Pelican Rapids schools face $200,000 aid cut after formula change

Pelican Rapids Public Schools will go into next year’s budget with more than $200,000 less in state aid after a change in calculations that is already tightening planning for staffing, class offerings and activities. The issue came up at the Pelican Rapids School Board’s June 17 regular meeting, where finance officials said the updated formulas were not producing the level of support the district had expected.

The loss lands hard in a small rural district in Otter Tail County. The National Center for Education Statistics lists Pelican Rapids Public Schools as a rural, remote district with 842 students in 2024-25, 70.67 classroom teachers and a student-teacher ratio of 11.91. In the same district profile, NCES reported $16.121 million in total revenue, including $8.988 million in state revenue, so a six-figure aid drop cuts into a major funding stream rather than a side account.

Minnesota’s School Finance Division is the state office responsible for calculating school aid entitlements, property tax levy limitations and budget forecasts. Compensatory revenue, one of the formulas that helps districts serving higher-need students, is based on prior-year Oct. 1 enrollment and free and reduced-price meal counts. State history materials show compensatory revenue climbed statewide from about $474 million to $799 million in fiscal 2024 after Medicaid students became directly certifiable, and lawmakers added hold-harmless protections for fiscal 2025 and a modified hold-harmless for fiscal 2026.

For Pelican Rapids, that technical shift now translates into practical choices. Salaries, benefits, supplies, transportation, utilities and extracurricular commitments do not stay flat just because the aid formula changes, and district leaders will have to decide what can be delayed, what can be reduced and what will need to be protected for students. The district’s FY2026 board records also include a December 15 resolution directing administrators to make recommendations for reductions in programs and positions, a sign that staffing remains part of the discussion as the budget comes together.

The pressure comes in a district that says it is committed to high-quality academic, arts and athletic programs in a unique rural setting. U.S. News lists 59.1% of students in Pelican Rapids Public Schools as economically disadvantaged, underscoring how changes in state aid formulas can hit families and classrooms where local margins are already thin. As next year’s budget takes shape, the shortfall is likely to shape the district’s choices long before the school year begins.