SF4268

Purpose

• The bill aims to increase local optional revenue for Minnesota school districts that have limited referendum revenue authority. It does this by changing how local optional revenue and the related levies and aid are calculated, using new formulas and year-by-year thresholds.

Main Provisions

• Local optional revenue is defined as the sum of three tiers: first, second, and third tier local optional revenue.
  • First tier revenue = 300 times the district’s adjusted pupil units.
  • Second tier revenue = 424 times the district’s adjusted pupil units.
  • Third tier revenue = the greater of zero or the product of adjusted pupil units and (100 minus the operating referendum revenue per adjusted pupil unit).
• Local optional levy is the sum of first, second, and third tier levies.
• Levy calculations by tier:
  • First tier levy = first tier revenue multiplied by the smaller of 1 or the ratio of the district’s referendum market value per resident pupil unit to 880,000.
  • Second tier levy uses year-specific thresholds and the ratio of referendum market value per resident pupil unit:
  • 2023: threshold 548,842
  • 2024: threshold 510,000
  • 2025: threshold 626,450
  • 2026: threshold 642,038
  • 2027 and later: threshold 671,345
  • In each case, second tier levy = second tier revenue times the smaller of 1 or (referendum market value per resident pupil unit) divided by the respective threshold.
  • Third tier levy = third tier revenue multiplied by the smaller of 1 or the ratio of referendum market value per resident pupil unit to 880,000.
• All levies must be spread on referendum market value.
• Districts may levy less than the permitted amount.
• Local optional aid equals local optional revenue minus local optional levy. If a district’s actual levy for any tier is less than its maximum for that tier, aid for that tier is reduced proportionally.

What Changes This Bill Makes

• Reconfigures how much local optional revenue districts can raise (first, second, and third tiers) and how much levy they can levy for each tier.
• Introduces year-by-year thresholds for the second tier levy, affecting how much aid districts receive.
• Ties the levies and aid to referendum market value per resident pupil unit, and to operating referendum revenue per adjusted pupil unit, linking funding to district wealth and referendum performance.
• Requires that the local optional levy be spread on referendum market value and allows districts to adjust downward if they choose to levy less.

Significance and Impact

• Targets districts with limited referendum authority to provide more predictable local funding.
• Aligns local funding authority with changes in property wealth (referendum market value per resident pupil unit) and existing levy/revenue metrics.
• If districts reduce actual levies below maximum for any tier, aid is reduced proportionally, creating a direct link between levied revenue and state aid.

Definitions and Key Terms (embedded)

• Local optional revenue, local optional levy, first/second/third tier, adjusted pupil units, operating referendum revenue per adjusted pupil unit, referendum market value per resident pupil unit, aid, and maximum levy limit.

Effective Statutory Context

• Amends Minnesota Statutes 2024 section 126C.10 subdivision 2e to implement these changes.

Relevant Terms - local optional revenue - local optional levy - first tier revenue - second tier revenue - third tier revenue - adjusted pupil units - operating referendum revenue per adjusted pupil unit - referendum market value per resident pupil unit - aid - maximum levy - levy (first/second/third tier) - spread on referendum market value - Minnesota Statutes 126C.10 subdivision 2e