-27 for English Learner cross-subsidy aid
• $64 million in FY 24-25 and $117.7 million in FY 26-27 for student support personnel aid
• $9.8 million in FY 24-25 and $11.6 million in FY 26-27 for transportation sparsity revenue
• Existing VPK/School Readiness+ slots made permanent, expands the number of seats by an additional 5,200 seats in FY26-27 and later.
• Provisions related to non-exclusionary discipline that aim to address disparities in school suspension rates for various student demographic groups.
  Establishment of an Ethnic Studies component of the social studies standards.
• $13.5 million per year (both in this biennium and on-going) for helping districts implement Multi-Tiered Systems of Support (MTSS)
• Approximately $80 million in programs to enhance the teaching profession and address teacher shortage areas, especially for teachers of color.
• $35 million for professional development and $34 million for curriculum acquisition to promote evidence-based reading programs through the READ Act

All funding and language items have been agreed to, but the document that contains everything in a readily digestible format is not available at this point. It will likely be available at some point today, and I will post it on the blog. As always, I welcome any questions or comments.

Check the blog this week for updates. There may be more than one per day and I will announce new blog entries through my Twitter feed @Lundellleg

Let me know if you have any questions or comments at 612-220-7459 or brad.lundell@schoolsforequity.org or lundelllegislative31@gmail.com.

Combined Legislative Meetings held this week at the Capitol.