Why Change Minnesota’s Permanent School Fund if It’s Already Working?
Minnesota’s Permanent School Fund has supported public education for generations.
So why change it?
The Permanent School Fund isn’t the problem.
In fact, the fund itself has grown significantly. What Minnesota voters are being asked to consider this November is whether the way money is distributed from the fund should be modernized.
The fund has changed dramatically
The Permanent School Fund was established when Minnesota became a state in 1858 as a permanent resource for public education.
Revenue generated from school trust lands—including timber, mining, leases and other natural resource activities—is invested through the Minnesota State Board of Investment.
And that investment has grown.
In 2010, the Permanent School Fund was valued at approximately $675 million. Today, it is worth more than $2.3 billion.
That growth is good news for Minnesota students.
But the constitutional rules governing how money is distributed from the fund have not kept pace with modern investment and trust-management practices.
The issue is the formula—not the fund
Under the current structure, annual distributions to schools are primarily based on interest and dividend earnings.
The constitutional amendment would modernize that approach.
If voters approve the amendment, annual distributions would instead be based on 4.5% of the fund’s average market value over the previous three years.
Why does that matter?
A market-value approach allows Minnesota schools to benefit more fully from the overall performance of the fund, while the three-year average is intended to make distributions more predictable from year to year.
In other words:
Same fund. Same purpose. A modernized distribution formula.
Why use a three-year average?
Markets go up and down. Basing distributions on a single year could expose schools to those swings.
That’s why the proposal uses a three-year rolling average.
The Permanent School Fund Task Force considered multiple averaging periods and concluded that three years offered an appropriate balance: it reduces year-to-year volatility while remaining responsive enough to adjust during prolonged market downturns.
For Minnesota school districts, greater predictability can also provide better visibility into future distributions and support budgeting and planning.
Why 4.5%?
The 4.5% figure wasn’t selected arbitrarily.
The Permanent School Fund Task Force reviewed historical performance, practices used by other school trust funds and educational endowments, and financial modeling specifically designed for Minnesota’s fund.
After that analysis, the task force concluded that a 4.5% distribution rate using a three-year rolling average best balances consistent annual distributions with long-term preservation of the fund.
The task force unanimously endorsed its recommendations.
What wouldn’t change?
This is just as important as understanding what would change.
The Permanent School Fund would still exist.
It would remain dedicated to supporting public education.
The proposal is designed to preserve the fund as a resource for future generations of Minnesota students.
And the amendment does not raise property taxes, income taxes or sales taxes.
It changes how revenue from an existing education trust is distributed.
Why MASA supports the amendment
Good stewardship isn’t simply about protecting an asset. It’s also about making sure that asset effectively fulfills the purpose for which it was created.
Minnesota’s Permanent School Fund was created to support public education.
The fund has grown substantially. Now Minnesota voters have the opportunity to modernize how its benefits reach students.
MASA supports the Permanent School Fund constitutional amendment because the proposed approach would increase annual distributions and make them more predictable while preserving the long-term health of the fund.
The fund grew. The formula didn’t.
This November, Minnesota voters have the opportunity to change that.
Students First. Improve the Trust.