Compensatory Revenue Task Force Releases Final Recommendations

In October, the Compensatory Revenue Task Force met to finalize its report to the legislature, outlining recommendations to reform compensatory funding.

The 14-member task force, which was established by the MN legislature in 2025, included school superintendents, school finance officials, charter school administrators, teachers, education advocates, and legislators to analyze the compensatory funding formula and develop proposed changes to the program.

 Key recommendations include:

• Students who are underprepared to learn should be the intended beneficiaries, with the number of students experiencing poverty as a proxy for need.
• Combine direct certification, Application for Educational Benefits forms, and SUN Bucks applications to identify as many eligible students as possible.
• Count free and reduced-price lunch students with the same weight.
• The concentration formula increases per-pupil funding as a school's share of students in poverty grows.
• Require that at least 70 percent of compensatory revenue be spent at the school site that generated it.
• Starting in FY28, base revenue on a four-year rolling average of student counts for greater predictability.
• Over the longer term, add income tax data to reach students not served by other programs, reduce reliance on federal data, and give the state more flexibility in setting income thresholds.
• Require schools to describe each year how they spend compensatory revenue, with MDE compiling an annual statewide report on uses and promising practices for serving students who are academically behind. 

The recommendations offer a starting point for broader discussions about the future of compensatory revenue. With temporary fixes set to expire, lawmakers will need to revisit the issue during the 2027 session.