HF2100

Purpose of the Bill

This bill aims to revise how education finance is managed in Minnesota by modifying the procedures for determining local funding contributions to school districts. The objective is to reduce dependency on referendums for additional funding and to give districts more local revenue authority.

Main Provisions

1. Local Optional Revenue Increase:

   • The bill changes the calculation of local optional revenue for school districts. Starting in fiscal year 2025, the first tier of local optional revenue will be increased, with further increases set for 2027.
   • Specifically, first tier revenue will be calculated by multiplying the adjusted pupil units by 300 in fiscal years 2025 and 2026, increasing to 400 in 2027 and beyond.
   • A district's second tier local optional revenue will be calculated by multiplying the adjusted pupil units by 424.

2. Levy Adjustments:

   • The local optional levy combines the first and second tier levies. The levy is calculated based on the district’s market value per pupil compared to set statewide benchmarks, which adjust each year.
   • The bill provides specific scaling factors to be used for calculating these levies, changing yearly until 2027.

3. Education Finance Reform:

   • The bill proposes changes to the referendum allowances for local districts, setting new calculations and reducing these allowances under specific conditions.
   • The revised approach involves deducting sums and allowances linked to previous fiscal years and new allowances obtained post-2019.
   • It aims to diminish the amount that districts need to raise through voter-approved referendums by providing more base funding through state-managed channels.

Significant Changes to Existing Law

• The bill represents a shift towards empowering local districts with more revenue-generating authority without excessive reliance on referenda. It modifies existing state statutes to adjust the calculations and limits pertaining to local revenue and referenda allowances.
• Local districts will have adjusted capabilities to spread local levies over their referendum market value, and they may choose to levy less than the maximum permitted amount.

Relevant Terms

• Education Finance
• Referendum Allowance
• Local Optional Revenue
• Levy Authority
• School District Funding
• Pupil Units
• Education Statutes
• Financial Reform