Local optional revenue increase could add millions to school funding

If Minnesota school districts were a naval fleet, Paul Bourgeois says they have been sinking from funding hits for years.

“We’re steaming along out there, but we’re taking some hits,” said the executive director of finance and operations for the Minnetonka School District. “Inflation is just a torpedo that is hitting us. It’s hitting everybody.”

Sponsored by Rep. Matt Norris (DFL-Blaine), HF4117 hopes to throw a floatation device to Minnesota school districts by raising the local optional revenue amount per student from $724 to $920 for fiscal year 2025.

The bill was laid over Thursday by the House Education Finance Committee for possible inclusion in a larger bill.

Norris said the number has remained stagnant since 2014, and rising inflation demands an increase on what local districts can levy taxpayers. “The $196 [increase] is going to be like a man in the desert stumbling upon an oasis.”

In total, the bill would allocate $167 million in new funding.

[MORE: View the proposed changes by district for the 2025-26 school year]

For fiscal year 2026 and beyond, the bill would allow the local optional revenue number to increase by the rate of inflation. It would also add cost-based reimbursements for school districts’ unemployment insurance costs and paid family and medical leave expenses, mandates added to schools in 2023.

No money is currently budgeted for school districts to pay for these mandates, but they know the expenses will be coming soon, Bourgeois said.

“The mandates … are a couple more torpedoes that are going to hit us,” he said.

Rep. Ben Bakeberg (R-Jordan) said the bill would put the onus of funding paid family and medical leave and unemployment insurance on local school boards, mandates they didn’t ask for.

“This bill is just trying to cover the new mandates that were passed by the DFL last year,” he said. “... If there is not a funding source for this, it will result in budget reductions.”

Rep. Ron Kresha (R-Little Falls) believes the bill should be going through the tax committee because it will raise taxes on Minnesotans in one form or another.

“To say this is not raising taxes on the property side, is to ignore the fact that if we were to put this in the tax committee, we would have to raise taxes somewhere else,” he said.

The bill would also increase the state equalization aid to school districts with a lower tax base to reduce funding disparities, Norris said.

“The equalizing factors for [local option revenue] and operating referendum have been badly eroded by inflation over the years,” said Scott Croonquist, executive director of the Association of Metropolitan School Districts.