ST. PAUL — A bipartisan effort that would support school districts with a high number of cabin properties survived the first legislative deadlines, but it now must make its way into the education finance bill amid budget negotiations.
The proposed legislation creates a new type of aid that would supplement part of districts' voter-approved operating levies by up to 50%, based on the amount of seasonal recreational property in the district.
The Senate version, authored by DFL Sen. Grant Hauschild of Hermantown, and the House version, authored by Republican Rep. Spencer Igo of Wabana Township, both have additional co-authors from both parties. In committee, the bills were laid over for inclusion in the omnibus bill.
They made it to this point last year, too.
Hauschild plans to introduce an amendment that limits the scope of the bill and cuts the cost in half, which he said helps increase the odds it will pass this session.
How the new aid would work
The new seasonal tax base replacement aid is based on a district’s ratio of seasonal recreational property — often called cabin property — to the total referendum market value, which is the value of all taxable property except seasonal recreational and agricultural lands.
Starting in the 2026-27 school year, the new aid would be subtracted from a district’s voter-approved levy. There are already two existing referendum aids that help offset the levy.
Districts won’t get any new money from the seasonal tax base replacement aid — their referendum revenue is still capped at whatever voters approve. But more of that revenue will come from the state and less from local property taxes, in theory increasing a district’s chances of passing a referendum because they can ask local voters for less up front while still getting the same amount of money.
Take Cook County School District, for example. The district has an $800 per pupil referendum, which generates about $393,000 each year. According to Senate research, the new aid would reduce the local levy amount by 40%. The state would give the district $157,000, so local taxpayers would only need to cover the remaining $236,000.
The levy reduction would be capped at 50%.
The original bill would have cost the state about $9.1 million a year and saved local taxpayers about the same amount.
But Hauschild’s new amendment requires a district to have at least 15% cabin property to get the aid. Senate research estimates that would knock the cost — and local savings — down to about $3.8 million a year.
“If we just kept the bill as is, it picks up school districts like Minnetonka and others in the Twin Cities that frankly I wouldn’t designate as seasonal recreational districts,” Hauschild told KAXE on Monday, April 21. “And so, this is really getting at the heart of the issue.”
A mini education finance history lesson
The need for the bill comes from the equally confusing history of education finance in Minnesota.
Seasonal recreational taxes used to be part of local operating levies. Legislators changed that in 2001 and began sending that tax revenue to a statewide education fund so it could be more equitably distributed.
Hauschild said that change alone was a disservice to Northern Minnesota districts. But then, he said, the Pawlenty administration moved that money from an education fund to the state general fund.
Hauschild said a lot of legislators who were part of the negotiations are still around, so he’s emphasized in committee that there are no changes to how cabins are taxed.
“This bill basically is kind of a shuffling of money to say, ‘Well, we’re not going to change the deal you guys came up with in 2001 to shift these seasonal recreation property taxes,” he said. “But we are going to basically make a concerted effort to get back to the way it was.”
As most cabins are much more expensive than a residential property, to Hauschild, it’s an equity issue.
“If you’re going to recreate and be in a school district and a region to utilize our outdoors and our natural resources, then you should also help our kids with the equal opportunity they have at our rural schools.”
There are other efforts aiming to address the rural education equity issue, but Hauschild said his is more targeted and costs millions less.
Widespread impact in Northern Minnesota
Levies used to be bonus money. But educators told legislators that now, they are needed to fully fund a district.
Roughly 70% of school districts in Minnesota have operating levies. About a third of those that don’t are Northern Minnesota school districts that would benefit from this new aid.
Grand Rapids attempted to pass an operating levy in 2023, but 75% of voters said no. Superintendent Matt Grose was among the testifiers in support of the measure.
“This bill isn’t a handout,” he told the House Education Finance Committee on April 1. “Our communities still have to step up and say yes. This just gives them a fair chance to do that.”
Lake Superior Superintendent Gina Kleive has also been a vocal supporter.
“Our region is the beloved destination for many Minnesotans, whose fondest memories are tied to their cabins and their vacation homes,” she told the House committee.
“ ... [The levy] reduction would be a gamechanger, transforming how our voters perceive school funding, and making passage of an operating levy far more feasible.”
Budget cuts in both districts are impacting staffing, class sizes and student opportunities, and a referendum would help undo some of that impact.
The new measure would have an even greater impact on a line of districts stretching from Nevis to McGregor. Crosby-Ironton, which is cutting more from its budget after two failed referendums, would see a 45% reduction.
“As a student, it deeply upsets me that the opportunities I have had are actively being taken away from the roughly 1,000 other students in my district,” C-I senior Candice Wynn told the Senate Taxes Committee last month. She explained the district is raising its activity fee to $150 per student.
“ ... Imagine being the parents who have to tell their children they can’t afford to have them play sports or participate in school activities.”
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