House bill proposes diverting funds from rail project to fund school worker unemployment aid

House members have found a way to fund unemployment insurance for hourly and temporary school workers through the 2027-28 school year.

Sponsored by Rep. Emma Greenman (DFL-Mpls), HF1143, as amended, would cancel $77.23 million set aside two years ago for the Northern Lights Express rail project —proposed passenger rail service between Minneapolis and Duluth — and shift about $22.6 million from special education aid to provide $100 million in fiscal year 2026 that would fund the unemployment aid for hourly school workers.

The bill was approved by the House Ways and Means Committee Thursday and sent to the House Floor.

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Combined with the remaining $33 million from the initial unemployment insurance funding, the $133 million should fund the entire program through the 2028 school year, Greenman said.

“What this does is ensure, that as we look at the summer, that [school workers] have the lifeline of a partial wage replacement to get them through the year,” she said.

Rep. Erin Koegel (DFL-Spring Lake Park) is disappointed to see money for “capital improvements and betterments” of the Northen Lights Express project disappear but called the unemployment funding a “worthy cause” for those funds.

“I very much appreciate this approach,” she said. “It’s a really good idea that will make sure to keep a lot of people whole while doing the least amount of harm to our budgets.”

And, she noted, it keeps project money available to help meet the state requirement if federal funding is forthcoming.

The 2023 law allocated $194.7 million “for capital improvements and betterments for the Minneapolis-Duluth Northern Lights Express intercity passenger rail project, including preliminary engineering, design, engineering, environmental analysis and mitigation, acquisition of land and right-of-way, equipment and rolling stock, and construction.”

House Education Finance Committee Co-chair Rep. Ron Kresha (R-Little Falls) supports the bill because it keeps schools from directly having to fund unemployment insurance but cautioned about playing a “shell game” with education funding at the “11th hour.”

“We’re pulling funds from something to fund something else. And we can’t continue to play this shell game,” he said. “We also need to be aware of our fiduciary responsibility and understand that we need to put things into place that give certainty. This approach of taking it down to the end and then, ‘Oh look! I found some money under a rock,’ does not work for the state of Minnesota. It does not work for our schools and it won’t work for these workers.”