Purpose

• The bill aims to increase funding designed to help school districts with the costs related to special education. It creates a new mechanism called cross subsidy reduction aid and sets how much aid districts will receive each year based on a specific factor.

Main Provisions

• The bill amends Minnesota Statutes 2024 section 125A.76 subdivision 2e to add a new Subdivision 2e called “Cross subsidy reduction aid.”
• Key calculation: a school district’s annual cross subsidy reduction aid equals the district’s initial special education cross subsidy from the previous fiscal year multiplied by the cross subsidy aid factor for the current fiscal year.
• The cross subsidy aid factor is a percentage that changes by fiscal year:
  • 6.43 percent for fiscal year 2023
  • 44 percent for fiscal years 2024 and 2025
  • 50 percent for fiscal year 2026
  • 50 to 54 percent for fiscal year 2027 and later (the exact value for 2027+ is shown as a range in the text)

How the Calculation Works

• For each district, take the district’s initial cross subsidy in the prior year.
• Multiply that amount by the cross subsidy aid factor for the current year.
• The result is the district’s cross subsidy reduction aid for that year.

Changes to Existing Law

• Introduces a new aid mechanism (cross subsidy reduction aid) and ties it to an explicitly defined annual factor schedule.
• Requires updating the statute (125A.76 Subd. 2e) to reflect this new calculation and factor structure.
• Indicates that money is appropriated to fund this cross subsidy reduction aid, though the excerpt does not specify an exact dollar amount.

Practical Impact

• School districts will receive a defined, year-by-year increasing level of aid to help cover special education costs, based on the prior year’s cross subsidy and the current year’s factor.
• The state is signaling a phased approach to increasing funding for cross subsidy related to special education.

Relevant Terms - cross subsidy reduction aid - cross subsidy aid factor - initial special education cross subsidy - Minnesota Statutes 125A.76 Subd. 2e - fiscal year - special education cross subsidy - appropriation (money set aside for this purpose)