Summer unemployment insurance for hourly school workers boosted by $100 million

A new law that takes effect July 1, 2025, will provide a onetime $100 million appropriation in fiscal year 2026 to reimburse school districts to fund the summer unemployment insurance program.

Funds in the account are used to reimburse school districts, charter schools, intermediate school districts, and other cooperative units for costs associated with providing unemployment benefits to hourly school employees over the summer.

Sponsored by Rep. Emma Greenman (DFL-Mpls) and Sen. Jennifer McEwen (DFL-Duluth), the law will cancel a $77.23 million appropriation made in 2023 for the Northern Lights Express rail project — a proposed passenger rail service between Minneapolis and Duluth — and reduce $683,000 for fiscal year 2026 and $22.09 million for fiscal year 2027 from special education aid to provide the $100 million to the school unemployment aid account.

However, the special education reductions in the bill are not an actual loss in revenue to schools since these costs are fully covered by the direct state unemployment insurance aid payments for the 2026-27 biennium. In subsequent years, if no direct unemployment aid is provided to schools, the special education formula will reimburse a portion of the unemployment insurance costs for special education paraprofessionals in the same manner as other eligible special education expenditures.

Hourly workers will remain eligible for the summer unemployment insurance program in future years, but districts will eventually have to absorb the cost.

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