MARSHALL — The state of Minnesota gave an economic forecast update in early December, stating that Minnesota is expected to see a $616 million surplus through the 2026-27 biennium. However, it revealed the state could see a potential $5 billion budget shortfall by the 2028-29 biennium. 

With cuts that may have to be made across the board, Minnesota Gov.Tim Walz created a proposal indicating various strategies or reductions. A “Governor’s 2025 Education Budget Proposals” presentation was given by the House Education Finance Committee on Feb. 11. 

Under a list of potential cuts or changes, Walz is proposing to close the Alternative Teacher Compensation program, also known as QComp, in fiscal year 2027. According to his proposal, there are 111 estimated school districts, 71 charter schools, one intermediate district and one education district that currently implements QComp. 

The Marshall Public School District is one that uses QComp funding, and could see effects if the program does close.  

“At the state level, a concern we have is the governor’s proposal to eliminate QComp funding. For us, that is over $700,000 of annual revenue that ties directly to teacher pay and incentives,” Marshall superintendent Jeremy Williams said at Tuesday night’s school board meeting. “We’ll want to watch if that proposal gets any traction and will continue to advocate for keeping the funding available.” 

The proposal states the closure of QComp would result in savings of $78.7 million in fiscal year 2027 and $173.13 million in fiscal year 2028.

Also in the proposal would be reductions to special education transportation reimbursement. For school fiscal year 2026, 95% percent of eligible expenses would be reimbursed, and it would decrease to 90% reimbursement for school fiscal year 2027 and thereafter. 

If passed, the changes would result in a reduction of $48.6 million in fiscal years 2026 and 2027, and $54.86 million in the fiscal year 2028-2029 biennium.

“Special ed funding and cross subsidies are always a hot topic, and we know our needs are ever-increasing while funding is not keeping up,” Williams said. “We are also paying close attention to conversations about Compensatory funding, as changes since COVID with how those revenue dollars are calculated have a significant impact on our overall budget, and we still haven’t seen a long-term plan for how this will be calculated.” 

Another notable aspect in the proposal is the elimination of nonpublic pupil aid beginning in fiscal year 2026. 

This funding includes textbooks, instructional materials, standardized testing, health services, guidance and counseling services for nonpublic school institutions. 

Walz’s proposal details if passed, this would result in a $52.52 million general fund reduction in fiscal year 2026, and $56.4 million by the 2028-29 biennium. 

The budget now seeks to reach an agreement by July 1, the start of the state’s fiscal year. 

“I think the overall message we’re hearing is that there won’t be much in the way of new money to go around this year,” Williams said. “So, we anticipate more conversations about how to look at mandates and other ways to support school.”