Is Minnesota’s Permanent School Fund Amendment a Tax Increase?

When voters hear the words “school funding,” one question often comes quickly:

Will this raise my taxes?

We asked the exact same thing. For the Permanent School Fund constitutional amendment on Minnesota’s ballot this November, the answer is straightforward:

No.

The amendment does not raise property taxes. It does not raise income taxes. It does not raise sales taxes. And it does not create a new tax.

That’s because the Permanent School Fund is not a new source of education funding. It already exists.

Remind me again, where does the money come from?

Minnesota’s Permanent School Fund dates back to statehood in 1858, when public lands were set aside specifically to support public education.

Those school trust lands have generated revenue for generations through activities such as timber sales, mining and mineral royalties, leases and other natural resource activity.

That revenue is invested through the Minnesota State Board of Investment.

Combined with decades of investment growth, the Permanent School Fund has grown from approximately $675 million in 2010 to more than $2.3 billion today.

In other words, the amendment is not asking Minnesotans to create a $2.3 billion education fund.

Minnesota already has one.

So what would the amendment actually change?

The question before voters is about how annual distributions from that existing fund are calculated.

Under the current system, distributions are primarily based on interest and dividend earnings.

If voters approve the amendment, annual distributions would instead be calculated using 4.5% of the fund’s average market value over the previous three years.

The goal is to allow more of the economic value generated by the fund to support students today while preserving the fund as a long-term resource for future generations.

The fund remains.

Its purpose remains.

What changes is the distribution formula.

Does this affect my local property taxes?

No.

The constitutional amendment itself does not increase local property taxes or authorize a new local levy. That makes the Permanent School Fund different from a school district operating or bond referendum, where voters may be asked to approve a local property tax increase for a specific purpose.

The Permanent School Fund is an existing statewide education trust. The November ballot question asks whether Minnesota should modernize how money from that trust is distributed—not whether taxpayers should contribute additional money to it.

Is this new state spending?

The amendment does not establish a new government program or create a new funding source.

The Permanent School Fund has supported Minnesota public education since statehood and already provides annual distributions to schools.

What would change is the amount available for distribution and the method used to calculate it. That distinction matters. This isn't about finding a new source of revenue. It's about deciding how an existing education asset should work for Minnesota students.

If schools receive more money, where does the additional money come from?

This is another important question.

Under current law, distributions are primarily based on the fund’s interest and dividend earnings, while much of the fund's investment growth is not included in the distribution formula. The proposed market-value approach would change that calculation.

A nonpartisan task force studied the Permanent School Fund's historical performance and different distribution models before unanimously recommending a 4.5% distribution based on the fund's three-year average market value.

The recommendation was designed to increase annual distributions while preserving the fund's purchasing power over time and balancing the needs of current and future students.

Why MASA supports the amendment

Minnesota communities invest significantly in their public schools, and questions about taxes deserve clear answers.

This amendment does not ask Minnesota taxpayers to pay more.

Instead, it asks voters whether Minnesota should make better use of an education asset it already has.

The Permanent School Fund has been dedicated to Minnesota students for more than 165 years. MASA supports modernizing its distribution formula so more of the value generated by the fund can support students today while preserving this important resource for generations to come.

No new taxes. Same Permanent School Fund. A modernized distribution formula.

Students First. Improve the Trust.

Find out more at: mnpsfamendment.org