HF 3900
Introduction - 94th Legislature (2025 - 2026)
Posted on 03/02/2026 02:40 p.m.
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A bill for an act
relating to state government; proposing an amendment to the Minnesota
Constitution, article XI, section 8; modifying the permanent school fund to calculate
distributable earnings; amending Minnesota Statutes 2024, section 11A.16,
subdivisions 5, 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
CONSTITUTIONAL AMENDMENT
Section 1. new text begin CONSTITUTIONAL AMENDMENT PROPOSED.
new text end
new text begin
An amendment to the Minnesota Constitution is proposed to the people. If the amendment
is adopted, article XI, section 8, will read:
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Sec. 8.
The permanent school fund of the state consists of (a) the proceeds of lands
granted by the United States for the use of schools within each township, (b) the proceeds
derived from swamp lands granted to the state, (c) all cash and investments credited to the
permanent school fund and to the swamp land fund, and (d) all cash and investments credited
to the internal improvement land fund and the lands therein. No portion of these lands shall
be sold otherwise than at public sale, and in the manner provided by law. All funds arising
from the sale or other disposition of the lands, or income accruing in any way before the
sale or disposition thereof, shall be credited to the permanent school fund. Within limitations
prescribed by law, the fund shall be invested deleted text begin to secure the maximum return consistent with
the maintenance of the perpetuity of the fund. The principal of the permanent school fund
shall be perpetual and inviolate forever. This does not prevent the sale of investments at
less than the cost to the fund; however, all losses not offset by gains shall be repaid to the
fund from the interest and dividends earned thereafter. The net interest and dividends arising
from the fund shall be distributeddeleted text end new text begin and managed as a perpetual financial resource for the sole
purpose of supporting the different school districts of the state. Management of the fund
shall be designed to provide annual distributions while preserving the purchasing power of
the fund over time and balancing the needs of current and future beneficiaries. The
distribution policy shall be specified in law and consistent with the aforementioned principles.
Distributions from the fund shall be apportionednew text end to the different school districts of the state
in a manner prescribed by law.
A board of investment consisting of the governor, the state auditor, the secretary of state,
and the attorney general is constituted for the purpose of administering and directing the
investment of all state funds. The board shall not permit state funds to be used for the
underwriting or direct purchase of municipal securities from the issuer or the issuer's agent.
Sec. 2. new text begin SUBMISSION TO VOTERS.
new text end
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The proposed amendment must be submitted to the people at the 2026 state general
election. The question submitted must be:
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"Shall the Minnesota Constitution be amended .......?
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Yes
.
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No
.
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" new text end |
ARTICLE 2
STATUTORY CHANGES
Section 1.
Minnesota Statutes 2024, section 11A.16, subdivision 5, is amended to read:
Subd. 5.
Calculation of deleted text begin incomedeleted text end new text begin distributable earningsnew text end .
new text begin (a) new text end As of the end of each fiscal
year, the state board shall calculate the deleted text begin investment income earned bydeleted text end new text begin distributable earnings
ofnew text end the permanent school fund. The deleted text begin investment income earned by the funddeleted text end new text begin amount of
distributable earningsnew text end shall equal deleted text begin the amount of interest on debt securities, dividends on
equity securities, and interest earned on certified monthly earnings prior to the transfer to
the Department of Education. Gains and losses arising from the sale of securities shall be
apportioned as follows:deleted text end new text begin 4.5 percent of the average net asset value of the permanent school
fund as of the end of the preceding three fiscal years.
new text end
deleted text begin
(a) If the sale of securities results in a net gain during a fiscal year, the gain shall be
apportioned in equal installments over the next ten fiscal years to offset net losses in those
years. If any portion of an installment is not needed to recover subsequent losses identified
in paragraph (b) it shall be added to the principal of the fund.
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(b) If the sale of securities results in a net loss during a fiscal year, the net loss shall be
recovered first from the gains in paragraph (a) apportioned to that fiscal year. If these gains
are insufficient, any remaining net loss shall be recovered from interest and dividend income
in equal installments over the following ten fiscal years.
deleted text end
new text begin
(b) After the end of the fiscal year, the director shall report the total distributable earnings
to the Legislative Permanent School Fund Commission established in section 127A.30 and
the commissioner of the Department of Education.
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Sec. 2.
Minnesota Statutes 2024, section 11A.16, subdivision 6, is amended to read:
Subd. 6.
Disposition of deleted text begin incomedeleted text end new text begin distributable earningsnew text end .
Notwithstanding provisions
of section 11A.12, the deleted text begin incomedeleted text end new text begin distributable earningsnew text end of the permanent school fund as
calculated pursuant to subdivision 5, shall be credited to the permanent school fund, and
transferred to the school endowment fund as needed for payments made pursuant to section
127A.32.
Sec. 3. new text begin EFFECTIVE DATE.
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Sections 1 and 2 are effective January 1, 2027, if the constitutional amendment proposed
in article 1, section 1, is adopted by the voters.
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