SF 1889

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 03/22/2012 10:36am

A bill for an act
relating to the permanent school fund; changing the Permanent School Fund
Advisory Committee into a legislative commission; providing for an advisor
for school trust lands; amending Minnesota Statutes 2010, sections 15A.0815,
subdivision 3; 16A.06, subdivision 11; 16A.125, subdivision 5; 84.027,
subdivision 18; 94.342, subdivision 5; 127A.30; proposing coding for new law
in Minnesota Statutes, chapter 127A.

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

Section 1.

Minnesota Statutes 2010, section 15A.0815, subdivision 3, is amended to
read:

Subd. 3.

Group II salary limits.

The salaries for positions in this subdivision may
not exceed 85 percent of the salary of the governor:

Executive director of Gambling Control Board;

Commissioner, Iron Range Resources and Rehabilitation Board;

Commissioner, Bureau of Mediation Services;

Ombudsman for Mental Health and Developmental Disabilities;

Chair, Metropolitan Council;

new text begin School trust lands advisor;
new text end

Executive director of pari-mutuel racing; and

Commissioner, Public Utilities Commission.

Sec. 2.

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 Legislative-Citizen new text end Permanent School Fund deleted text begin Advisory Committee deleted text end new text begin
Commission, 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.

Sec. 3.

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 deleted text begin protection, deleted text end
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. new text begin After presentation to the
Legislative-Citizen Permanent School Fund Commission, new text end the commissioner of natural
resources shall supply the commissioner of management and budget with the information
needed for the certificate. new text begin The certificate shall include an analysis that compares costs
certified under this section with costs incurred on other public and private lands with
similar land assets.
new text end

(d) After a fiscal year, the commissioner shall distribute the receipts credited to the
suspense account during that fiscal year as follows:

(1) the amount of the certified costs incurred by the state 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;

(2) the balance of the certified costs incurred by the state 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. 4.

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

Subd. 18.

Permanent school fund authority; reporting.

new text begin (a) new text end The commissioner of
natural resources has the authority and responsibility for the administration of school trust
lands under sections 92.121 and 127A.31. The commissioner shall biannually report to the
deleted text begin Permanent School Fund Advisory Committee deleted text end new text begin Legislative-Citizen Permanent School Fund
Commission new text end 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:

(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 (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, 2016, the permanent school fund shall be
compensated for all school trust lands included under a designation or policy provision
that prohibits long-term economic return. Any uncompensated designation or policy
provision restrictions on the long-term economic return on school trust lands is removed
on July 1, 2016, and the lands shall be managed for long-term economic return to the
permanent school fund.
new text end

new text begin (c) The first 2013 report required under paragraph (a) shall 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 shall 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) shall include a status
report of the commissioner's progress in maximizing the long-term economic return on
lands identified in the first 2013 report.
new text end

new text begin (d) When future designations or policies prohibit the long-term economic return on
school trust land, the conflict shall be resolved by compensating the permanent school
fund though an exchange or purchase of the lands before designation or application of
the policy.
new text end

Sec. 5.

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 deleted text end new text begin Legislative-Citizen Permanent School Fund Commission new text end is appointed as
temporary trustee of the school trust land for purposes of the exchange. The deleted text begin committee deleted text end
new text begin commission new text end shall provide independent legal counsel to review the exchanges.

Sec. 6.

Minnesota Statutes 2010, section 127A.30, is amended to read:

127A.30 new text begin LEGISLATIVE-CITIZEN new text end PERMANENT SCHOOL FUND
deleted text begin ADVISORY COMMITTEE deleted text end new text begin COMMISSION new text end .

Subdivision 1.

new text begin Commission established; new text end membership.

deleted text begin A state deleted text end new text begin (a) The
Legislative-Citizen new text end Permanent School Fund deleted text begin Advisory Committee deleted text end new text begin Commission of 16
members new text end is established deleted text begin to advise the Department of Natural Resources on the management
of permanent school fund land, which is held in trust for the school districts of the state deleted text end new text begin
in the legislative branch new text end . The deleted text begin advisory committee must consist deleted text end new text begin commission consists new text end
of the following persons deleted text begin or their designees deleted text end : deleted text begin the chairs of the education committees of
the legislature, the chairs of the legislative committees with jurisdiction over the K-12
education budget, the chairs of the legislative committees with jurisdiction over the
environment and natural resources policy and budget, the chair of the senate Committee
on Finance and the chair of the house of representatives Committee on Ways and Means,
the commissioner of education, one superintendent from a nonmetropolitan district, one
superintendent from a metropolitan area district, one person with an expertise in forestry,
one person with an expertise in minerals and mining, one person with an expertise in
real estate development, one person with an expertise in renewable energy, one person
with an expertise in finance and land management, and one person with an expertise in
natural resource conservation. The school district superintendents shall be appointed
by the commissioner of education. The committee members with areas of expertise in
forestry, minerals and mining, real estate development, renewable energy, finance and land
management, and natural resource conservation shall be appointed by the commissioner of
natural resources. Members of the legislature shall be given the opportunity to recommend
candidates for vacancies on the committee to the commissioners of education and natural
resources. The advisory committee must also include a nonvoting member appointed
by the commissioner of natural resources. The commissioner of natural resources shall
provide administrative support to the committee. The members of the committee shall
serve without compensation. The members of the Permanent School Fund Advisory
Committee shall elect their chair and are bound by the provisions of sections 43A.38 and
116P.09, subdivision 6.
deleted text end

new text begin (1) two public members appointed by the senate Subcommittee on Committees of
the Committee on Rules and Administration;
new text end

new text begin (2) two public members appointed by the speaker of the house;
new text end

new text begin (3) four public members appointed by the governor;
new text end

new text begin (4) four members of the senate, including two members from the minority party,
appointed by the senate Subcommittee on Committees of the Committee on Rules and
Administration; and
new text end

new text begin (5) four members of the house of representatives, including two members from the
minority party, appointed by the speaker of the house.
new text end

new text begin (b) Members appointed under paragraph (a) must not be registered lobbyists. The
governor's appointments to the commission are subject to the advice and consent of the
senate.
new text end

new text begin (c) Public members appointed under paragraph (a) shall have practical experience or
expertise or demonstrated knowledge in renewable or nonrenewable resource management
or development, real estate, business, finance, trust administration, asset management, or
the practice of law in the areas of natural resources or real estate.
new text end

new text begin (d) Public members serve four-year terms. Appointed legislative members serve
at the pleasure of the appointing authority. Public and legislative members continue to
serve until their successors are appointed. Public members shall be initially appointed
according to the following schedule of terms:
new text end

new text begin (1) two public members appointed by the governor for a term ending the first
Monday in January 2015;
new text end

new text begin (2) one public member appointed by the senate Subcommittee on Committees of the
Committee on Rules and Administration for a term ending the first Monday in January
2015;
new text end

new text begin (3) one public member appointed by the speaker of the house for a term ending
the first Monday in January 2015;
new text end

new text begin (4) two public members appointed by the governor for a term ending the first
Monday in January 2017;
new text end

new text begin (5) one public member appointed by the senate Subcommittee on Committees of the
Committee on Rules and Administration for a term ending the first Monday in January
2017; and
new text end

new text begin (6) one public member appointed by the speaker of the house for a term ending
the first Monday in January 2017.
new text end

new text begin (e) Terms, compensation, and removal of public members are as provided in section
15.0575. A vacancy on the commission may be filled by the appointing authority for the
remainder of the unexpired term.
new text end

new text begin (f) The first meeting of the commission shall be convened by the chair of the
Legislative Coordinating Commission no later than December 1, 2014. Members shall
elect a chair, vice-chair, secretary, and other officers as determined by the commission. The
chair may convene meetings as necessary to conduct the duties prescribed by this section.
new text end

new text begin (g) The school trust lands advisor shall provide staffing for the commission.
new text end

Subd. 2.

Duties.

The deleted text begin advisory committee deleted text end new text begin commission new text end shall review deleted text begin the policies of
the Department of Natural Resources and deleted text end current statutes on management of school trust
fund lands at least annually and shall recommend necessary changes in statutes, policy,
and implementation in order to ensure provident utilization of the permanent school fund
lands. By January 15 of each year, the deleted text begin advisory committee deleted text end new text begin commission new text end shall submit
a report to the legislature with recommendations for the management of school trust
lands to secure long-term economic return for the permanent school fund, consistent with
sections 92.121 and 127A.31. The deleted text begin committee's deleted text end new text begin commission's new text end annual report may include
recommendations to:

(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; deleted text begin and
deleted text end

(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 ; and
new text end

new text begin (5) manage the asset allocation of the permanent school fund new text end .

deleted text begin Subd. 3. deleted text end

deleted text begin Duration. deleted text end

deleted text begin Notwithstanding section 15.059, subdivision 5, the advisory
committee is permanent and does not expire.
deleted text end

new text begin Subd. 4. new text end

new text begin Conflict of interest. new text end

new text begin (a) A commission member may not be an advocate
for or against a commission action or vote on any action that may be a conflict of interest.
A conflict of interest must be disclosed as soon as it is discovered. The commission shall
follow the policies and requirements related to conflicts of interest developed by the Office
of Grants Management under section 16B.98.
new text end

new text begin (b) For the purposes of this section, a "conflict of interest" exists when a person
has an organizational conflict of interest or direct financial interests and those interests
present the appearance that it will be difficult for the person to impartially fulfill the
person's duty. An "organizational conflict of interest" exists when a person has an
affiliation with an organization that is subject to commission activities, which presents
the appearance of a conflict between organizational interests and commission member
duties. An "organizational conflict of interest" does not exist if the person's only affiliation
with an organization is being a member of the organization.
new text end

new text begin Subd. 5. new text end

new text begin Open meetings. new text end

new text begin (a) Meetings of the commission and other groups the
commission may establish are subject to section 3.055. Except where prohibited by
law, the commission shall establish additional processes to broaden public involvement
in all aspects of its deliberations, including recording meetings, video conferencing,
and publishing minutes. For the purposes of this subdivision, a meeting occurs when a
quorum is present and the members take action on any matter relating to the duties of the
commission. The quorum requirement for the commission shall be seven members.
new text end

new text begin (b) For legislative members of the commission, enforcement of this subdivision is
governed by section 3.055, subdivision 2. For nonlegislative members of the commission,
enforcement of this subdivision is governed by section 13D.06, subdivisions 1 and 2.
new text end

Sec. 7.

new text begin [127A.3014] POLICIES.
new text end

new text begin Subdivision 1. new text end

new text begin Management. new text end

new text begin The Legislative-Citizen Permanent School Fund
Commission shall recommend policies for the school trust lands advisor and the
commissioner of natural resources. 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 commissioner of natural resources and the school trust lands
advisor shall recommend to the governor and the legislature any necessary or desirable
changes in statutes relating to the trust or their trust responsibilities.
new text end

Sec. 8.

new text begin [127A.3015] SCHOOL TRUST LANDS ADVISOR.
new text end

new text begin Subdivision 1. new text end

new text begin Appointment. new text end

new text begin The school trust lands advisor shall be appointed by
the governor. The commissioner of management and budget shall provide office space
for the advisor. The commissioner shall provide human resources, payroll, accounting,
procurement, and other similar administrative services to the advisor. The advisor's
appointment is subject to the advice and consent of the senate.
new text end

new text begin Subd. 2. new text end

new text begin Qualifications. new text end

new text begin The governor shall select the advisor on the basis of
outstanding professional qualifications and knowledge of finance, business practices,
minerals, forest and real estate management, and the fiduciary responsibilities of the
trustee to the beneficiaries of the trust. The advisor serves in the unclassified service.
new text end

new text begin Subd. 3. new text end

new text begin Compensation. new text end

new text begin Compensation of the advisor shall be established under
chapter 15A.
new text end

new text begin Subd. 4. new text end

new text begin Duties. new text end

new text begin The school trust lands advisor shall advise the governor,
commissioners of natural resources and management and budget, and the
Legislative-Citizen Permanent School Fund Commission on the management of school
trust lands, including:
new text end

new text begin (1) Department of Natural Resources management plans;
new text end

new text begin (2) leases;
new text end

new text begin (3) royalty agreements;
new text end

new text begin (4) land sales and exchanges;
new text end

new text begin (5) cost certifications; and
new text end

new text begin (6) revenue generation opportunities.
new text end

new text begin Subd. 5. new text end

new text begin Cost certification. new text end

new text begin The costs of the school trust lands advisor and the
Legislative-Citizen Permanent School Fund Commission shall be certified under section
16A.125.
new text end