School District Finance

Property Tax Related

This report collects other tax payments for property types subject to school taxes that are paid in lieu of property taxes. This information is used in the calculation of state aid formula payments to school districts.

The local contribution requirement in the formula is set at 60 mills and a percentage (75%) of other local in-lieu of property tax sources.The report is necessary to accurately identify the other local in-lieu of property tax payments made to school districts in your county over the July 1, 2018 to June 30, 2019 school year.

Foundation Aid Payment Report

 The foundation aid payment system distributes payments monthly based on a statutorily defined payment schedule.

State Formula Aid and Transportation

  • The August 1, September 1 payments are based on 10% of estimated entitlement.
  • The October payment is based on 20% of estimated entitlement.
  • The November 1 payment adjusts payments to 60% of actual entitlement for the school year.
  • The December 1 (68%), January 1 (76%), February 1 (84%), March 1 (92%), and
  • April 1 (100%) payments are approximately 1/5 of the total remaining entitlement. 

Redirected Payments

  • The funding generated from the REA factor is deducted from the district and paid directly to the REA on the same payment schedule as State Formula Aid and Transportation. The amount is shown as an adjustment to State Aid.
  • Upon request, Special Education funding generated in the funding formula is paid directly to the Special Education Unit on behalf of member school districts. The amount is shown as an adjustment to State Aid. 

Other Payments

  • REA coordinator grants are distributed to regional education associations in the month supporting documentation is processed.
  • Student contract reimbursements are paid in the month they are processed.
  • Gifted and talented funding is distributed in February. 

Foundation Aid Payments

K-12 Funding Legislation

Final Status May 23, 2019
 
SB 2013 appropriates the funding for the Department of Public Instructions budget including State School Aid, Transportation, and Special Education. The bill also contains language for distributing gifted and talented, REA grants, and transportation grants.

  • The transportation appropriation increased $1.1 million from the 2017-19 biennium
  • This will allow the reimbursement rates to remain the same as the 2017-19 biennium
  • The student contracts line increased $4.7 million
  • A transfer of up to $4 million from the un-obligated state aid to cover the shortfalls in student contracts in the current biennium was approved
  • Continued $500,000 for REA operating grants
  • Continued $800,000 for Gifted and Talented grants

SB 2265 carries the policy language supporting the appropriation for state school aid

  • Changes calculation of Average Daily Membership from days to hours
  • Changes the enforcement date of withholding state aid payment for the fall enrollment report from November 1 to October 1
  • Increases the per pupil payment rate to $9,839 and $10,036 for next biennium
  • Resets the baseline payment to the 2018-19 payment
  • Increases the districts receiving a transition minimum adjustment 1% each year of the biennium
  • Increases the districts receiving a transition maximum adjustment 5% each year of the biennium
  • A percentage of sinking and interest tax levy compared to total levy will not be deducted from the in lieu of property tax contributions
  • All categories for in lieu of property tax deductions will be deducted at 75%
  • Beginning in the 2020-21 school year districts will receive a .5 weighting factor if their fall enrollment is greater than the previous year’s spring ADM
  • There will be an adjusting payment in the 2021-22 school year from fall enrollment to spring ADM that will also received a .5 weighting factor
  • The weighting factor will increase .1 each year until the weighting factor reaches 1.
  • In the 2020-21 school year districts that are deducted below 60 mills will have their deduct increased above the 12% max by 10% of the difference of 60 mills of the taxable valuation and the deduct after the 12% limit.
    • This percentage will increase each year until every district is deducted at 60 mills
    • Districts will have the ability to increase their tax levy accordingly if they are levying below 70 mills
  • Tuition received for students from Minnesota or Montana will not be deducted in the funding formula
  • Tuition payments to South Dakota for districts that are part of the cross-border agreement will have their tuition paid from then integrated formula payment line
  • $800,000 appropriation for music education grants
  • $200,000 appropriation for research-based literacy intervention services
  • $3 million appropriation for rapid enrollment grants to be distributed the first year of the biennium

SB 2052 Allows school districts to establish a safety plan fund and give the school district additional levy authority if approved by a vote of the people in a regular or special election

  • Must specify the number of mills up to 5 mills
  • Approval or reauthorization may not be effective for more than 5 taxable years

 Other Resources

  • Legislative Update Presentation  
  • Budgeting tools

Contact/Correspondence