This November, Minnesota voters will decide whether to change how the state's Permanent School Fund distributes money to schools, a shift that could increase per-pupil funding by roughly 40 percent. The proposed constitutional amendment would more than double the fund's annual payout rate, from around 2 to 2.5 percent to 4.5 percent of the fund's value, according to a report published June 23, 2026, by the Center of the American Experiment. The $2.3 billion trust fund, created from land granted to Minnesota when it became a state in 1858, currently generates revenue from mining and timber production on roughly 2.5 million acres of school trust land.
Under the current system, schools receive distributions based only on the fund's interest and dividends, which typically amount to 2 to 2.5 percent of the fund's value each year. In the 2024-25 school year, the fund distributed a record $58 million to the state's 329 public school districts and 181 charter schools—about 0.4 percent of the E-12 education biennial budget. That averaged out to about $68 per student statewide, with Anoka-Hennepin, the largest district, collecting $2.6 million and Minneapolis receiving $2 million. The fund's principal can't be spent, as the Minnesota Constitution requires it remain "perpetual and inviolate forever." Annual payments fluctuate year to year because if the fund experiences realized investment losses, those losses are recovered over time through a statutory smoothing process.
The proposed amendment would change the payout formula to distribute 4.5 percent of the fund's three-year rolling average market value, rather than just interest and dividends. A legislative task force recommended that rate and averaging method, arguing it would preserve the fund's long-term purchasing power while allowing more of its investment growth to reach schools. The bill passed the House 133-0 and the Senate 43-24, carried by Rep. Spencer Igo (R) and Sen. Mary Kunesh (DFL). The ballot language states that the amendment would increase funding without raising individual income or property taxes, since the additional distributions would come from the existing trust. However, the report notes that the amendment "does not create new accountability requirements or establish a process for measuring the effectiveness of the additional dollars."
Supporters say the change is needed because the current formula limits how much of the fund's investment growth can be distributed to schools, even when the fund performs well. Opponents worry that tying the annual payout to 4.5 percent of market value could force the fund to hand out more than it actually earned during a bad market stretch, which starts to eat into principal. While the three-year average is designed to smooth out short-term market swings, the report notes it "wouldn't fully protect the fund through a multi-year downturn." How serious that risk is depends on assumptions about future market returns that nobody can know in advance. A point of disagreement during the legislative debate centered on whether future changes to the distribution rate should require a supermajority, with Sen. Robert Farnsworth (R) warning that without that guardrail, a future single-party trifecta could turn the fund into a "political bargaining chip." Conference committee stripped that provision out, meaning future legislatures could change the 4.5 percent rate through the normal legislative process with a simple majority.
The amendment would take effect July 1, 2027, if a majority of all electors voting in the November election vote "yes." A "no" vote, or leaving the ballot question blank, would keep the current constitutional formula in place. The amendment only changes how money from the fund is distributed and how much—it doesn't add new ways to measure whether the extra dollars improve student outcomes. For voters, the choice comes down to whether nearly doubling the payout rate is worth the risk that future market downturns could slowly drain a fund that's been protected for more than 150 years.