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Rules committee backs constitutional amendment to increase permanent school fund distributions to 4.5%
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Summary
The committee recommended Senate File 35‑93, a constitutional amendment to modernize permanent school trust fund distributions and permit a statutory distribution policy; sponsor said experts recommended a 4.5% distribution rate and the committee voted to recommend the measure to pass.
The Senate Rules Committee on April 23 recommended passage of a proposed constitutional amendment to change how Minnesota's permanent school trust fund distributes monies to school districts.
Senator Kunish, the bill sponsor, told the committee the permanent school fund was created in 1858 and is invested in publicly traded stocks and bonds purchased with revenue from school trust lands. She said the constitution currently limits distributions to interest and dividends, which prevents realizing gains from sales; a task force reviewed options and recommended moving the detailed distribution policy to statute and setting an initial distribution rate of 4.5 percent of a multiyear average.
During questioning, committee members asked for the fund balance and details about how distributions would be allocated. Kunish cited a fiscal‑year 2025 fund value and said distributions historically averaged about 2.5 percent while growth averaged about 8 percent over the last decade. She said FY2025 balance figures provided in the hearing were $2,300,000,000. She also said the existing per‑pupil distribution currently amounts to roughly $68 per student and that a 4.5 percent distribution would approximately double that amount (she described the target as roughly $120 per student); distributions would be made twice a year in March and September. The sponsor said task‑force experts reviewed actuarial and sustainability concerns and recommended starting at 4.5 percent with the ability to adjust up or down in future years if returns change.
Senators asked whether distributions would remain a per‑pupil allocation; the sponsor said the per‑pupil allocation would remain the formula used to distribute funds to school districts. After discussion and input from staff and experts, the committee voted by voice to recommend Senate File 35‑93 to pass.
Next steps: the committee report was adopted and the bill will proceed in the legislative process for further consideration.
