Takeaways from the 2026-27 Minnesota Governor’s Biennial Budget

Change Item: Legal Services Costs (MDE)

What it does:

• Provides $6,000,000 one-time (FY 2026) from the General Fund to cover MDE legal costs (lawsuits + required legal work).

Why it’s requested:

• The Legislature previously provided $7.5M one-time for FY 2024–25, but that funding ends June 30, 2025, while several major cases are expected to continue into FY 2026–27.
• MDE says it has ongoing, complex litigation and needs stable resources for:
  • Attorney General support
  • Discovery, mediation, expert witnesses, court reporters
  • Outside counsel when needed
  • Administrative legal work (rulemaking, appeals)

Staffing:

• Temporarily maintains 2.3 FTE already being paid from the prior one-time appropriation (e.g., General Counsel, Deputy GC, part of a compliance role).

Budget breakdown (within the $6M):

• ~$986K for staff salaries/benefits
• ~$5.014M for legal/litigation costs

Bottom line:
This is essentially a bridge appropriation to keep MDE’s legal team and litigation capacity functioning after the prior one-time legal funding expires.

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Change Item: Operating Adjustment (MDE)

What it does:
Adds ongoing operating funding to cover rising agency costs:

• $677,000 in FY 2026
• $1,365,000 each year starting FY 2027 (and continuing)

Why it’s requested:
MDE says normal inflationary pressures are rising while budgets stay flat, including:

• Health insurance, FICA/Medicare, salary costs
• Rent, utilities, fuel
• IT and legal services

What else is proposed (management flexibility):

• Allow MDE to retain up to 10% of competitively awarded grants for administration if admin funding isn’t already provided.
• Allow executive agencies to carry forward unspent non-grant operating funds from the second year of a biennium into the next (a broader MMB proposal, referenced here).

Bottom line:
This is a standard “keep the lights on” adjustment: small ongoing funding increases + new flexibility tools to avoid cutting services when costs rise.