SF2340

Purpose of the Bill

The purpose of this bill is to modify how school districts in Minnesota can collect and use local funds for education through changes in local optional revenue and referendum allowances. This includes adjusting the financial mechanisms available to school districts, such as levy limits and revenue calculations, beginning with the 2025 fiscal year.

Main Provisions

• Local Optional Revenue: The bill adjusts the formula for calculating local optional revenue available to Minnesota school districts. From fiscal year 2025, first-tier local optional revenue is calculated as 300 times the district's adjusted pupil units. This increases to 400 times the adjusted pupil units starting in fiscal year 2027. Second-tier local optional revenue will continue to be calculated as 424 times the adjusted pupil units of the district for every fiscal year.

• Local Optional Levy: The bill details how school districts can levy local taxes to generate this revenue. The calculations for these levies are based on the district's referendum market value per resident pupil unit, compared to a set baseline that changes annually starting in 2023 to gradually increase through 2027.

• Referendum Allowance: The bill revises the initial referendum allowance calculations for districts starting from fiscal year 2027. It also allows for changes in allowances depending on voter-approved adjustments and subtracts certain amounts at various stages of the calculation, ensuring some historical allowances are phased out or adjusted downward.

Significant Changes

• Increase in Local Revenue Potential: The legislation increases the potential first-tier local optional revenue a district can calculate based on student enrollment numbers, ultimately allowing for more funds to be raised locally as the base multiplier increases over the coming years.

• Adjustments to Levy Calculations: The bill updates the formulas for determining allowable levies, linking them to comparative market values per resident pupil, which change annually, thus potentially affecting how much districts can levy for additional funds.

• Alteration of Referendum Allowance Calculations: Changes to the method of calculating referendum allowances signify a shift in how school districts might plan long-term budgeting with existing or expiring allowances, with particular attention to adjustments approved by voters.

Relevant Terms

• Local optional revenue
• Local optional levy
• Referendum market value
• Adjusted pupil units
• Referendum allowance
• Fiscal years
• Inflation adjustments