SF2201: School Funding Adjustments

The Act sets the state and categorical percent of growth for school budgets for FY2026 and subsequent years, adjusts property tax replacement payments, limits transportation equity aid, alters school district budgeting and enrollment procedures, and introduces a $7 million appropriation for education support personnel salary supplements. It changes the payment schedule for various state aid distributions from monthly to quarterly and clarifies timelines for enrollment certifications and budget adjustments. Several obsolete references and outdated calculations are removed.

Key Points & Impacts

• Sets the state percent of growth at 2% for the budget year beginning July 1, 2026, and categorical state percent of growth at 2% for the same period (with special calculation for transportation equity fund in FY2025 at 5%).

• Removes outdated references and calculations for FY2023 and FY2024 regarding categorical state percent of growth and property tax replacement payment formulas; updates formulas to align with new fiscal years.

• Establishes a $1 million cap per district for transportation equity aid beginning July 1, 2026.

• Changes the payment frequency for state aid, property tax replacement, and transportation equity aid from monthly to quarterly, and adjusts the payment calendar to begin in July and end in April.

• Creates a $7 million appropriation for FY2026-2027 to supplement education support personnel compensation, distributed proportionally based on district enrollment.

• Adds a new 'adjusted enrollment' measure to be determined and reported annually in January, with related adjustments to basic enrollment calculations and budget procedures.

• Requires that school district budget adjustments for FY2026-2027 be funded solely by state aid, not property taxes.

• Updates timelines and procedures for certification and adjustment of school district enrollments and related fiscal adjustments, including for nonpublic and special education services.