When Minnesota passed universal school meals in 2023, I warned that the policy’s design could create future funding and data problems if not addressed. That is now happening and has prompted a proposed $35 million in additional spending.
Tonight, Gov. Tim Walz will likely tout universal school meals as one of his signature achievements during the State of the State address. But what won’t be mentioned are the added ongoing costs to the state budget and the fact that districts must navigate more complex funding streams.
A big part of this is compensatory aid, which is state funding to schools serving more low-income students. The counts of students determine how funding is distributed.
Before universal school meals, free and reduced-price lunch (FRPL) applications were the primary way to identify low-income students. While the system was imperfect, it was fairly consistent across districts. The legislature’s implementation of universally provided school meals changed that. Once every student gets free breakfast and lunch, fewer families have any reason to fill out those applications.
An uneven replacement
This shifted the state toward “direct certification,” which pulls data from programs like Medicaid, SNAP, and the Minnesota Family Investment Program (MFIP) to automatically identify low-income students who participate in these and similar programs. Families don’t need to complete any paperwork, but it doesn’t catch every eligible student, especially families who qualify but aren’t enrolled in those programs.
While districts can try to fill the gaps with other forms, participation is uneven. This leaves a funding formula problem for districts to deal with — not because demographics differ but because the methods of collecting data do.
Districts with higher rates of students in SNAP or MFIP have, in many cases, benefited under the new system. Districts that previously relied more on FRPL application data, and whose low-income families don’t fit direct certification categories, risk undercounting and corresponding funding losses.
Temporary fixes are becoming a habit
The legislature kicked the can down the road with a temporary “hold harmless” provision for FY 2025 and then modified it for FY 2026 to prevent these budget swings. That provision expires in July, and no long-term solution is in place. Instead, another “temporary” solution has been proposed that would extend the hold harmless provision through FY 2027 and add roughly $35 million in new spending to buy back projected funding losses. Lawmakers have essentially handed off the hard part of structural reform to a Compensatory Revenue Task Force created in earlier legislation.
It is likely the universal school meals program is here to stay, but this policy shift created the identification gap in the first place and put school districts, lawmakers, and now a task force in charge of cleaning up the consequences. The task force’s job essentially becomes to reconstruct the income-targeting that the program eliminated. But the legislature’s deference of this fix to a task force doesn’t guarantee policymakers will act on its recommendations — or that the recommendations will reflect a real solution to begin with. Without a firm commitment to address these structural problems, Minnesota risks continuing to rely on temporary adjustments and additional spending. Tonight the governor will call this program a success. The school districts still waiting on a real funding fix might describe it differently.
