A BILL for an Act to amend and reenact section 15.1-27-04.1 of the North Dakota Century Code, relating to the determination of state aid.
HB 1381 revises North Dakota’s school finance formula by amending section 15.1-27-04.1, which governs how the superintendent of public instruction calculates each district’s baseline funding and resulting state aid. The bill updates the baseline funding components, the per-weighted-student-unit calculations, and the annual state-aid formulas for the 2023-24 and 2024-25 school years and beyond. It also sets out how the formula should phase down certain districts’ baseline funding over time so that state aid is gradually aligned with the new per-student payment amounts.
A major feature of the bill is the treatment of local revenues in the aid calculation. It specifies which revenue sources are included in baseline funding and which are partially or fully excluded, including tuition, mineral revenue, payments in lieu of taxes, mobile home tax revenue, telecommunications tax revenue, and homestead/disabled veterans credit reimbursements. The bill also adds or clarifies adjustments for tuition tied to residential treatment facilities, adult farm management programs, high-cost and special education students, cross-border education contracts, and students educated on an Air Force base with federal impact aid. It further changes the deduction for certain revenues from 75 percent to 65 percent in the post-June 30, 2025 version and updates the mill-levy reference year used in one of the revenue adjustments.
The bill would affect the state’s school aid distribution system and school districts’ entitlement to aid by changing the formulas used by the superintendent of public instruction. Districts with higher local revenue bases or special tuition arrangements could see different aid outcomes depending on how their revenues are counted and phased into the formula. County auditors and school boards would continue to have reporting obligations, but with updated calculations and references tied to the new formula structure.
The general sentiment reflected in the vote history suggests the bill had meaningful support in the House but faced stronger resistance in the Senate. It passed House second reading 64-26, indicating a clear majority in favor, but failed on Senate second reading 14-31, showing that the chamber was not persuaded to adopt the changes. No committee transcript is available, so the record does not show detailed floor or committee arguments, but the voting pattern suggests the proposal was controversial and did not achieve consensus.
The main points of contention likely centered on how the bill redistributes school aid, how aggressively it reduces baseline funding over time, and whether the revised treatment of local revenues and tuition is fair to different districts. Districts that rely on tuition from federal impact aid arrangements, cross-border students, or other special revenue streams may have had concerns about exclusions or reduced deductions, while others may have supported the bill as a way to modernize and equalize the funding formula. The Senate’s rejection indicates unresolved disagreement over the fiscal and policy effects of the changes.
HB 1381 would amend North Dakota Century Code section 15.1-27-04.1 to change the state school aid formula, including baseline funding calculations, per-weighted-student-unit amounts, and deductions for local revenues. It would directly affect the superintendent of public instruction, county auditors, school boards, and school districts by changing how state aid is computed and what revenue sources are counted or excluded in the formula.
The bill appears to have had mixed but substantial support: it passed the House comfortably, but it failed in the Senate by a wide margin. That pattern suggests the measure was viewed favorably by a majority in one chamber but not enough senators agreed with the funding changes to advance it. With no committee transcript available, the public record mainly shows a divided legislative response rather than a detailed consensus.
The likely areas of contention were the distributional effects of the school aid formula changes, especially the phased reductions to baseline funding and the treatment of local revenue sources. Districts affected by Air Force base tuition, cross-border education, special education tuition, or other excluded revenues may have viewed the bill differently from districts that would benefit from a revised formula. The Senate defeat suggests disagreement over whether the bill fairly balanced state support, local property tax effort, and district-specific revenue adjustments.