What’s proposed:
A one-time $30 million General Fund appropriation in FY 2026 to cover summer unemployment insurance (UI) costs for hourly school workers.

Why this is needed:

• In 2023, Minnesota expanded unemployment insurance eligibility to hourly school workers during summer break.
• Local education agencies (LEAs) must pay these costs but are not allowed to levy to cover them.
• The original $135M one-time appropriation (FY 2024) is projected to be exhausted by FY 2026.
• Summer UI costs are higher than originally expected and growing.

Who benefits:

• School districts
• Charter schools
• Intermediate districts and cooperatives
• Perpich Center for Arts Education
• Minnesota State Academies
  (The largest share of benefits go to paraprofessionals.)

How the money is used:

• Reimburses LEAs for summer unemployment benefits paid to hourly workers
• Payments are made after costs are incurred, based on verified DEED data
• Any unused funds are returned to the General Fund

Cost context:

• Estimated total summer UI costs ≈ $70 million per year by FY 2026
• This $30M fills the funding gap left after prior appropriations

Budget side effect:

• Reduces projected special education spending by ~$23.7M, since districts won’t need to shift UI costs into special education budgets if UI funds run out
  • The state had assumed districts would start charging summer unemployment costs to special education if UI aid ran out. By adding more UI funding, those costs stay out of special education—so projected special education spending goes down on paper, even though services don’t change.
    
    This is a budget accounting shift, not a program cut—it prevents unemployment costs from being misclassified as special education expenses.

Impact on students and families:

• Prevents LEAs from diverting classroom dollars to cover mandated UI costs
• Helps stabilize staffing by supporting lower-paid hourly workers

Bottom line:
This is a stopgap funding fix to cover a state-mandated benefit whose costs exceeded original estimates—without forcing districts to cut programs or raise local taxes.