The Trust That Helped Build Minnesota Classrooms
Minnesota's Permanent School Fund isn't simply an education trust—it's proof that responsible resource development, smart investing, and public education have worked hand in hand for generations.
Big Picture
Politics often rewards promises about what government will do next. But sometimes the better political argument is reminding voters what has quietly worked for generations.
This November, Minnesotans will vote on a constitutional amendment modernizing the state’s Permanent School Fund—a proposal that has largely flown under the political radar despite affecting every public school district in the state.
At first glance, the referendum appears highly technical. It asks voters whether Minnesota should modernize how earnings from the state’s $2.3 billion Permanent School Fund are distributed to public schools by adopting a contemporary “total return” investment model rather than relying primarily on interest and dividends.
But hidden beneath the constitutional language is one of Minnesota’s most remarkable—and least appreciated—stories.
For more than a century and a half, Minnesota has taken wealth generated from its forests, minerals and public lands, invested it instead of spending it, and used those investments to help educate generations of Minnesota children.
That isn’t just smart public finance. It’s Minnesota’s social compact in action.
And politically, it gives Democrats an opportunity to tell a story they too often leave untold: one where miners, loggers, educators, conservationists and parents are all part of the same success story.
Minnesota’s Original Investment in Its Future
When Minnesota first became a state in 1858, Congress granted the new state millions of acres of land to support public education. Rather than treating those lands as assets to be quickly sold off, Minnesota built something far more enduring.
School trust lands generated revenue through timber harvesting, iron ore mining, taconite production, mineral leases and other resource development. In turn, instead of immediately spending those proceeds, the state deposited them into a permanent trust whose principal could not be spent. The result was an education endowment that continues to grow more than 150 years later.
It is difficult to overstate how forward-thinking that decision was. Minnesota effectively decided that today’s natural resources should help educate tomorrow’s children.
Generation after generation has benefited from that decision.
The Industries That Built the Permanent School Fund
The Permanent School Fund did not materialize through financial engineering – it was built by Minnesota workers and industries. Historically, no industries have contributed more to the trust than Minnesota’s mining and forestry sectors; namely - iron ore, taconite, and timber, alongside other state-land leases.
Too often, these industries are discussed almost exclusively in terms of employment statistics, environmental permitting or regional politics. Rarely are they discussed in the terms of education policy but perhaps they should be.
Every mining royalty deposited into the trust, timber sale conducted on school trust lands, and lease signed on behalf of Minnesota students, became another investment in Minnesota classrooms. That reality deserves far greater recognition than it receives today.
And to be clear, recognizing and appreciating those contributions is not the same as arguing that every mining proposal should be immediately approved or that every environmental concern dismissed entirely. Minnesota can (and must) simultaneously maintain rigorous environmental standards while acknowledging that responsibly managed natural-resource industries have been extraordinary partners in financing public education.
Those ideas are not contradictory. In fact, the Permanent School Fund has demonstrated that they have worked together for generations.
Why a Constitutional Referendum is Needed
In today’s political environment, constitutional amendments often become ideological battlegrounds. This proposal is refreshingly different.
The amendment emerged from years of study by experts, legislators and investment professionals who concluded that the state’s investment framework should better reflect modern portfolio management. The legislation was led by State Senator Mary Kunesh (DFL-New Brighton) in the Senate and State Representative Spencer Igo (R-Wabana) in the House. Ultimately, the state legislature passed the constitutional referendum proposal and placed the question before voters with bipartisan support.
The constitutional amendment itself is less about changing the purpose of the fund than updating how it operates.
When Minnesota originally established the distribution formula, investment portfolios generated much of their returns through interest payments and stock dividends. But today’s markets work differently because a much larger share of long-term investment growth comes through appreciation in asset values rather than dividend income alone.
Under the current constitutional language, schools cannot fully benefit from that modern investment reality. As a result, the fund has grown dramatically while annual distributions have not always kept pace with its long-term performance. The proposed amendment would address that mismatch by allowing distributions based on a fixed percentage of the fund’s average market value—a model already used by many university endowments and large public trusts.
In short, the constitutional amendment doesn’t spend more of the trust – it spends the trust more strategically. The principal, as well as future generations of students, remain protected because schools simply receive a more stable and sustainable share of the investment returns that the fund is already generating.
Good public policy sometimes means creating something new. Other times, it means updating yesterday’s rules to reflect today’s realities. The Permanent School Fund constitutional amendment is a fantastic example of the latter.
The Political Opportunity Democrats Shouldn’t Waste
There is also a broader political lesson and opportunity for Democrats.
For years, Republicans have enjoyed a messaging advantage when conversations turn to mining, forestry and natural-resource development. Democrats have too frequently responded defensively—or avoided the conversation altogether.
Reforming the Permanent School Fund offers a different approach.Instead of framing natural-resource industries solely through the lens of permitting fights or environmental disputes, Democrats can tell a much richer story.
They can proudly say that Minnesota’s miners, loggers, heavy-equipment operators, engineers and countless other workers have helped finance public education for generations. They can argue that respecting and valuing those industries is entirely consistent with supporting both conservation and public education.
After all, the Permanent School Fund itself is built upon exactly that balance: responsibly managing public resources to preserve them and their value for future generations.
That message resonates far beyond northern Minnesota and the Iron Range - it speaks to organized Labor, educators, and suburban parents alike. It also speaks to rural communities that sometimes question whether state leaders and fellow Minnesotans truly appreciate the economic contributions they make to the rest of state
Perhaps most importantly, it points toward the future.
As Minnesota debates critical minerals needed for batteries, electric vehicles, housing materials, and advanced manufacturing, the state has an opportunity to write the next chapter of this story. Today’s responsible mineral and forestry development could become tomorrow’s classroom funding just as iron ore, taconite, and timber have done for previous generations.
That story is a far more compelling vision than simply arguing about individual projects one permit at a time.
Bottom Line
The Permanent School Fund reminds us that Minnesota has never had to choose between investing in education and valuing the industries that make those investments possible.
For more than 150 years, the state has transformed natural-resource wealth into lasting public opportunity—not by spending it all at once, but by managing natural assets wisely, investing the finances carefully, and sharing the returns across geography and generations.
This November’s constitutional amendment doesn’t change that mission – it modernizes it.
And in doing so, it gives Democrats an opportunity to reclaim a story that has always belonged to Minnesota: that miners and teachers, loggers and students, conservation and economic development are not opposing forces but rather partners in a uniquely Minnesotan social compact. A compact that has quietly helped educate millions of children and, if voters approve this amendment, will continue doing so for generations to come.
Democrats should proudly connect with that story and own that legacy this November.