April 2026 article

Legislative Update: What It Means for Owatonna Public Schools

By Superintendent Tammy Champa

While this year’s legislative session is not considered a funding year, many items are being discussed that could impact Owatonna Public Schools. Having just made 3.8 million dollars in budget adjustments for the 2026-2027 school year, we are watching several key topics that carry significant implications for our school district. 

While some proposals present opportunities, others introduce notable challenges that could directly impact our students, staff, and community. Below is a summary of some of the changes that would have the biggest effect on school funding, including what each means for our district.

Permanent School Fund (PSF) Constitutional Amendment

Legislation is advancing to modernize the management of the Permanent School Fund, including a proposed constitutional amendment that would appear on the November 2026 ballot. This change would adjust how school trust land investment returns are distributed to schools. Currently, the Minnesota Board of Investments is limited to distributing 3.5% of interest and dividends to school districts (approximately $350,000 to Owatonna Public Schools this year). The amendment proposes a distribution of 4.5% based on interest, dividends and appreciation of assets. 

While there are still many moving parts, this proposal has the potential to be a meaningful win for public education. If passed, it could provide a more sustainable funding stream and reduce pressure on the state budget—ultimately benefiting districts across the state.

Compensatory Funding

This remains one of the most pressing concerns for our district.

Compensatory funding has historically been based on “free and reduced meal applications or educational benefit forms.” Since the addition of universal school meals, the state has been determining a formula to replace the age-old system. Currently, the formula only addresses direct certifications for benefits. While this new formula would have negatively impacted Owatonna, the legislature previously created a “hold harmless” state that maintained our existing funding. 

If another “hold harmless” provision is not passed in this session, Owatonna Public Schools would see a reduction of approximately $960,000 in compensatory funding next year. Statewide, 271 out of 331 districts would experience losses under the current model.

There is ongoing discussion, including a task force reviewing alternative formulas. Some states utilize tax data rather than self-reported forms, which may offer a more stable and consistent approach. However, at this time, uncertainty remains.

Special Education Funding (Blue Ribbon Commission)

This is another challenging and evolving situation.

The required reduction in special education state funding has now increased to $300 million, following the governor’s recent adjustment. Earlier proposals included shifting costs such as specialized transportation to the general fund, but current direction indicates that reductions must come directly from special education budgets.

This creates significant concern, as districts already rely heavily on general fund dollars to meet student needs.

Safety and Security

At this time, legislative conversations around safety and security have focused primarily on competitive grant opportunities.

While grants can provide helpful resources, they often lack the consistency and predictability districts need to ensure long-term planning and comprehensive safety measures.

Moving Forward

As always, our focus remains on ensuring that students are at the center of our work. These legislative discussions are complex and, in many cases, still evolving. We will continue to advocate for policies that support strong, stable funding and allow us to provide safe, high-quality learning environments for each and every student in Owatonna.

We are grateful for the continued partnership and understanding of our community as we navigate these important issues together.