Minnesota House Democrats would tie school funding increases to the rate of inflation and help cover the rising cost of special education and English learner services under their education budget bill released this week.

Democrats in the Minnesota Senate are taking a slightly different approach, giving schools a bigger funding increase over the next two years but not guaranteeing inflationary boosts into the future. They would put more money toward covering school districts' special education costs.

The DFL-controlled Legislature started rolling out its spending bills this week after Gov. Tim Walz and legislative leaders struck a deal to increase the state's budget by nearly $17.9 billion over the next two years, including a $2.2 billion hike for education. The House and Senate must hash out spending and policy differences before they adjourn May 22.

"We've had 20 years of underinvestment in our schools. While we can't change that overnight, or even one biennium, I think this bill is an incredible start," said Rep. Cheryl Youakim, DFL-Hopkins, chair of the House Education Finance Committee.

The House education bill would increase general education funding by 4% in fiscal year 2024 and 2% in 2025 before indexing future appropriations to inflation. The Senate's bill would give state schools a 4% bump in 2024 and a 5% increase in 2025.

Speaker Melissa Hortman, DFL-Brooklyn Park, described the House education budget as one that could have "generational impact." School districts would no longer have to plead with lawmakers for funding to offset inflation, she said.

Democrats in both chambers want to help cover a steep statewide deficit for special education services. The Department of Education estimates that the state's roughly 330 school districts will collectively have an $811 million shortfall between their special education costs and revenue this year.

School districts are required under state and federal law to maintain special education services, but the government has offered only a fraction of the money necessary to provide them. Districts have long had to pull from general funds to cover the difference, squeezing their overall finances.

The House Democrats' bill would cover 47.8% of the gap starting in fiscal year 2024 and onward. Senate Democrats would take a phased approach, covering 40% of the shortfall in 2024, 47.3% in 2025 and 60% in 2026 and onward.

The two bills would also cover a similar though much smaller deficit for English learner services, with the House covering 100% of the gap by 2027 and the Senate covering 75% by 2026.

"We put the dollars in the best places at this time to have the biggest impact on our students," said Sen. Mary Kunesh, DFL-New Brighton, who chairs the Senate Education Finance Committee.

The House and Senate education committees heard public feedback on their budget bills Wednesday. Several of those who testified, including Education Commissioner Willie Jett, told Kunesh's committee they'd like the Senate to link future education funding increases to inflation like the House bill does.

Doing so would allow school districts to "more confidently budget and educators to more securely plan for the next year," said Jett, who spoke on behalf of the Walz administration.

Kirk Schneidawind, executive director of the Minnesota School Boards Association, said in an interview that covering part of the shortfall for special education services would also help free up money for school districts.

Youakim said she will fight to include the funding measure tied to inflation in the final bill, but Kunesh said she's not convinced that's the best approach. Tying future school funding hikes to inflation would be costly now, she said, leaving less money for pressing needs. It could also put the state in an uncomfortable position down the road if economic conditions are unfavorable.

"If anything should go wrong and we already have this security for education, that's great for education. But what about the rest of the costs of doing government and doing business in Minnesota?" Kunesh said. "All of those other committees, all of those other budgets, would really suffer at the hands of education."

Rep. Ron Kresha, R-Little Falls, shared similar reservations.

"Anytime you try to tie the hands of future legislators, you create problems," said Kresha, the GOP lead on the House Education Finance Committee. "We can't predict what the economy is going to be like."

The House and Senate have several weeks to smooth out their differences. Kunesh said she's optimistic they'll end up with a "really good final product."

Democrats previously were able to quickly agree on another major education bill regarding universal school meals, which Walz signed into law earlier this month.

"If I could've walked out of here with just universal meals and indexing the formula to inflation, I'd feel pretty good about our session," Youakim said.

New graduation requirements

In their education policy proposals, House and Senate Democrats would make classes on personal finance and civics new requirements for high school graduation. Additional provisions included only in the House bill would require school districts to offer courses on ethnic studies and the Holocaust.

Also included in both bills are policies that would allow school boards to renew expiring referendums, require districts to offer free menstrual products to students, and prohibit American Indian mascots in public schools unless they've been granted an exemption by the 11 federally recognized tribal nations in Minnesota.

The mascot exemption would be denied if any of the tribes oppose it.

"If a school wants to use either the image or the name or any kind of connection to our Indigenous people ... they need to work with their tribes to get that permission," Kunesh said.

Kresha said he doesn't think the mascot issue should be up to the Legislature.

"We have school districts that are working with our local populations," he said. "That's where that conversation should happen."