Lease levy authority restored for space necessary for graduation ceremonies.

A bill for an act

relating to education finance; restoring lease levy authority for space necessary

for graduation ceremonies; amending Minnesota Statutes 2025 Supplement, section

126C.40, subdivision 1.

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

Section 1.

Minnesota Statutes 2025 Supplement, section 126C.40, subdivision 1, is amended

to read:

Subdivision 1.

To lease building or land.

(a) When an independent or a special school

district or a group of independent or special school districts finds it economically

advantageous to rent or lease a building or land for any instructional purposes
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, for high

school graduation ceremonies,
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or for school storage or furniture repair, it may apply to the

commissioner for permission to make an additional capital expenditure levy for this purpose.

An application for permission to levy under this subdivision must contain the terms and

conditions of the proposed lease, and a description of the space to be leased and its proposed

use. Projects funded under this subdivision that require an expenditure in excess of $500,000

per school site if the school district has a capital loan outstanding, or $2,000,000 per school

site if the school district does not have a capital loan outstanding, are subject to review and

comment under section
123B.71, subdivision 8
, in the form and manner prescribed by the

commissioner.

(b) The criteria for approval of applications to levy under this subdivision must be

annually prescribed by the commissioner, and must include but are not limited to: the

reasonableness of the price, the appropriateness of the space to the proposed activity, the

feasibility of transporting pupils to the leased building or land, conformity of the lease to

the laws and rules of the state of Minnesota, the appropriateness of the proposed lease to

the space needs of the district, the financial condition of the district, and a review of the

statutory operating debt percentage applicable to the district. The commissioner must not

authorize a levy under this subdivision in an amount greater than the cost to the district of

renting or leasing a building or land for approved purposes. The proceeds of this levy must

not be used for operating costs. A district may not levy under this subdivision for the purpose

of leasing or renting a district-owned building or site to itself.

(c) For agreements finalized after July 1, 1997, a district may not levy under this

subdivision for the purpose of leasing: (1) a newly constructed building used primarily for

regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed

building addition or additions used primarily for regular kindergarten, elementary, or

secondary instruction that contains more than 20 percent of the square footage of the

previously existing building.

(d) Notwithstanding paragraph (b), a district may levy under this subdivision for the

purpose of leasing or renting a district-owned building or site to itself only if the amount is

needed by the district to make payments required by a lease purchase agreement, installment

purchase agreement, or other deferred payments agreement authorized by law, and the levy

meets the requirements of paragraph (c). A levy authorized for a district by the commissioner

under this paragraph may be in the amount needed by the district to make payments required

by a lease purchase agreement, installment purchase agreement, or other deferred payments

agreement authorized by law, provided that any agreement include a provision giving the

school districts the right to terminate the agreement annually without penalty.

(e) The total levy under this subdivision for a district for any year must not exceed $212

times the adjusted pupil units for the fiscal year to which the levy is attributable.

(f) For agreements for which a review and comment under section
123B.71, subdivision

8, have been submitted to the Department of Education after April 1, 1998, the term

"instructional purpose" as used in this subdivision excludes expenditures on stadiums.

(g) The commissioner of education may authorize a school district to exceed the limit

in paragraph (e) if the school district petitions the commissioner for approval. The

commissioner shall grant approval to a school district to exceed the limit in paragraph (e)

for not more than five years if the district meets the following criteria:

(1) the school district has been experiencing pupil enrollment growth in the preceding

five years;

(2) the purpose of the increased levy is in the long-term public interest;

(3) the purpose of the increased levy promotes colocation of government services; and

(4) the purpose of the increased levy is in the long-term interest of the district by avoiding

over construction of school facilities.

(h) A school district that is a member of an intermediate school district or other

cooperative unit under section
123A.24, subdivision 2
, or a joint powers district under

section
471.59
may include in its authority under this section the costs associated with leases

of administrative and classroom space for programs of the intermediate school district or

other cooperative unit under section
123A.24, subdivision
2, or joint powers district under

section
471.59
. This authority must not exceed $65 times the adjusted pupil units of the

member districts. This authority is in addition to any other authority authorized under this

section. The intermediate school district, other cooperative unit, or joint powers district may

specify which member districts will levy for lease costs under this paragraph.

(i) Notwithstanding paragraph (a), a district may levy under this subdivision for the

purpose of leasing administrative space if the district can demonstrate to the satisfaction of

the commissioner that the lease cost for the administrative space is no greater than the lease

cost for instructional space that the district would otherwise lease. The commissioner must

deny this levy authority unless the district passes a resolution stating its intent to lease

instructional space under this section if the commissioner does not grant authority under

this paragraph. The resolution must also certify that the lease cost for administrative space

under this paragraph is no greater than the lease cost for the district's proposed instructional

lease.

(j) Notwithstanding paragraph (a), a district may levy under this subdivision for the

district's proportionate share of deferred maintenance expenditures for a district-owned

building or site leased to a cooperative unit under section
123A.24, subdivision 2
, or a joint

powers district under section
471.59
for any instructional purposes or for school storage.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 2.
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GRADUATION FACILITIES; 2026 GRADUATION.
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The Department of Education must approve as part of the lease levy under Minnesota

Statutes, section 126C.40, subdivision 1, for taxes payable in 2027, the costs of any leases

for graduation ceremony facilities for high school students graduating at the end of the

2025-2026 school year, regardless of whether the lease was received by the Department of

Education prior to the district's graduation ceremony.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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