1.1 A bill for an act
1.2 relating to education finance; broadening the natural disaster debt service
1.3 equalization aid program to assist school districts with a high percentage of property
1.4 excluded from the tax rolls; amending Minnesota Statutes 2024, sections 123B.535;
1.5 127A.49.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2024, section 123B.535, is amended to read:
1.8 123B.535 NATURAL DISASTER ENHANCED DEBT SERVICE
1.9EQUALIZATION.
1.10 Subdivision 1.Definitions.(a) For purposes of this section, the eligible natural disaster
1.11enhanced debt service revenue of a district is defined as the amount needed to produce
1.12between five and six percent in excess of the amount needed to meet when due the principal
1.13and interest payments on the obligations of the district that would otherwise qualify under
1.14section 123B.53 under the following conditions: specified in paragraphs (b) and (c).
1.15 (b) A school district qualifies for enhanced debt service equalization aid if:
1.16 (1) the district was impacted by a natural disaster event or area occurring January 1,
1.172005, or later, as declared by the President of the United States of America, which is eligible
1.18for Federal Emergency Management Agency payments;
1.19 (2) the natural disaster caused $500,000 or more in damages to school district buildings;
1.20and
1.21 (3) the repair and replacement costs are not covered by insurance payments or Federal
1.22Emergency Management Agency payments.
1Section 1.
REVISOR CR/DG 25-0086212/04/24
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 116
NINETY-FOURTH SESSION
Authored by Bliss01/22/2025
The bill was read for the first time and referred to the Committee on Education Finance 2.1 (c) A school district also qualifies for enhanced debt service equalization aid if at least
2.230 percent of a district's property value is excluded from the district's taxable value.
2.3 (b) (d) For purposes of this section, the adjusted net tax capacity equalizing factor equals
2.4the quotient derived by dividing the total adjusted net tax capacity of all school districts in
2.5the state for the year before the year the levy is certified by the total number of adjusted
2.6pupil units in the state for the year prior to the year the levy is certified.
2.7 (c) (e) For purposes of this section, the adjusted net tax capacity determined according
2.8to sections 127A.48 and 273.1325 shall be adjusted to include the tax capacity of property
2.9generally exempted from ad valorem taxes under section 272.02, subdivision 64.
2.10 Subd. 2.Notification.A district eligible for natural disaster enhanced debt service
2.11equalization revenue under subdivision 1 must notify the commissioner of the amount of
2.12its intended natural disaster enhanced debt service revenue calculated under subdivision 1
2.13for all bonds sold prior to the notification by July 1 of the calendar year the levy is certified.
2.14 Subd. 3.Natural disaster Enhanced debt service equalization revenue.The debt
2.15service equalization revenue of a district equals the greater of zero or the eligible debt service
2.16revenue, minus the greater of zero or the difference between:
2.17 (1) the amount raised by a levy of ten percent times the adjusted net tax capacity of the
2.18district; and
2.19 (2) the district's eligible debt service revenue under section 123B.53.
2.20 Subd. 4.Equalized natural disaster enhanced debt service levy.A district's equalized
2.21natural disaster enhanced debt service levy equals the district's natural disaster enhanced
2.22debt service equalization revenue times the lesser of one or the ratio of:
2.23 (1) the quotient derived by dividing the adjusted net tax capacity of the district for the
2.24year before the year the levy is certified by the adjusted pupil units in the district for the
2.25school year ending in the year prior to the year the levy is certified; to
2.26 (2) 300 percent of the statewide adjusted net tax capacity equalizing factor.
2.27 Subd. 5.Natural disaster Enhanced debt service equalization aid.A district's natural
2.28disaster enhanced debt service equalization aid equals the difference between the district's
2.29natural disaster enhanced debt service equalization revenue and the district's equalized
2.30natural disaster enhanced debt service levy.
2Section 1.
REVISOR CR/DG 25-0086212/04/24 3.1 Subd. 6.Natural disaster Enhanced debt service equalization aid payment
3.2schedule.Debt service equalization aid must be paid according to section 127A.45,
3.3subdivision 10.
3.4 EFFECTIVE DATE.This section is effective for bond issues approved on or after July
3.51, 2025.
3.6 Sec. 2. Minnesota Statutes 2024, section 127A.49, is amended to read:
3.7 127A.49 AID ADJUSTMENTS.
3.8 Subdivision 1.Omissions.No adjustments to any aid payments made pursuant to this
3.9chapter or chapters 120B, 122A, 123A, 123B, 124D, 124E, 125A, and 126C resulting from
3.10omissions in district reports, except those adjustments determined by the legislative auditor,
3.11shall be made for any school year after December 15 of the next school year, unless otherwise
3.12specifically provided by law.
3.13 Subd. 2.Abatements.Whenever by virtue of chapter 278, sections 270C.86, 375.192,
3.14or otherwise, the net tax capacity or referendum market value of any district for any taxable
3.15year is changed after the taxes for that year have been spread by the county auditor and the
3.16local tax rate as determined by the county auditor based upon the original net tax capacity
3.17is applied upon the changed net tax capacities, the county auditor must, prior to February
3.181 of each year, certify to the commissioner of education the amount of any resulting net
3.19revenue loss that accrued to the district during the preceding year. Each year, the
3.20commissioner must pay an abatement adjustment to the district in an amount calculated
3.21according to the provisions of this subdivision. This amount must be deducted from the
3.22amount of the levy authorized by section 126C.46. The amount of the abatement adjustment
3.23must be the product of:
3.24 (1) the net revenue loss as certified by the county auditor, times
3.25 (2) the ratio of:
3.26 (i) the sum of the amounts of the district's certified levy in the third preceding year
3.27according to the following:
3.28 (A) section 123B.595, if the district received long-term facilities maintenance aid
3.29according to that section for the second preceding year;
3.30 (B) section 124D.20, if the district received aid for community education programs
3.31according to that section for the second preceding year;
3Sec. 2.
REVISOR CR/DG 25-0086212/04/24 4.1 (C) section 142D.11, subdivision 3, if the district received early childhood family
4.2education aid according to section 142D.11 for the second preceding year;
4.3 (D) section 126C.17, subdivision 6, if the district received referendum equalization aid
4.4according to that section for the second preceding year;
4.5 (E) section 126C.10, subdivision 13a, if the district received operating capital aid
4.6according to section 126C.10, subdivision 13b, in the second preceding year;
4.7 (F) section 126C.10, subdivision 29, if the district received equity aid according to
4.8section 126C.10, subdivision 30, in the second preceding year;
4.9 (G) section 126C.10, subdivision 32, if the district received transition aid according to
4.10section 126C.10, subdivision 33, in the second preceding year;
4.11 (H) section 123B.53, subdivision 5, if the district received debt service equalization aid
4.12according to section 123B.53, subdivision 6, in the second preceding year;
4.13 (I) section 123B.535, subdivision 4, if the district received natural disaster enhanced
4.14debt service equalization aid according to section 123B.535, subdivision 5, in the second
4.15preceding year;
4.16 (J) section 124D.22, subdivision 3, if the district received school-age care aid according
4.17to section 124D.22, subdivision 4, in the second preceding year;
4.18 (K) section 126C.10, subdivision 2e, paragraph (b), if the district received local optional
4.19aid according to section 126C.10, subdivision 2e, paragraph (c), in the second preceding
4.20year; and
4.21 (L) section 122A.415, subdivision 5, if the district received alternative teacher
4.22compensation equalization aid according to section 122A.415, subdivision 6, paragraph (a),
4.23in the second preceding year; to
4.24 (ii) the total amount of the district's certified levy in the third preceding December, plus
4.25or minus auditor's adjustments.
4.26 Subd. 3.Excess tax increment.(a) If a return of excess tax increment is made to a
4.27district pursuant to sections 469.176, subdivision 2, and 469.177, subdivision 9, or upon
4.28decertification of a tax increment district, the school district's aid and levy limitations must
4.29be adjusted for the fiscal year in which the excess tax increment is paid under the provisions
4.30of this subdivision.
4.31 (b) An amount must be subtracted from the district's aid for the current fiscal year equal
4.32to the product of:
4Sec. 2.
REVISOR CR/DG 25-0086212/04/24 5.1 (1) the amount of the payment of excess tax increment to the district in the preceding
5.2year, times
5.3 (2) the ratio of:
5.4 (i) the sum of the amounts of the district's certified levy in the third preceding year
5.5according to the following:
5.6 (A) section 123B.57, if the district received health and safety aid according to that section
5.7for the second preceding year;
5.8 (B) (A) section 124D.20, if the district received aid for community education programs
5.9according to that section for the second preceding year;
5.10 (C) (B) section 142D.11, subdivision 3, if the district received early childhood family
5.11education aid according to section 142D.11 for the second preceding year;
5.12 (D) (C) section 126C.17, subdivision 6, if the district received referendum equalization
5.13aid according to that section for the second preceding year;
5.14 (E) (D) section 126C.10, subdivision 13a, if the district received operating capital aid
5.15according to section 126C.10, subdivision 13b, in the second preceding year;
5.16 (F) (E) section 126C.10, subdivision 29, if the district received equity aid according to
5.17section 126C.10, subdivision 30, in the second preceding year;
5.18 (G) (F) section 126C.10, subdivision 32, if the district received transition aid according
5.19to section 126C.10, subdivision 33, in the second preceding year;
5.20 (H) (G) section 123B.53, subdivision 5, if the district received debt service equalization
5.21aid according to section 123B.53, subdivision 6, in the second preceding year;
5.22 (I) (H) section 123B.535, subdivision 4, if the district received natural disaster enhanced
5.23debt service equalization aid according to section 123B.535, subdivision 5, in the second
5.24preceding year;
5.25 (J) (I) section 124D.22, subdivision 3, if the district received school-age care aid
5.26according to section 124D.22, subdivision 4, in the second preceding year; and
5.27 (K) (J) section 122A.415, subdivision 5, if the district received alternative teacher
5.28compensation equalization aid according to section 122A.415, subdivision 6, paragraph (a),
5.29in the second preceding year; to
5.30 (ii) the total amount of the district's certified levy in the third preceding year, plus or
5.31minus auditor's adjustments.
5Sec. 2.
REVISOR CR/DG 25-0086212/04/24 6.1 (c) An amount must be subtracted from the school district's levy limitation for the next
6.2levy certified equal to the difference between:
6.3 (1) the amount of the distribution of excess increment; and
6.4 (2) the amount subtracted from aid pursuant to clause (a).
6.5 If the aid and levy reductions required by this subdivision cannot be made to the aid for
6.6the fiscal year specified or to the levy specified, the reductions must be made from aid for
6.7subsequent fiscal years, and from subsequent levies. The school district must use the payment
6.8of excess tax increment to replace the aid and levy revenue reduced under this subdivision.
6.9 (d) This subdivision applies only to the total amount of excess increments received by
6.10a district for a calendar year that exceeds $25,000.
6.11 EFFECTIVE DATE.This section is effective for adjustments for fiscal year 2026 and
6.12later.
6Sec. 2.
REVISOR CR/DG 25-0086212/04/24