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Session Review: Minimal Funding and a Constitutional Amendment

By June 3, 2026August 24th, 2026No Comments8 min read

SAINT PAUL — It has been a challenging year in education to say the least. Well beyond the typical session politics in an election year, the 2026 Minnesota legislative session convened against the backdrop of some of the most historically impactful events in the state’s modern history.

Following the end of the 2025 legislative session, we were rocked by the assassination of former House Speaker Melissa Hortman and her husband, Mark, and the shooting of Sen. John Hoffman and his wife, Yvette. That was followed by the tragic shooting at Annunciation Catholic Church and School later that summer that took the lives of two elementary-aged children and injured 28 more. And, beginning in December, schools faced significant disruptions and challenges related to the prolonged federal immigration enforcement actions that seriously impacted students, staff, families, and communities.

Minnesota Department of Education Director of Government Relations Adosh Unni provided an overview of the education-related legislation approved during the 2026 legislative session at the May 29 AMSD Board of Directors meeting.

Against that backdrop, the fiscal challenges facing our school districts were certainly overshadowed — but still could not have been more stark.

A March survey showed AMSD school districts were forecasting more than $233 million in budget shortfalls, while the February State Budget and Economic forecast projected that a short-term budget surplus would all but disappear by the 28-29 biennium due to expenditures sharply outpacing revenue.

In his budget proposal for the 2026 session, Gov. Walz recommended no supplemental funding for education and, in a surprise to even the Blue Ribbon Commission on Special Education, he proposed an additional $50 million cut to special education on top of the $250 million cut that was approved last session. Fortunately, this proposal was quickly rejected by legislators.

While the Legislature departed from past practice and did not pass an omnibus education bill, several education provisions were included in a number of different bills. In the end, minimal funding was approved and no new cuts were adopted. The new funding included a very scaled down compensatory hold harmless, along with grants for anonymous threat reporting systems, and one-time funding for school-linked behavioral health grants and mobile crisis service grants.

And, in what might be seen as the highlight, the Legislature approved legislation placing a constitutional amendment on the November ballot that, if approved, would increase disbursements from the Permanent School Fund starting in the 2027-28 school year.

On May 29, Minnesota Department of Education Director of Government Relations Adosh Unni and Director of School Finance Cathy Erickson provided an overview of the education-related legislation approved during the 2026 legislative session to the AMSD Board of Directors.

Highlights from their presentation and AMSD’s Session Review are listed below.

Supplemental Funding

  • A very modest supplemental finance bill, HF2433, allocates $10 million for a reduced compensatory revenue hold harmless. It also provides $5 million for anonymous threat reporting systems, with $4 million for school grants and $1 million for the Department of Public Safety.

Permanent School Fund Constitutional Amendment

  • The Legislature approved a November ballot question to amend the State Constitution to increase Permanent School Fund (PSF) distributions. The current framework excludes capital gains, limiting distributions to net interest and dividends. If approved, the state will adopt a 4.5 percent distribution rate based on a three-year rolling average of the Fund’s value.

Forecast Adjustments, Paraprofessional Qualifications, Operating Capital Uses

  • The forecast adjustment bill SF4282 updates appropriations based on the February 2026 forecast. The bill also clarifies federal paraprofessional competency requirements, permits using capital operating revenue for utilities, and authorizes two district fund transfers, including one for District 197.

Education Policy

The Education Policy Bill, HF4492, includes several provisions including modifications to the READ Act. The bill:

  • Extends the option for a school district to reduce the hours of instruction by 5.5 hours for teachers to receive at least 5.5 hours of approved professional development through the 2026-27 school year.
  • Excludes a teacher who was first enrolled in a Minnesota-approved elementary, special education, or early childhood education teacher preparation program on or after June 1, 2026, from additional training.
  • Amends the definition of literacy specialist to include any Professional Educator Licensing and Standards Board licensed educator who has completed Read Act professional development.
  • Beginning with the 2026-27 school year, local literacy plans must include a description of how schools in the district will use the school library media center to complement students’ foundational reading skills.
  • Allows an English language learner’s screening for the characteristics of dyslexia to be done according to vendor assessment guidelines.
  • Directs a district to administer an approved reading screener to students in grades 4 and above who are not reading at grade level at least once per year until the student reaches grade-level proficiency.
  • Requires districts to provide vendor-approved screening accommodations to students with documented accommodation plans.
  • By Oct. 1, 2026, MDE must establish an ongoing review process to identify curriculum and intervention materials using the Read Act rubric that’s posted on the department’s website.
  • Requires that districts issue high school diplomas to veterans of the Korean conflict and Vietnam war veterans, if requested.

HHS Supplemental Finance Bill

The Omnibus Health and Human Services Supplemental Finance Bill includes:

  • $12.25 million in FY27 for school-linked behavioral health grants. Grant awards must allow a grantee to use grant funds for a partnership with a nonpublic or Tribal Contract school.
  • $3.8 million in FY27 only for mobile crisis services grants under MS245.4889.
  • Requires the Legislative Budget Office annually to survey school districts and charter schools to gather information about the school’s group health insurance plans. Applies to self-insured and fully-insured school districts.

Omnibus Pension Bill

The Omnibus Pension Bill includes provisions related to TRA, including:

  • Requires employers across all state public pension plans, including TRA, to make pension
    contributions on the salaries of reemployed annuitants. For TRA this means retired members who have returned to TRA-covered positions while drawing their pension.
  • Lowers the minimum age from 62 to 59½ at which a teacher may enter into a written return-to-work agreement with their employer before retirement.
  • Lowers the employee contributions for Saint Paul TRA members from 9 percent to 8 percent of salary for coordinated members.
  • Extends the suspension of the earnings limitation for salary earned through FY2030 for retirees of TRA and Saint Paul Teachers returning to teaching service.

Anti-Grooming Bill

An anti-grooming bill, HF3489, was approved. The bill:

  • Grants authority to the Professional Educators Licensing and Standards Board (PELSB) to suspend or revoke teacher’s license for license holders convicted of grooming.
  • Requires local police departments and county sheriffs to notify the appropriate statewide staff
    licensing agency whenever a licensed educator is charged with certain crimes, including
    grooming.
  • Adds grooming as a felony in the criminal sexual conduct statute, with new provisions addressing cases involving school employees.
  • Requires the Department of Children, Youth, and Families, in consultation with MDE, to update mandated reporter training to reflect grooming.
  • Appropriates $1,450,000 annually toto MDE to increase the investigator capacity of the Student Maltreatment Program (SMP) team.

Omnibus Tax Bill

  • The Omnibus Tax Bill includes seasonal tax base replacement aid, providing school districts with a certain amount of class 4c(12) seasonal recreational market value with tax base replacement aid to reduce voter-approved operating referendum levies by up to 50 percent.

Elections Bill

  • The Omnibus Elections Bill includes language requiring that for special elections conducted by a school district with boundaries in more than one county, at least one polling place must be designated within each county in which more than 5,000 of the school district’s registered voters reside.

School Bus Safety

  • Legislation passed earlier in the session extends the current law that requires vehicles approaching a school bus to stop now at any time a school bus is displaying flashing red lights, regardless of whether the stop signal arm is extended. The bill further clarifies flashing yellow lights, as well as updates
    requirements on first aid kits, body fluids cleanup kits, and other minor requirements.

Bonding Bill

The Bonding Bill includes:

Links

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AMSD celebrated its 50th anniversary in 2024. AMSD is an education organization representing 49 greater metropolitan area and regional center school districts and 6 intermediate/cooperative districts that collectively enroll more than half of all public school students in Minnesota. The mission of AMSD is to advocate for member school districts so they can lead the transformation of public education.