Local optional revenue program renamed, program funding increased, and money appropriated.

A bill for an act

relating to education finance; renaming the local optional revenue program;

increasing the program's funding; appropriating money; amending Minnesota

Statutes 2024, sections 126C.10, subdivision 2e; 126C.17, subdivisions 7a, 7b;

Minnesota Statutes 2025 Supplement, section 124E.20, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 124E.20, subdivision 1, is amended

to read:

Subdivision 1.

Revenue calculation.

(a) General education revenue must be paid to a

charter school as though it were a district. The general education revenue for each adjusted

pupil unit is the state average general education revenue per pupil unit, plus the referendum

equalization aid allowance and
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first tier
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local
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optional
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education
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aid allowance in the pupil's

district of residence, minus an amount equal to the product of the formula allowance

according to section
126C.10, subdivision 2
, times .0466, calculated without declining

enrollment revenue, local
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optional
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education
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revenue, basic skills revenue, extended time

revenue, pension adjustment revenue, transition revenue, and transportation sparsity revenue,

plus declining enrollment revenue, basic skills revenue, pension adjustment revenue, and

transition revenue as though the school were a school district.

(b) For a charter school operating an extended day, extended week, or summer program,

the general education revenue in paragraph (a) is increased by an amount equal to 25 percent

of the statewide average extended time revenue per adjusted pupil unit.

(c) Notwithstanding paragraph (a), the general education revenue for an eligible special

education charter school as defined in section
124E.21, subdivision 2
, equals the sum of

the amount determined under paragraph (a) and the school's unreimbursed cost as defined

in section
124E.21, subdivision 2
, for educating students not eligible for special education

services.

(d) A charter school's general education revenue under paragraphs (a) to (c) is increased

by $132 times the adjusted pupil units for that fiscal year.

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EFFECTIVE DATE.

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This section is effective for fiscal year 2027 and later.

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Sec. 2.

Minnesota Statutes 2024, section 126C.10, subdivision 2e, is amended to read:

Subd. 2e.

Local
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optional
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education
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revenue.

(a)
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For purposes of this subdivision:
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(1) "regional average wage" means the average wage for each of Minnesota's economic

development regions for the most recent three years computed by the Minnesota Department

of Employment and Economic Development; and

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(2) "statewide average wage" means the statewide average wage for the most recent

three years computed by the Minnesota Department of Employment and Economic

Development.

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(b) A school district's region is the economic development region where the school

district's administrative offices are located.

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(c) A school district's geographical cost education index equals the greater of one or:

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(1) the sum of 0.23; and

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(2) 0.77 times the ratio of the regional average wage to the statewide average wage.

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(d) The local education allowance equals $979 for fiscal year 2027. The regional

education allowance for fiscal year 2028 and later equals the local education allowance for

the previous year times the ratio of the general education basic formula allowance for the

current year to the general education basic formula allowance for the previous year.

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(e)
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Local
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optional
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education
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revenue for a
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school
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district equals the
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sum of the district's

first tier local optional revenue and second tier local optional revenue. A district's first tier

local optional revenue equals $300 times
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product of:
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(1) the local education allowance for that year;

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(2) the school district's geographic cost index for that year; and

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(3)
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the adjusted pupil units of the district for that school year.
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A district's second tier

local optional revenue equals $424 times the adjusted pupil units of the district for that

school year.
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(b) A district's local optional levy equals the sum of the first tier local optional levy and

the second tier local optional levy.

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(c)
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(f)
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A district's
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first tier
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local
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optional
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education
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levy equals the district's
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first tier
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local
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optional
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education
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revenue times the lesser of one or the ratio of the district's

referendum market value per resident pupil unit to
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$880,000
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$.......
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.

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(d) For fiscal year 2023, a district's second tier local optional levy equals the district's

second tier local optional revenue times the lesser of one or the ratio of the district's

referendum market value per resident pupil unit to $548,842. For fiscal year 2024, a district's

second tier local optional levy equals the district's second tier local optional revenue times

the lesser of one or the ratio of the district's referendum market value per resident pupil unit

to $510,000. For fiscal year 2025, a district's second tier local optional levy equals the

district's second tier local optional revenue times the lesser of one or the ratio of the district's

referendum market value per resident pupil unit to $626,450. For fiscal year 2026, a district's

second tier local optional levy equals the district's second tier local optional revenue times

the lesser of one or the ratio of the district's referendum market value per resident pupil unit

to $642,038. For fiscal year 2027 and later, a district's second tier local optional levy equals

the district's second tier local optional revenue times the lesser of one or the ratio of the

district's referendum market value per resident pupil unit to $671,345.

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(e)
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(g)
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The local
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optional
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education
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levy must be spread on referendum market value.

A district may levy less than the permitted amount.

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(f)
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(h)
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A district's local
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optional
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education
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aid equals its local
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optional
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education
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revenue

minus its local
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optional
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education
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levy. If a district's actual levy for
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first or second tier
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local
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optional
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education
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revenue is less than its maximum levy limit
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for that tier
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, its aid must be

proportionately reduced.

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EFFECTIVE DATE.

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This section is effective for revenue for fiscal year 2027 and later.

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Sec. 3.

Minnesota Statutes 2024, section 126C.17, subdivision 7a, is amended to read:

Subd. 7a.

Referendum tax base replacement aid.

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(a) For fiscal year 2026,
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for each

school district that had a referendum allowance for fiscal year 2002 exceeding $415, for

each separately authorized referendum levy, the commissioner of revenue, in consultation

with the commissioner of education, shall certify the amount of the referendum levy in taxes

payable year 2001 attributable to the portion of the referendum allowance exceeding $415

levied against property classified as class 2, noncommercial 4c(1), or 4c(4), under section

273.13
, excluding the portion of the tax paid by the portion of class 2a property consisting

of the house, garage, and surrounding one acre of land. The resulting amount must be used

to reduce the district's referendum levy or first tier local optional levy amount otherwise

determined, and must be paid to the district each year that the referendum or first tier local

optional authority remains in effect, is renewed, or new referendum authority is approved.

The aid payable under this subdivision must be subtracted from the district's referendum

equalization aid under subdivision 7. The referendum equalization aid and the first tier local

optional aid after the subtraction must not be less than zero.

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(b) For fiscal year 2027 and later, a school district's referendum tax base replacement

aid equals its referendum tax base replacement aid for fiscal year 2026 per adjusted pupil

unit for fiscal year 2026 times its adjusted pupil units for the current school year.

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EFFECTIVE DATE.

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This section is effective for revenue for fiscal year 2027 and later.

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Sec. 4.

Minnesota Statutes 2024, section 126C.17, subdivision 7b, is amended to read:

Subd. 7b.

Referendum aid guarantee.

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(a) Notwithstanding subdivision 7, the sum of

a district's referendum equalization aid and local optional aid under section
126C.10
,

subdivision 2e, for fiscal year 2015 must not be less than the sum of the referendum

equalization aid the district would have received for fiscal year 2015 under Minnesota

Statutes 2012, section
126C.17, subdivision 7
, and the adjustment the district would have

received under Minnesota Statutes 2012, section
127A.47, subdivision 7
, paragraphs (a),

(b), and (c).

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(b)
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(a)
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Notwithstanding subdivision 7,
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for fiscal year 2026,
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the sum of referendum

equalization aid and local optional aid under section
126C.10, subdivision 2e
,
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for fiscal year

2016 and later,
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for a district qualifying for additional aid under paragraph (a) for fiscal year

2015, must not be less than the product of (1) the sum of the district's referendum equalization

aid and local optional aid under section
126C.10, subdivision 2e
, for fiscal year 2015, times

(2) the lesser of one or the ratio of the sum of the district's referendum revenue and local

optional revenue for that school year to the sum of the district's referendum revenue and

local optional revenue for fiscal year 2015, times (3) the lesser of one or the ratio of the

district's referendum market value used for fiscal year 2015 referendum equalization

calculations to the district's referendum market value used for that year's referendum

equalization calculations.

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(b) For fiscal year 2027 and later, a district's referendum aid guarantee equals its

referendum aid guarantee for fiscal year 2026 divided by its adjusted pupil units for 2026

multiplied by its adjusted pupil units for the current fiscal year.

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EFFECTIVE DATE.

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This section is effective for fiscal year 2027 and later.

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Sec. 5.
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APPROPRIATIONS; GENERAL EDUCATION AID.
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Subdivision 1.

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Department of Education.

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The sum indicated in this section is

appropriated from the general fund to the Department of Education in the fiscal year

designated.

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Subd. 2.

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Local education aid.

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For additional general education aid under Minnesota

Statutes, section 126C.19:

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$

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.......

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.....

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2027

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Sec. 6.
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REVISOR INSTRUCTION.
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The revisor of statutes must substitute the term "local education revenue," "local education

aid," and "local education levy" for "local optional revenue," "local optional aid," and "local

optional levy" wherever the terms appear in Minnesota Statutes. The revisor may also make

grammatical changes related to the change in terms.

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