Purpose

• Restore and clarify school districts’ authority to levy funds to lease space for purposes tied to graduation ceremonies, along with other non-operational uses like storage and furniture repair. The bill aims to help districts cover the cost of renting space when it is economically advantageous, while ensuring proper oversight and limits.

Main Provisions

• eligibility and purpose

  • Independent or special school districts (or groups of districts) can apply to the commissioner to levy a new capital expenditure levy specifically for leasing space used for instructional purposes related to high school graduation ceremonies, storage, or furniture repair.
  • Leases funded by this levy must be tied to the described space and its intended use.

• spending thresholds and oversight

  • Projects with an expenditure exceeding $500,000 per site (if the district has a capital loan) or $2,000,000 per site (if no capital loan) are subject to review and comment by the Department of Education (as prescribed by the commissioner).
  • The commissioner must set annual criteria for approval, including:
  • reasonableness of price
  • appropriateness of the space for the intended activity
  • feasibility of transporting students to the leased space
  • conformance of the lease with state laws and rules
  • alignment with district space needs
  • the district’s financial condition and debt measures
  • The levy may not exceed the district’s cost to rent/lease the approved space, and proceeds cannot be used for operating costs.
  • Districts may not levy to lease a district-owned building or site to themselves.

• exclusions and special rules

  • For leases finalized after July 1, 1997, districts may not levy for leasing a newly constructed building primarily used for regular instruction (K-12) or for additions that contain more than 20% of the existing building’s square footage.
  • If leasing a district-owned building to itself, the levy is allowed only if necessary to meet payments under a lease purchase, installment purchase, or other deferred payment agreement; the district must meet the same limits and include a termination-right clause.

• potential growth and exceptions

  • The total annual levy cannot exceed 2.12 times the district’s adjusted pupil units (subject to rounding in the statute’s text).
  • In certain review-and-comment cases, the term “instructional purpose” excludes expenditures on stadiums (i.e., stadium-related costs are not counted as instructional for this levy).
  • The commissioner may allow the district to exceed the limit for up to five years if the district has enrollment growth, the higher levy serves the long-term public interest, it helps colocate government services, and it avoids overbuilding facilities.

• partnerships and special districts

  • Intermediate districts, cooperative units, or joint powers districts may include in their levy authority the costs of leasing administrative and classroom space to support programs of the larger unit, up to a set limit (65 times adjusted pupil units). This is in addition to other authority.

• administrative space vs instructional space

  • In special cases, a district can levy to lease administrative space if the commissioner is satisfied that administrative lease costs are no greater than would be the cost of leasing instructional space. The district must pass a resolution agreeing to lease instructional space if the commissioner does not grant this authority, and must certify the administrative lease cost is no greater.

• deferred maintenance

  • Districts may levy for their share of deferred maintenance expenditures on district-owned buildings or sites that are leased to cooperative units or joint powers districts for instructional purposes or storage.

Effects on Existing Law

• This bill amends Minnesota Statutes 2025 Supplement section 126C.40, subdivision 1, to restore and clarify the authority to levy for leased space and to set conditions, caps, and oversight.
• It clarifies that certain stadium expenditures are excluded from the instructional-purpose levy.
• It adds or clarifies provisions for:
  • lease-purchase and deferred-payment arrangements
  • exceptions allowing some district-owned buildings to be leased to the district itself under strict conditions
  • cooperative-unit and joint-powers arrangements
  • administrative-space leasing as an alternative to instructional-space leasing under specific limits
  • combined costs for deferred-maintenance funding within these leases

Practical Implications

• School districts gain a formal mechanism to fund the leasing of space for graduation ceremonies and related needs through a capital-expenditure levy, with explicit caps and oversight.
• Districts must demonstrate need, price reasonableness, space appropriateness, student access considerations, and financial health before approval.
• Oversight by the Department of Education and connection to existing review processes help ensure funds are used for approved space and not for operating expenses.
• Districts involved in joint powers or cooperative arrangements can extend this authority to shared facilities, with defined limits.
• Exclusions (like stadiums and certain new instructional buildings) limit how this levy can be used for space that is not directly tied to the stated purposes.

Relevant Terms - lease levy, capital expenditure levy, graduation ceremonies, instructional purposes, independent school district, special school district - depreciation of space? (not directly here; see deferred maintenance) - 123B.71, subdivision 8 (review and comment) - 126C.40 subdivision 1 (amended section) - operating costs (not allowed to be funded by the levy) - lease purchase agreement, installment purchase agreement, deferred payments agreement - adjusted pupil units - stadiums (exclusion from instructional-purpose definition) - intermediate school district, cooperative unit, joint powers district - 123A.24, 471.59 (cooperative and joint powers references) - administrative space vs instructional space - cap limits (2.12 times adjusted pupil units)