What’s changing:
The Governor proposes changing how Literacy Incentive Aid (LIA) is distributed by removing MCA reading test scores from the formula and using poverty data instead.

What stays the same:

• Total funding does not change (budget-neutral)
• Allowable uses of LIA stay the same
• This is not a cut or an expansion, just a redistribution

Why this change is proposed:

• The current formula rewards schools that already have high reading proficiency and growth, not those with the greatest need.
• Schools serving high-poverty students tend to have lower MCA reading scores, which means they receive less LIA under the current system.
• The state has passed the READ Act, which requires major literacy reforms (training, curriculum, assessments). Schools with the greatest needs require more support to implement these mandates.

Additional reasons for timing:

• The Grade 3 MCA reading test is being redesigned to align with new ELA standards in 2025–26.
• New tests historically cause temporary drops in proficiency, making MCA-based funding unstable and potentially misleading.

What the new formula does:

• Shifts LIA distribution to a poverty-based metric
• Redirects funds toward under-served, under-performing schools
• Prioritizes schools serving large numbers of students eligible for free and reduced-price meals

Impact on students and families:

• Sends more literacy resources to schools where students are least likely to be reading at grade level
• Supports early literacy intervention beginning in kindergarten
• Aims to reduce Minnesota’s achievement and opportunity gaps

Rationale:

• Corrects a formula that currently advantages already-successful schools
• Aligns funding with student need rather than test performance

Bottom line:
This change shifts literacy funding from a performance-based reward model to a needs-based support model, ensuring schools with the greatest literacy challenges receive the resources required to meet READ Act expectations.