Why MASA Supports Minnesota’s Permanent School Fund Amendment
This November, Minnesota voters will decide whether to amend the state Constitution to change how money from the Permanent School Fund is distributed to Minnesota public schools.
The Minnesota Association of School Administrators supports the amendment.
Why?
For MASA, it comes down to a straightforward principle: Minnesota can make greater use of an education resource it already has while maintaining the fund as a permanent resource for future generations.
Here are the primary reasons behind MASA’s support.
1. The Permanent School Fund was created to support public education
The Permanent School Fund isn’t a new program.
Its roots date to Minnesota’s statehood in 1858, when public lands were set aside to support public education. Revenue generated by school trust lands—including timber sales, mining and mineral royalties, leases and other natural-resource activity—flows into the fund, where the assets are invested.
Over time, those revenues and investment returns have helped the fund grow substantially. The Permanent School Fund has increased from approximately $675 million in 2010 to more than $2.3 billion today.
And its purpose remains education.
The proposed constitutional language would expressly require the fund to be invested and managed as a “perpetual financial resource” for the purpose of distributing money to Minnesota school districts.
2. The fund has grown—but the way Minnesota determines distributions has not kept pace with modern investment practices
Under the existing constitutional framework, annual distributions are based primarily on the fund’s interest and dividends.
That distinction matters because modern investment portfolios don't generate returns only through interest and dividends. They also generate returns through increases in the value of their investments.
The Permanent School Fund Task Force concluded that the existing structure restricts the amount available for current students even as the overall value of the fund grows.
After studying other educational trusts and endowments, historical performance and different distribution rates, the Task Force recommended replacing the existing approach with a distribution equal to 4.5% of the fund’s average market value over the preceding three years.
For MASA, modernizing that distribution model means the fund can more fully serve the educational purpose for which it exists.
3. The proposal was designed to balance students today with students tomorrow
One of the most important questions surrounding any permanent endowment is sustainability.
Simply distributing more money isn't enough. The fund must continue supporting future generations.
That's why the proposed model doesn't simply distribute a fixed dollar amount each year. It uses 4.5% of the fund's average value over the previous three years.
The Task Force evaluated distribution rates ranging from 3% to 5% and modeled different investment conditions, including periods of negative returns and fund declines exceeding 20%. It ultimately concluded that the 4.5% three-year-average approach appropriately balanced larger and more predictable distributions with maintaining the fund as a perpetual financial resource.
The proposed constitutional language would also require management of the fund to preserve its purchasing power over time and balance the needs of current and future beneficiaries.
That balance is central to MASA’s support.
4. Public schools across Minnesota would benefit
The Permanent School Fund isn't targeted to one region or type of school community.
Its distributions support Minnesota public schools statewide.
That means the impact reaches rural, suburban and urban communities throughout Minnesota.
If voters approve the amendment, the new statutory distribution formula would take effect July 1, 2027. The ballot question describes the proposal as increasing funding going to school districts from the Permanent School Fund.
For MASA, which represents public school administrators throughout Minnesota, the statewide nature of the fund is particularly important.
Estimated post-amendment amounts add approximately $33 per student to the actual distribution, based on projections had the proposed formula been in place. Actual amounts will vary.
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5. It does not require raising individual income or property taxes
The proposal concerns an existing state education asset rather than creating a new source of revenue.
The ballot question itself states that the Permanent School Fund supports school districts without raising individual income or property taxes.
The amendment would change how much of the existing fund is available for annual distribution; it would not establish a new individual income or property tax to fund those distributions.
For MASA, that represents an opportunity to increase resources available to public schools through an asset Minnesota has been building and investing for generations.
6. The recommendation came after extensive analysis
This proposal wasn't developed overnight.
Minnesota's nine-member Permanent School Fund Task Force spent more than a year examining the fund, historical investment performance, distribution models used by other educational trusts and endowments, market volatility and the needs of current and future beneficiaries.
The Task Force ultimately unanimously recommended the 4.5% three-year-average distribution model. Its analysis included historical returns and forward-looking scenarios, including periods of substantial market decline.
The Legislature subsequently placed the constitutional question before Minnesota voters. The measure was carried in the House by Rep. Spencer Igo and in the Senate by Sen. Mary Kunesh.
A resource built for Minnesota students
Minnesota has spent generations building the Permanent School Fund.
The question before voters isn't whether that fund should continue to exist. Under the proposed constitutional language, it would remain a perpetual financial resource dedicated to public education.
The question is how that resource should serve Minnesota students—both today and decades from now.
MASA supports the proposed amendment because the organization believes the new framework would make greater use of an existing education asset, provide additional resources to public schools throughout Minnesota, and maintain constitutional requirements intended to preserve the fund for future generations.
Students First. Improve the Trust.
Learn more about the Permanent School Fund amendment at mnpsfamendment.org.