Senate File No. 1254 is a legislative bill that proposes changes to the funding structure for school districts in Minnesota. It specifically aims to adjust the Local Optional Revenue program, which is a form of financial support that schools can access.

The bill outlines the following key changes:

1. Sets fixed revenue amounts for fiscal years 2026 and 2027, and then links the revenue to an index from fiscal year 2028 onward. This index ties the amount of local optional revenue to the general formula allowance for schools, which is a certain amount of money schools receive per pupil. The purpose here is to adjust the revenue amount based on inflation or changes in funding standards over time.

2. Establishes a two-tier revenue system for local optional revenue:

   • The first tier remains a fixed amount per pupil.
   • The second tier fluctuates based on the index linked to the general formula allowance starting from fiscal year 2028.

3. Adjusts the calculations for school district levies, which are local taxes raised by school districts:

   • The calculation involves ratios based on the market value per pupil within the district, ensuring that the amounts raised are aligned with local property values and economic conditions.

4. Provides that if a school district does not choose to use its full levy potential, its aid (state financial support) is adjusted accordingly.

In summary, this bill seeks to modernize funding methodologies for schools in Minnesota by linking part of the financial support to economic indicators, potentially making school funding more responsive to changes in economic conditions and education funding needs.