Some Minnesota school districts are scrambling after finding out they could lose millions of dollars in state funding for next year.

One superintendent told 5 EYEWITNESS News it is an “unintended consequence” of the state’s universal free school meals program.

“My first reaction was just shock,” said Brian Zambreno, superintendent at South St. Paul Public Schools, who learned his district is facing a $1.5 million decrease in funding.

The issue is tied to what is called “compensatory revenue,” which is allocated to districts based on the number of low-income students enrolled there.

Districts could then use that money to help students experiencing poverty by hiring more teachers, academic interventionists and counselors for mental health.

Historically, the poverty calculation was largely based on the number of students who qualified for free or reduced lunch.

Minnesota now has free school lunch for all students, prompting the state to find a new way to calculate poverty levels within districts.

Instead of incorporating the free lunch forms, the state is now solely using “direct certification” to quantify poverty levels, which only lists families who receive government help such as SNAP benefits and medical assistance.

Zambreno said the change in calculation lowered the poverty rate at South St. Paul Schools from 58% to 42%, which slashes their compensatory funding from $4.5 million this year to $3 million next year.

“My demographics didn’t change. If anything, we have more students in poverty going into next year than we have this year, so there’s no logical reason why we would get less funding,” Zambreno said.

He noted the $1.5 million cut is equivalent to cutting 15 licensed teachers or 30 paraprofessionals.

Zambreno said districts did not learn about the change until late December and are now scrambling to balance their budgets, since staff decisions for next year need to be made by April.

Some districts stand to lose even more money than South St. Paul Public Schools.

For example, data from the Minnesota Department of Education shows Osseo Schools would lose $5.5 million next year.

The Minnesota School Boards Association told 5 EYEWITNESS NEWS this is a “top priority issue” impacting many districts.

The Minnesota School Boards Association provided the following statement:

“Compensatory funding for MN public school districts is a hugely important funding stream focused on supporting some of our neediest students. Instability and uncertainty in the amount of compensatory funding are forcing our school districts to reduce staff which reduces opportunities for our students. We are hopeful that a compensatory fix is passed soon in order to avoid further staff reductions and student opportunities. MSBA supports a hold-harmless approach in the short-term, i.e. same amount as previous year, while establishing a work group to resolve the ongoing issues for the long-term.”

Zambreno said superintendents from across the metro have been reaching out to the governor, education commissioner and chairs of the education finance committees at the State Capitol to find a solution.

“We’re asking them to hold the funding flat and then come back next year and spend some time to partner with the Department of Education, school districts, and school boards and say, ‘How do we want to count students in poverty?'” Zambreno said. “If we held it flat for next year, it’s not going to impact the state’s budget in any significant way, and it would stabilize our schools at a time when we need it more now than ever.”

South St. Paul Public Schools is asking staff and students to fill out postcards to send to lawmakers.

“What I worry is there’s so much noise in a legislative session, we can’t afford for this to slip through the cracks and not get done,” Zambreno said.

5 EYEWITNESS NEWS reached out to the governor’s office as well and received this response:

“The Governor is proposing $44 million {in new funding} to ensure school districts continue to get the funding they need to support their vulnerable students. He’s also proposing the creation of a working group to study different compensatory revenue calculations and the best options for the state moving forward.”