Committee advances constitutional amendment to change school trust fund distribution
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Summary
The Rules Committee heard a presentation from the State Board of Investment and voted to place House File 3,900 on the general register. The proposal would amend the Minnesota Constitution to allow a market‑value based distribution policy and authorize a 4.5% statutory distribution calculated on a three‑year rolling average, increasing per‑pupil distributions from about $68 to roughly $95 if enacted by voters and implemented by statute.
The Committee on Rules and Legislative Administration heard a presentation on House File 3,900, a proposed constitutional amendment to revise how Minnesota’s permanent school fund is governed and how earnings are distributed to school districts. Representative Igoe, the bill’s chief author, framed the proposal as an update to a fund established at statehood that now holds roughly $2.3 billion in assets and is meant to provide continuing education funding.
Andrew Krek, deputy director with the State Board of Investment and a member of the permanent school fund task force, told the committee the task force unanimously recommended moving the enduring principles for the fund into the constitution while leaving operational details—like a distribution policy—in statute. “We recommend adopting a 4 and a half percent distribution rate calculated based on a rolling three‑year average of the fund’s market value,” Krek said, summarizing the group’s technical modeling and comparison to peer endowments.
Krek outlined the rationale: current constitutional language limits distributions to interest and dividends and requires capital gains first be used to offset prior losses, which the task force said has constrained payouts even as the fund’s market value has grown. SBI modeling showed that a 4.5% rate on a three‑year rolling average would substantially increase near‑term distributions to districts while still allowing modest long‑term growth in many scenarios, the presentation said.
Members asked procedural and policy questions. Representative Long noted that the amendment’s proposed distribution amount would be set in statute and therefore could be revisited by a future legislature; Representative Igoe confirmed that the constitutional change would establish principles while the legislature would set the statutory distributable rate after voter approval. Committee discussion also referenced recent per‑pupil distributions: the testimony observed the last distribution was $68 per pupil and estimated that, under the proposed framework, that figure would rise to about $95 per pupil.
After the presentation and questions, Representative Igoe moved to place House File 3,900 on the general register and refer it as provided by committee rules. The motion carried by voice vote. The bill will proceed through the legislative process and, if the constitutional amendment language is approved by the Legislature, voters would decide the change at a future election before any statutory distribution takes effect.
The committee did not take a final floor‑level vote on statutory language today; the action was to place the constitutional amendment on the general register for subsequent consideration.
