Austin Schools Face $2.5M Funding Cut Despite Unchanged Student Needs

A change in Minnesota's school funding formula could significantly reduce compensatory support for Austin Public Schools, even though student needs remain the same.

Published on Feb. 20, 2026

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A change in Minnesota's school funding formula could cut Austin Public Schools' compensatory support by $2.5 million, even though student needs have not changed. The new formula now counts only students directly enrolled in specific assistance programs, whereas the previous system also included families who qualified financially but did not participate in government programs. Districts across Minnesota are asking the Legislature for a temporary 'hold harmless' to keep support stable while the state redesigns the measurement to accurately reflect actual student needs.

Why it matters

This funding change could result in fewer teachers and support staff per student in Austin, despite the same level of need in classrooms. The shift in the funding formula places more weight on program enrollment than on poverty, which does not reflect the reality that many families qualify financially but do not participate in government assistance.

The details

Under the previous system, families could complete a confidential school form to show financial hardship, and many did. However, the new formula now only counts students directly enrolled in specific assistance programs. This means that many families who qualify financially but do not participate in government programs are no longer being counted, even though their students still require the same level of support.

  • In February 2026, the change in Minnesota's school funding formula went into effect.

The players

Austin Public Schools

The school district in Austin, Minnesota that is facing a $2.5 million funding cut due to the change in the state's school funding formula.

Minnesota Legislature

The state legislature that districts across Minnesota are asking to provide a temporary 'hold harmless' to keep support stable while the state redesigns the measurement to accurately reflect actual student needs.

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What they’re saying

“Our classrooms didn't change; the same students still need help learning to read, and the same students still need added support to graduate. What changed was the funding signal for those supports, and it dropped.”

— Austin Submitted, Guest Commentator (austindailyherald.com)

What’s next

Districts across Minnesota are asking the Legislature for a temporary 'hold harmless' to keep support stable while the state completes the redesign of the measurement to reflect actual student needs.

The takeaway

This case highlights the unintended consequences that can arise when a change in funding formulas does not accurately reflect the reality of student needs on the ground. It underscores the importance of policymakers taking the time to get these complex funding systems right, in order to ensure that schools have the resources they need to support all students effectively.