Minnesota’s Budget Forecast: Economic Uncertainty and Fiscal Challenges Ahead
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Minnesota’s Budget Forecast: Economic Uncertainty and Fiscal Challenges Ahead

Last Week in Summary

Minnesota Management and Budget (MMB) released their budget forecast last Thursday and the outlook for Minnesota’s budget has dimmed even more. Factors at play include economic and fiscal uncertainty at the federal level, plus state spending policies put in place during the 2023 session. The projected surplus for FY 2026-27 is now $456 million, down $160 million from previous estimates. Rising inflation is driving both revenue and spending increases, but spending is growing faster than revenue through FY 2029. The general fund shortfall for FY 2028-29 is now projected to be nearly $6 billion, $852 million worse than predicted in November.

The special election to fill the House vacancy is tomorrow, and the new member will likely be sworn in on March 17. With a 67-67 tie or slim majority up for grabs, all eyes will be on those election results. The outcome will determine the fate of House committees and power dynamics for the remaining weeks of session. Legislative leaders did announce agreed upon budget target dates. House leaders have set an April 1 deadline to announce budget targets, and Senate leaders are planning to announce their targets on April 5.

House Education Finance

On Tuesday the House Ed. Finance Committee heard what was a roundtable discussion on Postsecondary Enrollment Options (PSEO). Superintendent Stump and Principal Nelson from Pequot Lakes presented their local perspectives and considerations on the current state of these programs. They noted the increase of credits and costs, a greater demand for flexibility from students, and potential concerns of low rigor courses being offered. Chair Kresha said there are things he wants the committee to talk about and work on as far as the flexibility for students, and suspects they will see a bill moving forward.

After it was heard in Ed. Policy earlier in the week, Thursday’s Ed. Finance committee had an informational only hearing on HF 957 (mandate relief for school districts, school boards authorized to opt out of compliance with recently enacted mandates) and HF 877 (Read Act amended, appropriations cancelled). The A1 and A2 Amendments were debated, and no formal action was taken.

House Education Policy

House Ed. Policy Committee heard bills on school discipline policies by Rep. Bakeberg (R-Jordan) as well as HF 957, a bill authored by Rep. Kresha (R-Little Falls) that would provide up to four years of relief from mandates passed during 2023-24, and up to four years of fund transfer flexibility. The bill was approved on a party-line vote by the committee last Tuesday and was sent to the House Ed. Finance Committee. HF 877 (amending the READ Act) was also introduced by Rep. Mueller (R-Austin). Rep. Mueller stated that she is hopeful that both parties can come to a consensus on this bill eventually.

Rep. Bakeberg’s bills, HF 514, HF 1052, and HF 1436 aim to modify dismissal limitations for grades K-3. Testifiers who oppose the bill said rather than suspensions, there is an opportunity for increased community partnerships and funding for school support staff, whereas bill supporters urged that balance needs to be restored in the classroom so that all students can learn and teachers can teach.

Senate Education Finance

Tuesday’s Ed. Finance Committee heard SF 2002, authored by Sen. Clark (D-Minneapolis), which would establish a Compensatory Revenue Task Force, adjust school funding eligibility based on direct certification and education benefits applications, and modify spending rules for compensatory revenue at school sites. Senators debated an amendment brought by Sen. Lang (R-Olivia) to give districts more time to delay mandates, but the amendment failed. SF 2002 was laid over.

Wednesday’s committee heard presentations on Community Education and Adult Basic Education, as well as SF 2007, a bill about funding for full-service community schools authored by Sen. Oumou Verbeten (D-St. Paul). The bill was moved to be laid over, and will not be passing through Ed. Policy.

Senate Education Policy

On Monday, Ed. Policy heard SF 1979, a bill authored by Sen. Rarick (R-Pine City) that prohibits school construction near former landfill sites. The bill was laid over. Sen. Kunesh brought forward SF 1404 and SF 1405. SF 1404 would change the exemption process for schools with American Indian mascots. SF 1404 would require schools to get written consent from only the Tribal Nation nearest to the school. This bill also establishes mascot replacement assistance for schools. SF 1405 would allow for American Indian drumming in public schools and was laid over for an omnibus bill.

Wednesday’s committee heard SF 2078, a bill to modify IEP requirements. Sen. Farnsworth (R-Hibbing) says the goal is to decrease time spent on paperwork and give teachers more time to work with students. With this bill, quarterly progress reports will still happen, but the state requirements would be more aligned with federal requirements.

Legislative Resources

Minnesota Lawmakers Tackle Education, Budget, and Bipartisan Reforms
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