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 faced unimaginable challenges this year as federal immigration agents flooded the Twin Cities region.

seven kids in the north suburban district

 along with dozens of parents and loved ones. Hundreds of students stopped coming to school because they were too afraid to leave their homes.

While the surge is over and most kids are back in school, district leaders say they’re now facing a new concern — one coming from the state Capitol that could cut millions of dollars in funding from Columbia Heights and other school systems that teach large numbers of kids from low-income families. 

“People are feeling, you know, pretty beat down after ‘Operation Metro Surge,’ to say the least,” said Zena Stenvik, the Columbia Heights superintendent. “It definitely took a toll, and so this almost feels like kicking someone when they're already down.”

The problem stems from a 2023 decision by the DFL-controlled Legislature and DFL Gov. Tim Walz to 

. While school leaders cheered the effort, the law led to changes in the way the state calculated what’s known as compensatory revenue. That’s money districts get to support students from economically disadvantaged families. 

Instead of counting the kids who qualify for free or reduced-price school meals, districts were now only able to count kids who qualified for federal programs like Medicaid or the Supplemental Nutrition Assistance Program.

The math would mean a loss of $3.6 million for Columbia Heights if state lawmakers don’t continue a 

 that’s set to expire soon. Stenvik says the funding loss would be like cutting some 80 percent of the staff in one of her elementary schools. 

“The federal government has reduced access to these federal programs such as SNAP and Medicaid,” she said. “So, children in Minnesota who are living in poverty are no longer accessing those programs at the same rate, and therefore using those to determine Minnesota's poverty is inaccurate.” 

More than half of the districts in the Twin Cities region say they are expecting a combined budget shortfall of more than $220 million for the 2026-27 school year, according to a recent 

from the Association of Metropolitan School Districts.

The expected deficits are due to several factors, including an increase in the cost of providing 

, said AMSD executive director Scott Croonquist.

But a big portion of the deficits are also a result of Minnesota’s issue with compensatory revenue. 

“They will need to develop budgets that will address those gaps, and unfortunately, of course, it will mean cuts,” Croonquist said. 

Last year, state lawmakers established a task force to evaluate the compensatory revenue system to better understand which students are best served with this revenue and which data should be used to establish compensatory revenue eligibility. Task members are expected to report to the Legislature by October. 

Stenvik, who serves on the task force, wants the Legislature to continue the hold-harmless measure until the task force can come up with a better solution. 

A recent task force survey of nearly 600 school staff and community members across the state found between 80-90 percent of respondents believed the state should continue the hold-harmless measure until it could transition to a new compensatory revenue formula. 

Brian Zambreno, superintendent of the South St. Paul Public School District, says without a fix, his budget faces a $1.5 million loss, the equivalent of about four teachers per school.

He said his district has used that money to hire school social workers, math and reading interventionists and enough staff to keep class sizes small. 

“We've been getting great outcomes,” Zambreno said, noting improved state math scores. “We're getting results, but now I'm concerned I'm gonna lose all the things we built to get these results.”

It’s a concern that extends to districts outside the Twin Cities region with large populations of kids from low-income homes. 

In Willmar, west of Minneapolis, superintendent Bill Adams said his district would have to lay off more than 15 staff members if the Legislature can’t find a solution. 

“This is a big deal,” Adams said. “It needs to be fixed.”

The surge of federal immigration agents in Minnesota sent 1,000 Willmar district students into hiding earlier this year. Adams said cutting staff would harm his community’s fragile recovery.  

“We can't afford to take a step back in providing these educational services,” Adams said. “That's a lot of staff that we’ll have to eliminate if they don't fix the comp(ensatory) aid, or at least hold us harmless for another year.”

Lawmakers in the state Senate have proposed a hold-harmless 

 sponsored by Sen. Doron Clark, DFL-Minneapolis.

“We passed it off the Senate floor. Every Republican that I've talked to in the Senate is for it and likes it. Every Democrat that I've talked to on the Senate floor is for it and likes it. And we just need to make sure that we keep talking with our colleagues over in the House,” Clark said.

In the House, lawmakers have also put forward a 

 that would temporarily address compensatory revenue. 

But Rep. Ben Bakeberg, R-Jordan, isn’t sure that the hold-harmless measure is the right step. He’s concerned that at least one version of the legislation would mean lost revenue for two districts he represents.

“There have been multiple versions of this bill moving through, and, you know, with each version, there are different winners and losers with it,” said Bakeberg, who’s also principal of Jordan Middle School.

He believes lawmakers need to look at cutting growth in state government and changing Minnesota’s universal meals program. 

“We're in this situation because of the change with universal meals during the 2023-2024 session under the DFL trifecta,” Bakeberg said. “School districts across the state expressed concerns at that time. I expressed concerns at that time.” 

For districts worried about their budgets, many are hoping state lawmakers can find a way forward before the end of session. 

“Why should we be harmed as school districts? Why are we balancing the state's budget on kids in poverty?” Zambreno said. “We’re doing this to kids in poverty. Saying it out loud, I just don't know how anyone could sleep at night with that.”

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Elizabeth Shockman

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School systems across Minnesota say they're facing a dire funding emergency if the Legislature doesn't act to deal with a crucial funding issue. Those with high numbers of students living in poverty are especially hard hit.

Potential funding change could cost some Minnesota school districts millions

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