HF 435

as introduced - 87th Legislature (2011 - 2012) Posted on 02/09/2011 09:16am

A bill for an act
relating to the permanent school fund; creating an independent authority to
manage, supervise, and administer Minnesota's permanent school trust lands;
amending Minnesota Statutes 2010, sections 16A.06, subdivision 11; 16A.125,
subdivision 5; 84.027, subdivision 18; 84.085, subdivision 1; 92.12, subdivision
1; 92.121; 92.13; 93.2236; 94.342, subdivision 5; proposing coding for new law
as Minnesota Statutes, chapter 128E.

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

Section 1.

Minnesota Statutes 2010, section 16A.06, subdivision 11, is amended to read:

Subd. 11.

Permanent school fund reporting.

The commissioner shall annually
report to the new text begin Board of Trustees of the Permanent School Trust Lands Administration,
the new text end Permanent School Fund Advisory Committee new text begin , new text end and the legislature the amount of the
permanent school fund transfer and information about the investment of the permanent
school fund provided by the State Board of Investment. The State Board of Investment
shall provide information about how they maximized the long-term economic return of the
permanent school fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 2.

Minnesota Statutes 2010, section 16A.125, subdivision 5, is amended to read:

Subd. 5.

Forest trust lands.

(a) The term "state forest trust fund lands" as used
in this subdivision, means public land in trust under the Constitution set apart as "forest
lands under the authority of the commissioner" of natural resources as defined by section
89.001, subdivision 13.

(b) The commissioner of management and budget shall credit the revenue from the
forest trust fund lands to the forest suspense account. The account must specify the trust
funds interested in the lands and the respective receipts of the lands.

(c) After a fiscal year, the commissioner of management and budget shall certify the
total costs incurred for forestry during that year under appropriations for the protection,
improvement, administration, and management of state forest trust fund lands and
construction and improvement of forest roads to enhance the forest value of the lands.
The certificate must specify the trust funds interested in the lands. The commissioner of
natural resources new text begin and the director of the Permanent School Trust Lands Administration
new text end shall supply the commissioner of management and budget with the information needed
for the certificate.

(d) After a fiscal year, the commissioner shall new text begin apportion the receipts and new text end distribute
the receipts credited to the suspense account during that fiscal year as follows:

(1) the amount of the certified costs incurred by the deleted text begin state deleted text end new text begin Department of Natural
Resources new text end for forest management, forest improvement, and road improvement during the
fiscal year shall be transferred to the forest management investment account established
under section 89.039 new text begin , and the portion of the certified costs incurred by the Permanent
School Trust Lands Administration must be transferred to that agency's investment
account new text end ;

(2) the balance of the certified costs incurred by the deleted text begin state deleted text end new text begin Department of Natural
Resources new text end during the fiscal year shall be transferred to the general fund; and

(3) the balance of the receipts shall then be returned prorated to the trust funds in
proportion to their respective interests in the lands which produced the receipts.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 3.

Minnesota Statutes 2010, section 84.027, subdivision 18, is amended to read:

Subd. 18.

Permanent school fund authority; reporting.

The deleted text begin commissioner of
natural resources deleted text end new text begin director of the Permanent School Trust Lands Administration new text end has the
authority and responsibility for the administration of school trust lands under sections
92.121 and 127A.31. The deleted text begin commissioner deleted text end new text begin director new text end shall biannually report to the Permanent
School Fund Advisory Committee and the legislature on the management of the school
trust lands that shows how the deleted text begin commissioner deleted text end new text begin director new text end has and will continue to achieve
the following goals:

(1) manage the school trust lands efficiently;

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

(3) manage the sale, exchange, and commercial leasing of school trust lands 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; and

(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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 4.

Minnesota Statutes 2010, section 84.085, subdivision 1, is amended to read:

Subdivision 1.

Authority.

(a) The commissioner of natural resources may accept for
and on behalf of the state any gift, bequest, devise, or grants of lands or interest in lands or
personal property of any kind or of money tendered to the state for any purpose pertaining
to the activities of the department or any of its divisions. Any money so received is hereby
appropriated and dedicated for the purpose for which it is granted. Lands and interests in
lands so received may be sold or exchanged as provided in chapter 94.

(b) When the commissioner of natural resources accepts lands or interests in land,
the commissioner may reimburse the donor for costs incurred to obtain an appraisal needed
for tax reporting purposes. If the state pays the donor for a portion of the value of the
lands or interests in lands that are donated, the reimbursement for appraisal costs shall not
exceed $1,500. If the donor receives no payment from the state for the lands or interests in
lands that are donated, the reimbursement for appraisal costs shall not exceed $5,000.

(c) The commissioner of natural resources, on behalf of the state, may accept and
use grants of money or property from the United States or other grantors for conservation
purposes not inconsistent with the laws of this state. Any money or property so received
is hereby appropriated and dedicated for the purposes for which it is granted, and shall
be expended or used solely for such purposes in accordance with the federal laws and
regulations pertaining thereto, subject to applicable state laws and rules as to manner
of expenditure or use providing that the commissioner may make subgrants of any
money received to other agencies, units of local government, private individuals, private
organizations, and private nonprofit corporations. Appropriate funds and accounts shall
be maintained by the commissioner of management and budget to secure compliance
with this section.

deleted text begin (d) The commissioner may accept for and on behalf of the permanent school fund a
donation of lands, interest in lands, or improvements on lands. A donation so received
shall become state property, be classified as school trust land as defined in section 92.025,
and be managed consistent with section 127A.31. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 5.

Minnesota Statutes 2010, section 92.12, subdivision 1, is amended to read:

Subdivision 1.

Appraisers.

new text begin The director of the Permanent School Trust Lands
Administration may have any school trust land appraised. new text end The commissioner may
have any deleted text begin school trust or deleted text end other state lands appraised. The appraisals must be made by
regularly appointed and qualified state appraisers. To be qualified, an appraiser must
hold a state appraiser license issued by the Department of Commerce. The appraisal
must be in conformity with the Uniform Standards of Professional Appraisal Practice of
the Appraisal Foundation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 6.

Minnesota Statutes 2010, section 92.121, is amended to read:

92.121 PERMANENT SCHOOL FUND LANDS.

The new text begin director of the Permanent School Trust Lands Administration and the new text end
commissioner of natural resources shall exchange permanent school fund land as defined
in the Minnesota Constitution, article XI, section 8, located in state parks, state recreation
areas, wildlife management areas, scientific and natural areas, or state waysides or on lands
managed by the commissioner as old growth stands, for other lands as allowed by the
Minnesota Constitution, article XI, section 10, and section 94.343, subdivision 1, that are
compatible with the goal of the permanent school fund lands in section 127A.31 when, as a
result of management practices applied to the permanent school fund lands and associated
resources, revenue generation has been diminished or is prohibited and no alternative has
been put into effect to compensate the permanent school fund for the income losses.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 7.

Minnesota Statutes 2010, section 92.13, is amended to read:

92.13 STATE LANDS, DATE OF SALE.

The commissioner shall hold public sales of deleted text begin school and other deleted text end state lands new text begin other than
school trust lands new text end when it is advantageous to the state and to intending buyers and settlers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 8.

Minnesota Statutes 2010, section 93.2236, is amended to read:

93.2236 MINERALS MANAGEMENT ACCOUNT.

(a) The minerals management account is created as an account in the natural
resources fund. Interest earned on money in the account accrues to the account. Money in
the account may be spent or distributed only as provided in paragraphs (b) and (c).

(b) If the balance in the minerals management account exceeds $3,000,000 on June
30, the amount exceeding $3,000,000 must be distributed to the permanent school fund
and the permanent university fund. The amount distributed to each fund must be in the
same proportion as the total mineral lease revenue received in the previous biennium
from school trust lands and university lands.

(c) Subject to appropriation by the legislature, new text begin and approval by the director of the
Permanent School Trust Lands Administration, new text end money in the minerals management
account may be spent by the commissioner of natural resources for mineral resource
management and projects to enhance future mineral income and promote new mineral
resource opportunities.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 9.

Minnesota Statutes 2010, section 94.342, subdivision 5, is amended to read:

Subd. 5.

Additional restrictions on school trust land.

School trust land may
be exchanged with other Class A land only if the deleted text begin Permanent School Fund Advisory
Committee is appointed as temporary deleted text end new text begin Board of Trustees of the Permanent School Trust
Lands Administration is serving as new text end trustee of the school trust land for purposes of the
exchange. The deleted text begin committee deleted text end new text begin board new text end shall provide independent legal counsel to review the
exchanges.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 10.

new text begin [128E.01] CITATION; PERMANENT SCHOOL TRUST LANDS
ADMINISTRATION ACT.
new text end

new text begin This chapter may be cited as the Permanent School Trust Lands Administration Act.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 11.

new text begin [128E.02] POLICY AND PURPOSE.
new text end

new text begin (a) The purpose of this chapter is to establish an administration and board to manage
Minnesota's school trust lands in accordance with the provisions of the Minnesota
Constitution, article XI, section 8.
new text end

new text begin (b) As trustee, the state must manage the lands and revenues generated from the
lands in the most prudent and profitable manner possible, and not for any purpose
inconsistent with the best interests of the trust beneficiaries as defined in the Minnesota
Constitution, article XI, section 8.
new text end

new text begin (c) The trustee must be concerned with both income for the current beneficiaries
and the preservation of trust assets for future beneficiaries, which requires a balancing of
short-term and long-term interests so that long-term benefits are not lost in an effort to
maximize short-term gains.
new text end

new text begin (d) This chapter shall be liberally construed to enable the board of trustees, the
director, and the administration to faithfully fulfill the state's obligations to the trust
beneficiaries.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 12.

new text begin [128E.03] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Administration. new text end

new text begin "Administration" means the Permanent School
Trust Lands Administration.
new text end

new text begin Subd. 2. new text end

new text begin Board. new text end

new text begin "Board" or "board of trustees" means the Permanent School Trust
Lands Board of Trustees.
new text end

new text begin Subd. 3. new text end

new text begin Director. new text end

new text begin "Director" or "director of the Permanent School Trust Lands
Administration" means the chief executive officer of the Permanent School Trust Lands
Administration.
new text end

new text begin Subd. 4. new text end

new text begin School trust land. new text end

new text begin "School trust land" means land granted by the United
States for use of schools within each township, swampland granted to the state, and
internal improvement land that are reserved for permanent school fund purposes under the
Minnesota Constitution, article XI, section 8, and land exchanged, purchased, or granted
for the benefit of the permanent school fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 13.

new text begin [128E.04] GOVERNANCE.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The Permanent School Trust Lands Administration
is established. The administration is an independent state agency and not a division of
any other department and is not subject to section 16B.37.
new text end

new text begin Subd. 2. new text end

new text begin Management. new text end

new text begin The Permanent School Trust Lands Administration shall
manage all school trust lands within the state. The administration is managed by a director
appointed by a majority vote of the board of trustees. The board of trustees shall provide
policies for the management of the administration and for the management of trust lands
and assets.
new text end

new text begin Subd. 3. new text end

new text begin Joint ventures. new text end

new text begin The Permanent School Trust Lands Administration, upon
approval of the board of trustees, may enter into joint ventures to develop trust lands
and minerals.
new text end

new text begin Subd. 4. new text end

new text begin Board of trustees membership; nomination list; qualifications; terms;
replacement; chair. new text end

new text begin (a) There is established the Permanent School Trust Lands Board of
Trustees.
new text end

new text begin (b) The board shall consist of seven members appointed by the governor with the
consent of the senate for six-year terms. Of the initial appointments to the board, the
governor shall appoint one member to serve a six-year term, one member to serve a
five-year term, one member to serve a four-year term, one member to serve a three-year
term, one member to serve a two-year term, and one member to serve a one-year term. All
subsequent appointments shall be for a term of six years, except that if a vacancy occurs,
the governor shall appoint a replacement to fill the unexpired term.
new text end

new text begin (c) The governor shall select six of the seven appointees to the board from a
nomination list of at least two candidates for each position or vacancy submitted according
to subdivision 5. The governor may request an additional nomination list of at least two
candidates from the nominating committee if the initial list of candidates for a given
position is unacceptable.
new text end

new text begin (d) The governor may appoint one member without requiring a nomination list. This
member serves a six-year term, but may be removed at the pleasure of the governor. The
initial member appointed under this paragraph serves a six-year term.
new text end

new text begin (e) Each board member must possess outstanding professional qualifications
pertinent to the purposes and activities of the trust. Qualifications which are pertinent
include: renewable and nonrenewable resource management or development, real estate,
business, finance, trust administration, asset management, and the practice of law in the
areas of natural resources or real estate.
new text end

new text begin (f) The board of trustees shall select a chair from its membership. The governor or
five board members may, for cause, remove a member of the board.
new text end

new text begin (h) Compensation and reimbursement of expenses for members of the board of
trustees is as provided in section 15.0575.
new text end

new text begin (i) Board members are "public officials" for purposes of chapter 10A.
new text end

new text begin Subd. 5. new text end

new text begin Board of trustees nominating committee. new text end

new text begin The Board of Trustees
Nominating Committee consists of 12 members. Six members must be appointed by the
Subcommittee on Committees of the Committee on Rules and Administration of the
senate. Six members must be appointed by the speaker of the house. A legislator may not
be a member of the committee. Appointing authorities must attempt to appoint members
who are knowledgeable about school trust funds issues. Geographical representation
must be taken into consideration when making appointments. Membership terms,
compensation, and removal of the members are governed by section 15.0575. The
nominating committee is subject to the open meeting law under chapter 13D.
new text end

new text begin Subd. 6. new text end

new text begin Information to board. new text end

new text begin Board members shall be given access to all
administration records and personnel consistent with law and as necessary to permit
the board to accomplish its responsibilities to ensure that the administration is in full
compliance with applicable policies and law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 14.

new text begin [128E.05] POLICIES.
new text end

new text begin Subdivision 1. new text end

new text begin Management. new text end

new text begin The board shall establish policies for the management
of the Permanent School Trust Lands Administration. The policies shall:
new text end

new text begin (1) be consistent with the Minnesota Constitution and state law;
new text end

new text begin (2) reflect undivided loyalty to the beneficiaries consistent with fiduciary duties;
new text end

new text begin (3) require the return of not less than fair market value for the use, sale, or exchange
of school trust assets;
new text end

new text begin (4) seek to optimize trust land revenues and increase the value of trust land holdings
consistent with the balancing of short-term and long-term interests, so that long-term
benefits are not lost in an effort to maximize short-term gains; and
new text end

new text begin (5) maintain the integrity of the trust and prevent the misapplication of its lands
and its revenues.
new text end

new text begin Subd. 2. new text end

new text begin Duties. new text end

new text begin The board and the director shall recommend to the governor and
the legislature any necessary or desirable changes in statutes relating to the trust or their
trust responsibilities. The board shall develop policies for the long-term benefit of the trust
utilizing the broad discretion and power granted to it in this chapter. The board is subject
to the open meeting law under chapter 13D.
new text end

new text begin Subd. 3. new text end

new text begin Policies continued unless changed. new text end

new text begin Policies adopted by the Department
of Natural Resources prior to the effective date of this act regarding school trust lands
shall remain in effect until amended or repealed by the board. The administration shall be
the named party in substitution of the Department of Natural Resources or its predecessor
agencies with respect to all documents affecting trust lands from the effective date of
this act.
new text end

new text begin Subd. 4. new text end

new text begin Accept land and property. new text end

new text begin The board may accept for and on behalf of the
permanent school fund a donation of lands, interest in lands, or improvements on lands.
A donation so received shall become state property, be classified as school trust land as
defined in section 92.025, and be managed consistent with section 127A.31.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 15.

new text begin [128E.06] DIRECTOR.
new text end

new text begin Subdivision 1. new text end

new text begin Term. new text end

new text begin The board shall select the director on the basis of outstanding
professional qualifications pertinent to the purposes and activities of the trust. The director
serves in the unclassified service at the pleasure of the board.
new text end

new text begin Subd. 2. new text end

new text begin Compensation. new text end

new text begin The board shall establish the compensation of the director
and annually report the director's compensation to the legislature. The compensation and
performance of the director shall be examined each year as part of the board's budget
review process. The director's compensation is subject to approval under section 3.855.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 16.

new text begin [128E.07] RESPONSIBILITIES OF DIRECTOR.
new text end

new text begin Subdivision 1. new text end

new text begin Duties and budget review. new text end

new text begin In carrying out the policies of the board
of trustees and in establishing procedures and rules, the director shall:
new text end

new text begin (1) take an oath of office before assuming any duties as the director;
new text end

new text begin (2) adopt procedures necessary for the proper administration of matters entrusted to
the director by state law and board policy;
new text end

new text begin (3) faithfully manage the administration under the policies established by the board;
new text end

new text begin (4) submit to the board and for public inspection an annual management budget
and financial plan for operations of the administration and, after approval by the board,
submit the budget to the governor;
new text end

new text begin (5) direct and control the budget expenditures as finally authorized and appropriated;
new text end

new text begin (6) establish job descriptions and employ, within the limitation of the budget, staff
necessary to accomplish the purposes of the office;
new text end

new text begin (7) maintain appropriate records of trust activities to enable the legislative auditor to
conduct periodic audits of trust activities;
new text end

new text begin (8) provide that all leases, contracts, and agreements be submitted to legal counsel
for review of compliance with applicable law and fiduciary duties prior to execution and
utilize the services of the attorney general as provided in section 128E.08;
new text end

new text begin (9) keep the board, beneficiaries, governor, legislature, and the public informed
about the work of the director and administration by reporting to the board in a public
meeting at least once during each calendar quarter; and
new text end

new text begin (10) respond in writing within a reasonable time to a request by the board for
responses to questions on policies and practices affecting the management of the trust.
new text end

new text begin Subd. 2. new text end

new text begin Additional responsibilities. new text end

new text begin The director may:
new text end

new text begin (1) contract with other public agencies for personnel management services; and
new text end

new text begin (2) with the approval of the board, enter into joint ventures and other business
arrangements consistent with the purposes of the trust.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 17.

new text begin [128E.08] ATTORNEY GENERAL; CAUSE OF ACTION.
new text end

new text begin (a) The attorney general shall: represent the board, director, or administration in
any legal action relating to trust lands; review leases, contracts, and agreements submitted
for review prior to execution; and undertake suits for the collection of royalties, rental,
and other damages in the name of the state.
new text end

new text begin (b) The attorney general may institute actions against any party to enforce this
chapter or to protect the interests of the trust beneficiaries.
new text end

new text begin (c) The trust beneficiaries specified in the Minnesota Constitution, article XI, section
8, may bring an action against the board of trustees to ensure that the board of trustees
faithfully fulfills the board's obligations to the trust beneficiaries.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 18.

new text begin [128E.09] LAND EXCHANGE.
new text end

new text begin The director of the Permanent School Trust Lands Administration may enter into
land exchange agreements with the commissioner of natural resources according to the
provisions of section 92.121.
new text end

Sec. 19.

new text begin [128E.10] FOREST AND MINERALS MANAGEMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Control. new text end

new text begin All forest and minerals management on school trust lands
is vested with the board of the Permanent School Trust Lands Administration according
to the provisions of this chapter.
new text end

new text begin Subd. 2. new text end

new text begin May contract. new text end

new text begin The administration may contract with any public or
private entity to make improvements to or upon trust lands and to carry out any of the
responsibilities of the office, so long as the contract requires strict adherence to trust
management principles and applicable law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 20. new text begin TRANSFER OF STAFF AND ASSETS AND BUDGET
RESPONSIBILITY.
new text end

new text begin Unless otherwise provided by statute, the responsibilities of the Department of
Natural Resources and any other state agency with respect to the permanent school fund
lands are transferred to the Permanent School Trust Lands Administration effective July
1, 2013.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end