Fiscal year 2027 compensatory aid calculation modification

A bill for an act

relating to education finance; modifying the calculation of compensatory aid for

fiscal year 2027; appropriating money: amending Minnesota Statutes 2025

Supplement, sections 126C.05, subdivision 3; 126C.10, subdivisions 3, 3c; 126C.15,

subdivision 2; Laws 2023, chapter 55, article 1, section 37, as amended.

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

Section 1.

Minnesota Statutes 2025 Supplement, section 126C.05, subdivision 3, is amended

to read:

Subd. 3.

Compensation revenue pupil units.

Compensation revenue pupil units must

be computed according to this subdivision.

(a) The compensation revenue concentration percentage for each building in a district

equals the product of 100 times the ratio of:

(1) the sum of the number of pupils enrolled in the building eligible to receive free meals

plus one-half of the pupils eligible to receive reduced-priced meals on October 1 of the

previous fiscal year; to

(2) the number of pupils enrolled in the building on October 1 of the previous fiscal

year.

(b) The compensation revenue pupil weighting factor for a building equals the lesser of

one or the quotient obtained by dividing the building's compensation revenue concentration

percentage by 80.0.

(c) The compensation revenue pupil units for a building equals the product of:

(1) the sum of the number of pupils enrolled in the building eligible to receive free meals

and one-half of the pupils eligible to receive reduced-priced meals on October 1 of the

previous fiscal year; times

(2) the compensation revenue pupil weighting factor for the building; times

(3) .60.

(d) Notwithstanding paragraphs (a) to (c), for voluntary prekindergarten programs under

section
142D.08
, charter schools, and contracted alternative programs in the first year of

operation, compensation revenue pupil units shall be computed using data for the current

fiscal year. If the voluntary prekindergarten program, charter school, or contracted alternative

program begins operation after October 1, compensatory revenue pupil units shall be

computed based on pupils enrolled on an alternate date determined by the commissioner,

and the compensation revenue pupil units shall be prorated based on the ratio of the number

of days of student instruction to 170 days.

(e) The percentages in this subdivision must be based on the count of individual pupils

and not on a building average or minimum.

(f) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2025 only, the

compensation revenue pupil units for each building in a district equals the greater of the

building's actual compensation revenue pupil units computed according to paragraphs (a)

to (e) for revenue in fiscal year 2025, or the building's actual compensation revenue pupil

units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.

(g) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2026 only, the

compensation revenue pupil units for each building in a district equals the greater of the

building's actual compensation revenue pupil units computed according to paragraphs (a)

to (e) for revenue in fiscal year 2026, or the building's actual compensation revenue pupil

units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.

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(h) Notwithstanding paragraphs (a) to (e), for revenue in fiscal year 2027 only, the

compensation revenue pupil units for each building in a district equals the greater of the

building's actual compensation revenue pupil units computed according to paragraphs (a)

to (e) for revenue in fiscal year 2027 or the building's actual compensation revenue pupil

units computed according to paragraphs (a) to (e) for revenue in fiscal year 2024.

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Sec. 2.

Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 3, is amended

to read:

Subd. 3.

Compensatory education revenue.

(a) A district's compensatory revenue

equals the sum of its compensatory revenue for each building in the district and the amounts

designated under Laws 2015, First Special Session chapter 3, article 2, section 70, subdivision

8, for fiscal year 2017. Revenue shall be paid to the district and must be allocated according

to section
126C.15, subdivision 2
.

(b) For fiscal years 2024
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, 2025, and 2026
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through 2027
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, the compensatory education

revenue for each building in the district equals the formula allowance minus $839 times the

compensation revenue pupil units computed according to section
126C.05, subdivision 3
.

(c) For fiscal year
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2027
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2028
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and later, the compensatory education revenue for each

building in the district equals its compensatory pupils multiplied by the building

compensatory allowance.

(d) When the district contracting with an alternative program under section
124D.69

changes prior to the start of a school year, the compensatory revenue generated by pupils

attending the program shall be paid to the district contracting with the alternative program

for the current school year, and shall not be paid to the district contracting with the alternative

program for the prior school year.

(e) When the fiscal agent district for an area learning center changes prior to the start of

a school year, the compensatory revenue shall be paid to the fiscal agent district for the

current school year, and shall not be paid to the fiscal agent district for the prior school year.

(f) Notwithstanding paragraph (c), for fiscal year 2026, if the sum of the amounts

calculated under paragraph (c) is less than $838,947,000, the commissioner must

proportionately increase the revenue to each building until the total statewide revenue

calculated for each building equals $838,947,000.

(g) Notwithstanding paragraph (c), for fiscal year 2027 and later, if the sum of the

amounts calculated under paragraph (c) is less than $857,152,000, the commissioner must

proportionately increase the revenue to each building until the total statewide revenue

calculated for each building equals $857,152,000.

Sec. 3.

Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 3c, is amended

to read:

Subd. 3c.

Statewide compensatory allowance.

For fiscal year
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2027
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2028
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, the statewide

compensatory allowance is
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$6,936
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$7,129
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. For fiscal year
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2028
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2029
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and later, the statewide

compensatory allowance equals the statewide compensatory allowance in effect for the

prior fiscal year times the ratio of the formula allowance under section
126C.10, subdivision

2
, for the current fiscal year to the formula allowance under section
126C.10, subdivision

2
, for the prior fiscal year, rounded to the nearest whole dollar.

Sec. 4.

Minnesota Statutes 2025 Supplement, section 126C.15, subdivision 2, is amended

to read:

Subd. 2.

Building allocation.

(a) A district or cooperative must allocate at least 80

percent of its compensatory revenue to each school building in the district or cooperative

where the children who have generated the revenue are served unless the school district or

cooperative has received permission under Laws 2005, First Special Session chapter 5,

article 1, section 50, to allocate compensatory revenue according to student performance

measures developed by the school board.

(b) A district or cooperative may allocate no more than 20 percent of the amount of

compensatory revenue that the district receives to school sites according to a plan adopted

by the school board. The money reallocated under this paragraph must be spent for the

purposes listed in subdivision 1, but may be spent on students in any grade, including

students attending school readiness or other prekindergarten programs.

(c) For the purposes of this section and section
126C.05, subdivision 3
, "building" means

education site as defined in section
123B.04, subdivision 1
.

(d) Notwithstanding section 123A.26, subdivision 1, compensatory revenue generated

by students served at a cooperative unit shall be paid to the cooperative unit.

(e) A district or cooperative with school building openings, school building closings,

changes in attendance area boundaries, or other changes in programs or student demographics

between the prior year and the current year may reallocate compensatory revenue among

sites to reflect these changes. A district or cooperative must report to the department any

adjustments it makes according to this paragraph and the department must use the adjusted

compensatory revenue allocations in preparing the report required under section
123B.76,

subdivision 3
, paragraph (c).

(f) For fiscal years 2026
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and
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,
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2027
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, and 2028
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only, notwithstanding the percentages

specified in paragraphs (a) and (b), a district may allocate up to 40 percent of the amount

of compensatory revenue that the district receives to school sites according to a plan adopted

by the school board, consistent with the purposes listed in subdivision 1.

Sec. 5.

Laws 2023, chapter 55, article 1, section 37, the effective date, as amended by

Laws 2025, First Special Session chapter 10, article 1, section 25, is amended to read:

EFFECTIVE DATE.

Paragraph (a) is effective for revenue for fiscal year
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2027
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2028
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.

Paragraph (b) is effective May 28, 2023. Paragraph (c) is effective the day following final

enactment.

Sec. 6.
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APPROPRIATION.
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$....... in fiscal year 2027 is appropriated from the general fund to the commissioner of

education for additional general education aid.

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