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There is a simple wording revision pending in the legislature in House File 31 that could make up for a school funding formula change that has resulted in large, unexpected projected losses of state aid. When the legislative formula for calculating each district’s compensatory aid was re-worded in 2023.  The level of compensatory aid sent out to Minnesota districts was specifically tied only to “direct” verification of eligible families for this upcoming school year.  

For the loss of wording allowing eligibility to be determined through a paper application, North Branch and Chisago Lakes are looking at big aid deductions.

Before this— compensatory aid distribution had been allocated based on paper form applications as well as the direct certifying of eligibility.  To be newly certified eligible as the basis for calculating the aid,  eligible enrollees had to be on existing lists of nutrition (food stamps), participants in free and reduced lunch subsidy and be a low income, Health & Human Services client family.  

The paper applications no longer count.

The MN Dept of Education reports 236 school districts lost compensatory aid when the direct certification process was enacted.  Chisago Lakes level of aid dipped by $93,188 and North Branch losses were $236,246 as of 2025.

Hopefully, in time for next year,  the legislature, through House File 31, will allow districts to go back to paper forms in addition to relying on existing databases for direct certifying of applications.

Allowing paper forms to be part of the application process again, could increase the Chisago Lakes aid by about $3,600 instead of down by about $93,000.  

Chisago Lakes Superintendent Brian Dietz noted that the budget is all about balance and alignment and the district is often left facing a shortfall and the need to stretch resources as best it can.  School funding gets revised based on enrollment, contract negotiations, inflation, energy costs, and other pressures.  “In conversation with our legislators,” Dietz continued, “they support our needs and finding avenues through legislation to find a path to get there.”

Todd Tetzlaff, North Branch Director of Finance and Human Resources, explained that North Branch schools have families who don’t automatically qualify via the direct method using state data systems.  “Paper applications remain essential for reaching families who may not (be in state systems.)” He added, “This is due to a variety of factors, including unique demographics of our community, employment circumstances or  (household income fluctuations.)”

North Branch will need to evaluate its budget, Tetzlaff added, in the event the paper forms continue to be disallowed.  He stressed, North Branch will continue to provide services to meet student needs and help them be successful at school.

Governor Walz as part of his budget—proposed a “hold harmless” consideration in his budget plan. The governor’s method would not directly address either form of compensatory aid application, not creating a situation where aid will be affected.

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