REGIONAL— It appears that the St. Louis County School District and Lake County are among the biggest losers from the failure of Congress over the past two years to pass an extension of a longstanding program that helped compensate local governments for the loss of tax base due to the existence of national forest lands within their taxing jurisdictions.
For more than a century, the federal government provided a share of the revenue generated on national forest lands to nearby local governments to help pay for basic services like roads and schools. For most of that period, that funding came as a 25-percent share of proceeds from the sale of timber on national forest lands. But as federal timber sales diminished beginning in the 1990s, Congress enacted a new program, the Secure Rural Schools and Community Self-Determination Act, which allocated additional funding to those local governments that were experiencing declining payments from federal timber sales.
Reauthorization of the program, typically referred by its partial acronym SRS, was already overdue, since it had expired in September 2023 and Congress never took up reauthorization. The U.S. House had attempted to restore the funding in the One Big Beautiful Bill Act, but the funds were stripped in the Senate version.
Under the program, the federal funds were paid to counties with national forest lands, and those monies were then allocated under three different titles. Most of the funds, however, went for schools and things like county roads.
Most of the school funds that came to St. Louis County went to ISD 2142, which contains the largest amount of national forest land of any school district in the state. As recently as 2022, ISD 2142 took in just under $200,000. It was a relatively small payment given the school district’s budget, but it had relatively few strings attached. With the school district’s growing budget deficit, the cut in funding is being felt. The district took in just $68,689 in payments in 2025, a drop of $130,000 over the past three years, which has contributed to the district’s projected $2.5 million budget deficit in the new school year.
For other school districts in the county, the loss of funding is relatively negligible. The Ely School District received just under $15,000 as recently as 2022 and received $4,980 this year.
St. Louis County itself has lost about $480,000 as a result of the phaseout of SRS, a relatively small amount against its $180 million property tax levy and $500 million annual budget.
Lake County faces larger impact
For Lake County, however, the loss of funding is more significant, about $385,000, a noticeable hit for a county with a $12.7 million levy and a $35 million annual budget. Making up those funds would require about a three percent increase in the county’s property tax levy.
Other federal funding
While the phaseout of the SRS program has had an impact, other sources of federal funding have a bigger impact in Minnesota. Special acts of Congress that earmarked federal payments uniquely to St. Louis, Lake, and Cook counties continue to provide the lion’s share of federal funding to these Minnesota jurisdictions. In 2023, those special acts generated $2.5 million in federal payments for Lake County, $2.025 million for Cook County, and $1.612 million for St. Louis County.
Reauthorization possible
ISD 2142 Finance Director Kim Johnson told the Timberjay this week that reauthorization of the SRS appears to be moving forward and that she has been in touch with both Sen. Amy Klobuchar and Rep. Pete Stauber on the importance of restoring the funding. “The senate bill has been approved by the senate without revisions and the house bill has been introduced,” said Johnson.