What is the Permanent School Fund?

This November, Minnesota voters will be asked to decide whether to modernize one of the state’s oldest sources of support for public education: the Permanent School Fund.

For many Minnesotans, the first question may simply be: What is the Permanent School Fund?

The Minnesota Association of School Administrators supports the proposed constitutional amendment, and over the coming weeks we will help Minnesotans understand what the fund is, how it works, what would change under the amendment, and why school leaders across the state believe the update is important for Minnesota students.

A trust created for Minnesota students

Wait - but where did this fund and money come from?

The Permanent School Fund dates back to Minnesota’s statehood in 1858.

Public lands were set aside specifically to generate revenue for public education. Revenue from school trust lands—including timber, mining, leases, and other natural resource activities—is deposited into the fund and invested through the Minnesota State Board of Investment.

The idea is straightforward: Minnesota created a permanent education asset that could support generations of students.

And it has grown considerably.

The Permanent School Fund increased from approximately $675 million in 2010 to more than $2.3 billion today.

The fund already supports Minnesota public schools. The amendment on the November ballot would not create a new fund or establish a new government program.

So why is there a constitutional amendment?

While the Permanent School Fund has grown significantly, the rules governing how money can be distributed from it remain rooted in an older investment structure.

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

The proposed amendment would modernize that approach by allowing annual distributions to be based on 4.5% of the fund’s average market value over the previous three years.

That three-year averaging approach is intended to make distributions more predictable while protecting the fund’s long-term value.

The Permanent School Fund Task Force studied historical performance, practices used by other endowments and multiple financial scenarios before recommending the 4.5% approach. The task force concluded that it best balances consistent annual distributions with preserving the fund for future generations.

What would not change?

Several important things would remain the same.

The Permanent School Fund would continue to exist. Its purpose would remain supporting public education. It would remain a long-term financial resource for Minnesota students.

And the proposed amendment does not raise property taxes, income taxes or sales taxes.

Instead, voters are being asked whether Minnesota should modernize how an existing education asset distributes revenue to schools.

Why MASA supports the amendment

Minnesota’s school leaders see the Permanent School Fund for what it was created to be: a resource for students.

The proposed amendment gives Minnesota an opportunity to increase and stabilize support for public schools while preserving the fund for future generations.

It does so without creating a new tax or new education program.

And because Permanent School Fund dollars are distributed statewide based on student enrollment, students in communities large and small share in the benefit.

Over the coming weeks, MASA will answer more of the questions voters may have about the amendment, including:

• Does this raise taxes?

• Could distributing more money put the fund at risk?

• Why was 4.5% selected?

• How does the three-year average work?

• What could the amendment mean for local schools?

• Why does this require changing the Minnesota Constitution?

Minnesotans deserve clear information before making this decision.

For more than 165 years, the Permanent School Fund has been an investment in Minnesota students. MASA believes it is time to ensure that investment works as effectively as possible for students today—and for generations to come.

Students First. Improve the Trust.

Find out more at: https://www.mnpsfamendment.org/