Walz proposes child tax credits, universal free lunch, boost in K-12 education funding

Gov. Tim Walz began rolling out the centerpiece of his second term agenda Tuesday, promising to make Minnesota the best place in America to raise children. Using a St. Paul school as a backdrop, he proposed an expansive education and child care plan that includes tax breaks for Minnesota families with children, K-12 spending hikes and efforts to increase affordable child care.

Walz, a former high school teacher, said his package of proposals will bolster the state’s schools and eliminate child poverty in Minnesota. The DFL governor is releasing parts of his two-year budget this week, but he said using state funds to aid families and children will be a major focus. The governor will release his entire budget with specific department allocations on Jan. 24. 

The Legislature, now narrowly controlled by Walz’s DFL allies, will take up his recommendations and craft a budget before adjourning in late May in preparation for the beginning of the fiscal year July 1.

Among notable budget recommendations released Tuesday: A child tax credit for low income families; increasing the general education funding formula by 4% next year and 2% the following year; and implementing universal free meals for Minnesota students.

Walz also is recommending that the state tie its education funding formula to inflation so rising costs don’t “eat away at school budgets,” he said. 

“We’re here today to fulfill and put out the pledge that we made to make Minnesota the best state in the country for a family to live and to make sure that every child gets the opportunity to thrive,” Walz said at the Adams Spanish Immersion School. “This budget will tackle and eliminate child poverty, put money into families’ pockets and fund our schools.”

The child tax credit under Walz’s proposal would provide $1,000 per child to families earning less than $50,000, with a maximum of $3,000 per family.

Walz is also proposing to expand the Child and Dependent Care Credit to help families afford child care. For example, a family making under $200,000 with two children under five years old could receive up to $8,000 for child care expenses, according to the plan.

Walz is recommending funding to hire staff who focus on student mental, emotional and physical health in districts throughout the state, though he did not specify how much.

The Walz administration said its entire child care and education package released on Tuesday costs roughly $5.2 billion of the $17.6 billion surplus — about 30%.

Republican lawmakers on Tuesday criticized Walz’s proposals, arguing that this spending would go towards schools that are failing to address low test scores and large achievement gaps.

“The Democrats’ education spending proposals are really a public relations stunt to send even more money into struggling schools without any accountability to parents or student achievement,” said Sen. Jason Rarick, R-Pine City, in a statement. Rarick is the Republican lead for the Senate Education Finance Committee.

On the campaign trail last year, Walz said one way Minnesota can “fully fund” education — a common Walz moniker — was to give more aid to school districts to cover the rising cost of special education and teaching students for whom English is not their first language. In education circles, the growing expense is called a “cross-subsidy.”

The federal government mandates school districts provide special education and English language learner programs but provides little funding for them. Districts are forced to use money from their general fund to pay for the programs, which can force districts to have larger class sizes or cut other programs to pay for the cost.

Walz campaigned on ending the cross-subsidy, but in his budget proposal, Walz suggested compensating districts for half of the special education subsidy, and one-quarter of the English language subsidy. Walz said the proposal is a compromise necessary given other budget needs. 

Walz said even though he’s not proposing to fully eliminate the cross-subsidies, districts will receive money in other ways.

DFL senators on Tuesday morning said they are proposing bills to eliminate the special education and English language cross subsidies so districts can allocate more money to teachers and other services.

The governor also wants to create a Department of Children, Youth, and Families to assume some of the child- and family-centered programs currently in other state agencies like the Department of Human Services and Department of Corrections.