1.1 	A bill for an act
1.2 	relating to education finance; clarifying the interest payments on the permanent 
1.3 	school fund;amending Minnesota Statutes 2010, section 11A.16, subdivision 5.
1.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5 	Section 1. Minnesota Statutes 2010, section 11A.16, subdivision 5, is amended to read:
1.6 		Subd. 5.Calculation of income. As of the end of each fiscal year, the state 
1.7 	board shall calculate the investment income earned by the permanent school fund. The 
1.8 	investment income earned by the fund shall equal the amount of interest on debt securities 
1.9 	and,  dividends on equity securities, and interest earned on certified monthly earnings prior 
1.10 	to the transfer to the Department of Education. Gains and losses arising from the sale of 
1.11 	securities shall be apportioned as follows:
1.12 	(a) If the sale of securities results in a net gain during a fiscal year, the gain shall 
1.13 	be apportioned in equal installments over the next ten fiscal years to offset net losses in 
1.14 	those years. If any portion of an installment is not needed to recover subsequent losses 
1.15 	identified in paragraph (b) it shall be added to the principal of the fund.
1.16 	(b) If the sale of securities results in a net loss during a fiscal year, the net loss shall 
1.17 	be recovered first from the gains in paragraph (a) apportioned to that fiscal year. If these 
1.18 	gains are insufficient, any remaining net loss shall be recovered from interest and dividend 
1.19 	income in equal installments over the following ten fiscal years.

1.20 	EFFECTIVE DATE. This section is effective the day following final enactment.