SF 3594

1st Engrossment - 94th Legislature (2025 - 2026)

Posted on 03/26/2026 09:20 a.m.

A bill for an act
relating to education; modifying the duties of the school trust lands director;
modifying required reports to the Legislative Permanent School Fund Commission;
requiring a report; amending Minnesota Statutes 2024, sections 84.027, subdivision
18; 127A.353, subdivision 4, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 84.027, subdivision 18, is amended to read:

Subd. 18.

Permanent school fund authority deleted text begin ; reporting deleted text end .

(a) The commissioner of
natural resources has the authority and responsibility to administer school trust lands under
sections 92.122 and 127A.31. deleted text begin The commissioner shall biennially report to the Legislative
Permanent School Fund Commission and the legislature on the management of the school
trust lands that shows how the commissioner has and will continue to achieve the following
goals:
deleted text end

deleted text begin (1) manage the school trust lands efficiently and in a manner that reflects the undivided
loyalty to the beneficiaries consistent with the commissioner's fiduciary duties;
deleted text end

deleted text begin (2) reduce the management expenditures of school trust lands and maximize the revenues
deposited in the permanent school trust fund;
deleted text end

deleted text begin (3) manage the sale, exchange, and commercial leasing of school trust lands, requiring
returns of not less than fair market value, to maximize the revenues deposited in the
permanent school trust fund and retain the value from the long-term appreciation of the
school trust lands;
deleted text end

deleted text begin (4) manage the school trust lands to maximize the long-term economic return for the
permanent school trust fund while maintaining sound natural resource conservation and
management principles;
deleted text end

deleted text begin (5) optimize school trust land revenues and maximize the value of the trust consistent
with balancing short-term and long-term interests, so that long-term benefits are not lost in
an effort to maximize short-term gains; and
deleted text end

deleted text begin (6) maintain the integrity of the trust and prevent the misapplication of its lands and its
revenues.
deleted text end

(b) When the commissioner finds an irresolvable conflict between maximizing the
long-term economic return and protecting natural resources and recreational values on
school trust lands, the commissioner shall give precedence to the long-term economic return
in managing school trust lands. By July 1, 2018, the permanent school fund must be
compensated for all school trust lands included under a designation or policy provision that
prohibits long-term economic return. The commissioner shall submit recommendations to
the appropriate legislative committees and divisions on methods of funding for the
compensation required under this paragraph, including recommendations for appropriations
from the general fund, nongeneral funds, and the state bond fund. Any uncompensated
designation or policy provision restrictions on the long-term economic return on school
trust lands remaining after July 1, 2018, must be compiled and submitted to the Legislative
Permanent School Fund Commission for review.

(c) By December 31, 2013, the report required under paragraph (a) must provide an
inventory and identification of all school trust lands that are included under a designation
or policy provision that prohibits long-term economic return. The report must include a plan
to compensate the permanent school fund through the purchase or exchange of the lands or
a plan to manage the school trust land to generate long-term economic return to the permanent
school fund. Subsequent reports under paragraph (a) must include a status report of the
commissioner's progress in maximizing the long-term economic return on lands identified
in the 2013 report.

(d) When management practices, policies, or designations by the commissioner diminish
or prohibit the long-term economic return on school trust land, the conflict must be resolved
as provided in section 92.122.

Sec. 2.

Minnesota Statutes 2024, section 127A.353, subdivision 4, is amended to read:

Subd. 4.

Duties; powers.

(a) The school trust lands director shall:

(1) act in a fiduciary capacity for trust beneficiaries in accordance with the principles
under section 127A.351;

(2) evaluate the school trust land asset position;

(3) determine the estimated current and potential market value of school trust lands;

(4) advise and provide recommendations to the governor on school trust land management
policies and other policies that may affect the goal of the permanent school fund under
section 127A.31;

(5) advise and provide recommendations to the Executive Council and Land Exchange
Board on all matters regarding school trust lands presented to either body;

(6) advise and provide recommendations to the commissioner of natural resources on
managing school trust lands, including but not limited to advice and recommendations on:

(i) Department of Natural Resources school trust land management plans;

(ii) leases of school trust lands;

(iii) royalty agreements on school trust lands;

(iv) land sales and exchanges;

(v) cost certification; and

(vi) deleted text begin revenue generating deleted text end new text begin revenue-generating new text end options;

(7) serve as temporary trustee of school trust lands for school trust lands subject to
proposed or active eminent domain proceedings;

(8) serve as temporary trustee of school trust lands pursuant to section 94.342, subdivision
5;

deleted text begin (9) submit to the Legislative Permanent School Fund Commission for review an annual
budget and management plan for the director that includes proposed legislative changes
that will improve the asset allocation of the school trust lands;
deleted text end

deleted text begin (10) deleted text end new text begin (9) new text end develop and implement a ten-year strategic plan and a 25-year framework for
management of school trust lands, in conjunction with the commissioner of natural resources,
that is updated every five years, with goals to:

(i) retain core real estate assets;

(ii) increase the value of the real estate assets and the cash flow from those assets;

(iii) rebalance the portfolio in assets with high performance potential and the strategic
disposal of selected assets;

(iv) establish priorities for management actions;

(v) balance revenue enhancement and resource stewardship; and

(vi) advance strategies on school trust lands to capitalize on ecosystem services markets;
and

deleted text begin (11) keep the beneficiaries, governor, legislature, and the public informed about the
work of the director by reporting deleted text end new text begin (10) report new text end to the Legislative Permanent School Fund
Commission deleted text begin in a public meeting at least once during each calendar quarter deleted text end new text begin as required under
subdivision 5 new text end .

(b) In carrying out the duties under paragraph (a), the school trust lands director may:

(1) direct and control money appropriated to the director;

(2) establish job descriptions and employ staff within the limitations of money
appropriated to the director;

(3) enter into interdepartmental agreements with any other state agency;

(4) enter into joint powers agreements under chapter 471;

(5) evaluate and initiate real estate development projects on school trust lands in
conjunction with the commissioner of natural resources and with the advice of the Legislative
Permanent School Fund Commission to generate long-term economic return to the permanent
school fund; and

(6) submit recommendations on strategies for school trust land leases, sales, or exchanges
to the commissioner of natural resources and the Legislative Permanent School Fund
Commission.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 3.

Minnesota Statutes 2024, section 127A.353, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Report. new text end

new text begin (a) By January 15 each year, the school trust lands director must submit
a written report to the Legislative Permanent School Fund Commission. The report must
inform trust beneficiaries, the governor, the legislature, and the public about school trust
land management activities, and must include information on:
new text end

new text begin (1) the director's efforts to develop and advocate for sustainable asset management
strategies that reflect undivided loyalty to the trust beneficiaries;
new text end

new text begin (2) school trust land management policies and activities, including new or emerging
revenue-generating opportunities;
new text end

new text begin (3) the financial position of school trust land assets, including management costs for the
preceding fiscal year and the revenues deposited in the permanent school fund;
new text end

new text begin (4) recommended statutory changes that would improve asset allocation, enhance financial
outcomes, or otherwise strengthen the long-term performance of school trust lands; and
new text end

new text begin (5) amounts distributed from the permanent school fund to Minnesota's public school
districts and charter schools in the preceding fiscal year.
new text end

new text begin (b) The commissioner of natural resources and the commissioner of education must
provide the director with the data necessary to complete the report.
new text end

new text begin (c) The report must be submitted in accordance with section 3.195.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end