The Minnesota House was poised to pass its education budget bill on Friday night after a debate over preserving unemployment benefits for hourly school workers derailed progress on the biggest chunk of state general fund spending earlier this month.
Democratic-Farmer-Labor and Republican House lawmakers late last month reached a compromise on spending that would have eliminated unemployment benefits for employees like bus drivers, cafeteria workers and paraprofessionals in 2028.
But the House DFL pulled back amid pressure from labor groups and the DFL’s progressive wing. Now it appears that the push to kill that benefit will die off when the education bill goes to conference committee with the Minnesota Senate version, which preserves the benefit.
DFLers expanded the unemployment benefit when they controlled state government in 2023, arguing it was unfair to exclude some school staff from unemployment insurance. Though some school districts said the mandate to continue offering it will strain their budgets when state funding dried up.
Education spending to remain level
Now that there’s a broader budget agreement between DFL Gov. Tim Walz, Senate DFL majority and the 67-67 tied House, it appears House Republicans have agreed to drop the rollback proposal. Under the deal, the state will have a two-year budget around $66 billion to $67 billion. It aims to control spending growth in social services and education.
The education budget makes up around one-third of the current $71 billion two-year state budget. Under the deal education spending will remain level for the next two years other than the required inflation-tied increases.
The House’s proposal still includes the rollback of unemployment insurance, but when they hammer out differences with the DFL majority Senate’s education bill, they’ll remove that piece, House DFL leader Melissa Hortman said Thursday.
House and Senate pre-kindergarten through 12th-grade education spending proposals have differences. For instance, the House calls for a $40 million increase in spending in 2026-2027, whereas the Senate currently keeps it level.
Under the budget deal, state leaders plan to cut spending by $420 million in 2028-2029 to help address a looming multi-billion state deficit in those years. But spending will remain level in the budget for 2026-2027.
In addition to the education budget, members of the House also were expected to take up a separate bill to provide the hourly school worker unemployment benefit with $100 million to operate over the next two years. About $77 million in funding would come from money originally meant for the Minneapolis-Duluth Northern Lights Express passenger rail project. The rest would come from state special education aid.
Flashpoints in negotiations
Unemployment insurance for hourly workers is not a significant portion of the state’s multibillion-dollar education budget. The 2023 bill provided around $135 million to cover the program for four years, though the state has already burned through most of that money at this point.
Despite it not being a huge portion of the budget, it emerged as flashpoint in negotiations on one of the biggest pieces of state spending. Controversy is now shifting to a proposal to cut state funded health insurance benefits for adults in the country illegally and to shut down the state prison in Stillwater.
The insurance issue sparked protests from DFLers Thursday outside the governor’s reception room at the Capitol and may pose a threat to efforts to finalize the budget. The regular session ends on May 19, and lawmakers have to pass a two-year budget by the end of June 30 or the state government shuts down.
In the last decade, there has been a special session every time control of government is split between the parties. Legislative leaders agree it’s likely they’ll have to return to the Capitol this year to finish the budget.
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