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Minnesota Legislature
2019-2020 Regular Session

FORTY-THIRD MEETING - Education Finance Division

April 28, 2020

STATE OF MINNESOTA FORTY-THIRD MEETING
MN HOUSE OF REPRESENTATIVES NINETY FIRST SESSION

EDUCATION FINANCE DIVISION
MINUTES

Representative Jim Davnie, Chair of the Education Finance Division, called the virtual meeting to order at 9:46 am on April 28, 2020 pursuant to House rule 10.01. The meeting is being broadcast via Zoom and House Public Information Services.

The Committee Legislative Assistant noted the roll.

Members present:

DAVNIE, Jim
SANDSTEDE, Julie
KRESHA, Ron
BENNETT, Peggy
DANIELS, Brian
DETTMER, Bob
DEMUTH, Lisa
EDELSON, Heather
ERICKSON, Sondra
HUOT, John
JURGENS, Tony
KOTYZA-WITTHUHN, Carlie
KUNESH-PODEIN, Mary
MARQUART, Paul
MURPHY, Mary
NORNES, Bud
PRYOR, Laurie
RICHARDSON, Ruth
SANDELL, Steve
YOUAKIM, Cheryl

A quorum was present.

HF 3992 (Murphy) School boards have authority to levy for certain capital purposes. One program, called the Long-Term Facilities Maintenance (LTFM) Revenue Program, allows school districts to levy for deferred maintenance and building health and safety needs. For many districts, the revenue is capped at a per pupil amount, but for larger districts that were formerly included in the alternative facilities program, including Duluth, the revenue is sufficient to cover any necessary deferred maintenance project. HF 3392 authorizes the Duluth school district to do three things: 1) sell the Historic Old Central High School; 2) construct and remodel new spaces for the district, including for the programs housed at Historic Old Central High School, demolish the 1971 Duluth Central High School building and build a bus garage and bus maintenance facility; and 3) redirect a portion of the estimated levy savings that would have been necessary to make the payments for the deferred maintenance improvements at the Historic Old Central High School toward repaying school board-approved general obligation bonds that would be sold to underwrite the construction and remodeling activities listed above.

Rep. Murphy moved that HF 3992 be presented before the committee; be referred to the committee on Ways and Means.

Rep. Murphy presented HF 3992.

Rep. Murphy renewed the motion that HF 3992 be referred to the committee on Ways and Means. A roll call vote was taken. Motion prevailed.

Roll Call Vote Count (HF 3992); ‘aye’ – 20, ‘no’ – 0:

DAVNIE, Jim (aye)
SANDSTEDE, Julie (aye)
KRESHA, Ron (aye)
BENNETT, Peggy (aye)
DANIELS, Brian (aye)
DETTMER, Bob (aye)
DEMUTH, Lisa (aye)
EDELSON, Heather (aye)
ERICKSON, Sondra (aye)
HUOT, John (aye)
JURGENS, Tony (aye)
KOTYZA-WITTHUHN, Carlie (aye)
KUNESH-PODEIN, Mary (aye)
MARQUART, Paul (aye)
MURPHY, Mary (aye)
NORNES, Bud (aye)
PRYOR, Laurie (aye)
RICHARDSON, Ruth (aye)
SANDELL, Steve (aye)
YOUAKIM, Cheryl (aye)

HF 1177 (Wazlawik) ServeMinnesota is the name of a state grant program designed to work in concert with federal youth service programs and is the statutorily designated recipient of federal AmeriCorps funds. Youth service programs are generally designed to provide the participant with skills and training while creating an opportunity for the participant to perform tasks that benefit the community. The ServeMinnesota program awards grants to program providers on a competitive-grant basis. The program provider combines the state grant money with federal money and provides the participants with living expenses or a stipend, health insurance, child care if needed and a post-service educational award of $5,920 for the 2018-19 school year, which may be used for higher education costs or to repay student loans. In the education area, ServeMinnesota programs are encouraged to provide children’s literacy efforts and reading tutoring through the reading Corps. Minnesota Math Corps provides ServeMinnesota/AmeriCorps members with a model of mathematics instruction the members use to help elementary and middle school students meet state academic standards in mathematics. The base budget for the Math Corps activities is $500,000 per year. HF 1177 proposes to raise this amount to $1,000,000 per year for fiscal years 2020 and 2021.

Rep. Pryor moved that HF 1177 be presented before the committee; be referred to the committee on Ways and Means.

Rep. Wazlawik presented HF 1177.

Rep. Pryor renewed the motion that HF 1177 be referred to the committee on Ways and Means. A roll call vote was taken. Motion prevailed.

Roll Call Vote Count (HF 1177); ‘aye’ – 12, ‘no’ – 8:

DAVNIE, Jim (aye)
SANDSTEDE, Julie (aye)
KRESHA, Ron (no)
BENNETT, Peggy (no)
DANIELS, Brian (no)
DETTMER, Bob (no)
DEMUTH, Lisa (no)
EDELSON, Heather (aye)
ERICKSON, Sondra (no)
HUOT, John (aye)
JURGENS, Tony (no)
KOTYZA-WITTHUHN, Carlie (aye)
KUNESH-PODEIN, Mary (aye)
MARQUART, Paul (aye)
MURPHY, Mary (aye)
NORNES, Bud (no)
PRYOR, Laurie (aye)
RICHARDSON, Ruth (aye)
SANDELL, Steve (aye)
YOUAKIM, Cheryl (aye)

HF 3642 (Kunesh-Podein) The Bureau of Indian Education (BIE) oversees Minnesota’s four tribal contract K-12 schools: Bug-O-Nay-Ge-Shig School in Bena (Leech Lake Tribe); Circle of Life School in White Earth (White Earth Tribe); Fond du Lac Ojibwe School in Cloquet (Fond du Lac Tribe); and Nay-Ah-Shing School in Onamie (Mille Lacs Tribe). These schools are located on reservations, operated by the tribes, and are designed to provide Indian students with educational services that are responsive to the needs and desires of the Indian communities. Minnesota pays a supplementary state school aid, called Tribal Contract School Aid, to the four tribal contract schools. The Permanent School Fund (PSF) of Minnesota consists of the proceeds of the lands granted to the state by the federal government for the use of schools, proceeds from swamplands granted to the state, and cash and investments credited to the fund. The DNR is responsible for managing bout 2.5 million acres of school trust land. The net proceeds from the land management activities (timber sales, minerals activities, lease revenue, etc.) annually are added to the principal of the fund. Each year, the interest and dividends arising from the investments of the fund are required by the Constitution to be distributed to the state’s school districts according to the formula set in statute which currently require a uniform per student payment to each school district and charter school (this amount is $45.04 for fiscal year 2020). Because the Minnesota Constitution requires the annual PSF distribution to go only to the school districts, HF 3642 creates a replacement aid appropriated from the state general fund. There are approximately 725 students attending Minnesota’s tribal contract school leading to an annual general fund cost to this provision of about $33,000.

Rep. Kunesh-Podein moved that HF 3642 be presented before the committee; be referred to the committee on Ways and Means.

Rep. Kunesh-Podein presented HF 3642.

Rep. Kunesh-Podein renewed the motion that HF 3642 be referred to the committee on Ways and Means. A roll call vote was taken. Motion prevailed.

Roll Call Vote Count (HF 3642); ‘aye’ – 12, ‘no’ – 8:

DAVNIE, Jim (aye)
SANDSTEDE, Julie (aye)
KRESHA, Ron (no)
BENNETT, Peggy (no)
DANIELS, Brian (no)
DETTMER, Bob (no)
DEMUTH, Lisa (no)
EDELSON, Heather (aye)
ERICKSON, Sondra (no)
HUOT, John (aye)
JURGENS, Tony (no)
KOTYZA-WITTHUHN, Carlie (aye)
KUNESH-PODEIN, Mary (aye)
MARQUART, Paul (aye)
MURPHY, Mary (aye)
NORNES, Bud (no)
PRYOR, Laurie (aye)
RICHARDSON, Ruth (aye)
SANDELL, Steve (aye)
YOUAKIM, Cheryl (aye)

HF 4407 (Erickson) School districts are required to adopt and use a uniform system of records and accounting. The adopted system, a modified accrual accounting system, is known as Uniform Financial Accounting and Reporting System (UFARS). Under UFARS every district must maintain a number of operating funds (e.g., general fund, food service, community service) and nonoperating funds (e.g., building construction, debt service, trust, and agency). UFARS, statutory reserves, and the state’s public indebtedness statute prohibit certain types of fund transfers between funds and from certain reserved accounts. Generally, transfers from the debt service fund are prohibited. The maximum effort capital loan program helps school districts with small tax bases that find it difficult or impossible to finance construction projects through conventional bond sales construct school facilities. Under this program, the school district issues bonds for a portion of the project cost and the state sells bonds that are loaned to the qualifying school district. Any balance remaining on the state loan is forgivable at the end of its term. The Ogilvie school district received a state maximum effort capital loan in April of 1990 for $11.34 million. The principal on the loan, and all outstanding interest on the loan cancel in April of 2020 (30 years after its receipt). In 2011 and 2016 districts with outstanding capital loan were authorized to refinance their loans, repay the outstanding principal owed to the state, and any interest payments were canceled. About ten districts were able to take advantage of these provisions. A few districts, including, Ogilvie, were unable to utilize these provisions. HF 4407 authorizes Independent School District No. 333, Ogilvie, to transfer any balance left in its debt service fund to the general fund without making a levy reduction.

Rep. Erickson moved that HF 4407 be presented before the committee; be referred to the committee on Ways and Means.

Rep. Erickson presented HF 4407.

Rep. Erickson renewed the motion that HF 4407 be referred to the committee on Ways and Means. A roll call vote was taken. Motion prevailed.

Roll Call Vote Count (HF 4407); ‘aye’ – 19, ‘no’ – 1:

DAVNIE, Jim (aye)
SANDSTEDE, Julie (aye)
KRESHA, Ron (no)
BENNETT, Peggy (aye)
DANIELS, Brian (aye)
DETTMER, Bob (aye)
DEMUTH, Lisa (aye)
EDELSON, Heather (aye)
ERICKSON, Sondra (aye)
HUOT, John (aye)
JURGENS, Tony (aye)
KOTYZA-WITTHUHN, Carlie (aye)
KUNESH-PODEIN, Mary (aye)
MARQUART, Paul (aye)
MURPHY, Mary (aye)
NORNES, Bud (aye)
PRYOR, Laurie (aye)
RICHARDSON, Ruth (aye)
SANDELL, Steve (aye)
YOUAKIM, Cheryl (aye)

Testifiers:

William Gronseth, Superintendent, Duluth Public Schools
Laurie Harper, Leech Lake Director of Education and Chair of the Bug-O-Nay-Ge-Shig School
Board
Kathy Belsheim, Superintendent, Ogilvie Public Schools


The meeting of the Education Finance Division was adjourned 11:09 am.


______________________________________________
Representative Jim Davnie, Chair

______________________________________________
Brittney Sunderland, Committee Legislative Assistant

More Info On This Meeting..
Agenda:

HF 3992 (Murphy) Independent School District No. 709, Duluth; levy authority transfer from the long-term facilities maintenance revenue program to the debt redemption fund authorized, report required, and bonds issued. HF 1177 (Wazlawik) Minnesota math corps program funding provided, and money appropriated. This bill was given a full hearing with testimony on 3/7/2019, therefore no new testimony will be taken on this bill. HF 3642 (Kunesh-Podein) Tribal contract or grant schools authorized payment equivalent to annual payment to school districts and charter school from permanent school fund endowment, and money appropriated. HF 4407 (Erickson) Independent School District No. 333, Ogilvie; fund transfer authorized. This remote hearing may be viewed live via the following methods: 1) Live stream via House website: https://www.house.leg.state.mn.us/live/2 2) YouTube: https://youtu.be/S4StGoFeqig If you wish to testify, please email Sarah Burt: sarah.burt@house.mn by COB on Monday, April 27th. If you have questions about the accessibility of remote hearings or require assistance to arrange the necessary service to participate as a testifier, please contact Blake Wilcox by emailing him at Blake.Wilcox@house.mn or by leaving a message at 651-296-8803.

Bills Added:
  • HF3992 (Murphy) - Independent School District No. 709, Duluth; levy authority transfer from the long-term facilities maintenance revenue program to the debt redemption fund authorized, report required, and bonds issued.
  • HF1177 (Wazlawik) - Minnesota math corps program funding provided, and money appropriated.
  • HF3642 (Kunesh-Podein) - Tribal contract or grant schools authorized payment equivalent to annual payment to school districts and charter school from permanent school fund endowment, and money appropriated.
  • HF4407 (Erickson) - Independent School District No. 333, Ogilvie; fund transfer authorized.
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• This meeting held in accordance with House Rule 10.01 •. 03:53 - HF3992 (Murphy) Independent School District #709, Duluth; levy authority transfer from the long-term facilities maintenance revenue program to the debt redemption fund authorized, report required, and bonds issued. 25:45 - HF1177 (Wazlawik) Minnesota math corps program funding provided, and money appropriated. 41:33 - HF3642 (Kunesh-Podein) Tribal contract or grant schools authorized payment equivalent to annual payment to school districts and charter school from permanent school fund endowment, and money appropriated. 1:02:35 - HF4407 (Erickson) Independent School District #333, Ogilvie; fund transfer authorized. Runs 1 hour, 21 minutes.