SF 3593

2nd Engrossment - 94th Legislature (2025 - 2026)

Posted on 03/24/2026 10:49 a.m.

A bill for an act
relating to state government; proposing an amendment to the Minnesota
Constitution, article XI, section 8; modifying the investment, management, and
distribution policy for the permanent school fund; amending Minnesota Statutes
2024, sections 11A.16, subdivisions 5, 6; 127A.32.

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:
new text end

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 distributed deleted text end new text begin and managed as a perpetual financial resource for the sole
purpose of apportioning money to the different school districts of the state. Management
of the fund shall be designed to provide annual distributions, minus necessary administrative
spending, while preserving the purchasing power of the fund over time and balancing the
needs of current and future beneficiaries. Administrative spending shall be in the manner
prescribed by law. The distribution policy shall be prescribed by law and consistent with
the aforementioned principles. Distributions from the fund shall be apportioned new 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

new text begin (a) The proposed amendment must be submitted to the people at the 2026 state general
election. The question submitted must be:
new text end

new text begin "Shall the Minnesota Constitution be amended to increase the funding going to all school
districts from the permanent school fund, which is a fund that supports school districts
without raising individual income or property taxes, effective July 1, 2027?
new text end

	new text begin Yes . new text end
	new text begin No . new text end	new text begin " new text end

new text begin (b) The title required under Minnesota Statutes, section 204D.15, subdivision 1, for the
question submitted to the people under paragraph (a) shall be: "Increasing funding to school
districts."
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 income deleted text end new text begin distributable amount new text end .

deleted text begin As of the end of each fiscal
year, deleted text end new text begin (a) new text end The state board shall calculate the deleted text begin investment income earned by deleted text end new text begin distributable
amount of new text end the permanent school fund. The deleted text begin investment income earned by the fund deleted text end new text begin distributable
amount new 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 five 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.
deleted text end

deleted text begin (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) The director shall report by August 15 the distributable amount to the Legislative
Permanent School Fund Commission established in section 127A.30 and the commissioner
of education.
new text end

Sec. 2.

Minnesota Statutes 2024, section 11A.16, subdivision 6, is amended to read:

Subd. 6.

Disposition of deleted text begin income deleted text end new text begin distributable amount new text end .

deleted text begin Notwithstanding provisions of
section 11A.12, deleted text end The deleted text begin income deleted text end new text begin commissioner of management and budget shall transfer the
distributable amount new text end of the permanent school fund as calculated pursuant to subdivision 5 deleted text begin ,
shall be credited to the permanent school fund, and transferred deleted text end to the school endowment
fund as needed for payments made pursuant to section 127A.32.

Sec. 3.

Minnesota Statutes 2024, section 127A.32, is amended to read:

127A.32 SCHOOL ENDOWMENT FUND; DESIGNATION.

For the purpose of aid to public schools, a school endowment fund is established.

The school endowment fund shall consist of the deleted text begin income deleted text end new text begin distributable amounts new text end from the
permanent school fund. The commissioner may accept for and on behalf of the permanent
school fund a donation of cash, marketable securities, or other personal property. A noncash
donation, other than a donation of marketable securities, must be disposed of for cash as
soon as the commissioner can obtain fair market value for the donation. Marketable securities
may be disposed of at the discretion of the State Board of Investment consistent with sections
11A.16 and 11A.24. A cash donation and the cash receipts from a donation disposed of for
cash must be credited immediately to the permanent school fund. Earnings from marketable
securities are earnings of the permanent school fund.

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective July 1, 2027, for aid payable in fiscal year 2028 if the
constitutional amendment proposed in article 1, section 1, is adopted by the voters.
new text end