Low-income students could lose out on funding, thanks to wrinkle in free school lunch law

Yahoo

26-02-2025

Students arrive to Creative Arts Secondary School by school bus on Thursday, Jan. 9, 2025, in Saint Paul, Minn. Photo by Ellen Schmidt/Minnesota Reformer.
Nearly three quarters of Minnesota school districts will see a reduction in funding to support low-income students next year because of a wrinkle in Minnesota's free school meals law — unless the Legislature acts this session.
A formula for extra school funding relies on a count of students eligible for free and reduced price meals under federal guidelines, even if that's seemingly moot because all Minnesota students can get free meals.
Districts certify students as eligible through a process called direct certification, i.e, the Minnesota Department of Human Services matches school district enrollment with participants in SNAP, welfare, Medicaid and other safety net programs.
Or, districts can collect paper forms from families to certify low-income status.
Under the universal school meals law, starting next year, only students counted through direct certification will be tallied when it's time to give districts with more low-income students extra instructional money. The idea was to make it easier for school districts, which would no longer need to collect paper forms.
But the end of paper forms could be costly for districts that still rely on them. Nearly 13% of all students eligible for free meals were certified through paper forms in 2022. For reduced price meals, almost 40% of eligible students are certified this way.
Certain districts are particularly prodigious when it comes to paper forms, which means they have more to lose. In the Twin Cities, for example, Minneapolis Public Schools had about 12% of students qualifying for free or reduced price meals using paper forms, while in Bloomington Public Schools less than 2% of students were certified through paper forms. Worthington, in southwestern Minnesota, had almost 22% of its students certified through paper forms, while Fergus Falls Public Schools certified only 3% of its students this way.
Fewer low-income students means less money.
And, there's lots of money at stake: Minnesota provides nearly $900 million per year in additional funding for low-income students — known by budget wonks as 'compensatory revenue' — to school districts and charter schools.
Gov. Tim Walz and the Legislature were aware that fewer students would be counted as low-income when they approved the Universal School Meals legislation in 2023 that eliminated paper forms.
The 2023 legislation temporarily allowed for certification by paper forms, which was extended again in 2024.
Students who are ineligible for, or do not participate in other public assistance programs will fall through the cracks without paper forms next year.
Anticipating an artificially reduced count of low-income students, lawmakers also set a minimum amount the state must spend on the extra instructional money each year going forward.
Because of the hold harmless provisions, over half of Minnesota public schools received an increase in extra instructional money in 2024. If the Legislature doesn't act this year, however, some Minnesota school districts could lose nearly $50 million in state funding meant to bolster academic and social support for poor students.
Walz has proposed extending the hold harmless provision for an additional school year and allowing districts to continue to use paper forms at an estimated cost of $44 million. His proposal would also create a working group to study the issue, and propose changes to how low-income instructional money is determined and distributed.
The paper form issue is adding to what is already a cloudy budget outlook for school districts next year, with both the state and many districts alike facing long term budget uncertainty. Because of the complexity of how the additional funding is allocated, some districts, like Minneapolis, would be better off under current law, which would eliminate paper forms.
But the three largest districts — Anoka-Hennepin, Rosemount Apple Valley Eagan, and St. Paul — would be better off under Walz's proposal.
The swings in funding are significant. Anoka-Hennepin would lose $3.8 million next year under current law, but would gain $883,000 in additional funding under Walz's proposal. St. Paul Public Schools could expect $2.2 million more next year under current law, and $2.5 million more if Walz's proposal is enacted.
Rep. Cheryl Youakim, DFL-Hopkins, has introduced a bill that would allow districts to continue to certify students using paper forms.
Kate Lynn Snyder, a lobbyist for the teachers' union, described Youakim's proposal as 'simpler' than Walz's. She said in testimony before the House Education Finance Committee that Walz's proposal would just push the fiscal cliff caused by eliminating paper forms out one year, whereas Youkim's proposal would permanently remedy the issue.
Spending on instruction for low-income schools has grown by 52% since the 2020-21 school year. Most of the growth is because Minnesota became one of 38 states that expanded direct certification to include Medicaid participants; more students on Medicaid means more students in the low-income category that translates into more funding.
A district's compensatory revenue is also tied to the state's per-pupil funding formula, which increased 10% from 2021 to 2024.
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