The following provisions of the Minnesota Constitution apply to school trust lands.
The permanent school fund of the state consists of (a) the proceeds of lands granted by the United States for the use of schools within each township, (b) the proceeds derived from swamp lands granted to the state, (c) all cash and investments credited to the permanent school fund and to the swamp land fund, and (d) all cash and investments credited to the internal improvement land fund and the lands therein. No portion of these lands shall be sold otherwise than at public sale, and in the manner provided by law. All funds arising from the sale or other disposition of the lands, or income accruing in any way before the sale or disposition thereof, shall be credited to the permanent school fund. Within limitations prescribed by law, the fund shall be invested to secure the maximum return consistent with the maintenance of the perpetuity of the fund. The principal of the permanent school fund shall be perpetual and inviolate forever. This does not prevent the sale of investments at less than the cost to the fund; however, all losses not offset by gains shall be repaid to the fund from the interest and dividends earned thereafter. The net interest and dividends arising from the fund shall be distributed to the different school districts of the state in a manner prescribed by law.
A board of investment consisting of the governor, the state auditor, the secretary of state, and the attorney general is constituted for the purpose of administering and directing the investment of all state funds. The board shall not permit state funds to be used for the underwriting or direct purchase of municipal securities from the issuer or the issuer's agent.
As the legislature may provide, any of the public lands of the state, including lands held in trust for any purpose, may be exchanged for any publicly or privately held lands with the unanimous approval of the governor, the attorney general and the state auditor. Lands so acquired shall be subject to the trust, if any, to which the lands exchanged therefor were subject. The state shall reserve all mineral and water power rights in lands transferred by the state.
School and other public lands of the state better adapted for the production of timber than for agriculture may be set apart as state school forests, or other state forests as the legislature may provide. The legislature may also provide for their management on forestry principles. The net revenue therefrom shall be used for the purposes for which the lands were granted to the state.
The following Minnesota statutes apply to school trust lands.
School trust lands were granted to the state pursuant to the Organic Act of 1849 and Enabling Act of 1857. Proceeds from the sale or disposition of these lands shall support public schools. Roughly 100,000 acres of mostly trust fund land is located within the Boundary Waters Canoe Area Wilderness; the state has not disposed of these lands to the United States nor ceded jurisdiction over these lands.
The attorney general shall begin and prosecute actions against all persons claiming to own any portion of the school or other public lands adversely to the state, whenever, in the attorney general's opinion, an action can be sustained, and shall cause an appearance to be entered for the state on learning of any application to preempt any such land.
All interest and profit accruing from and all losses incurred by investment activity shall be credited to or borne by the fund (including the Permanent School Fund) from which the investment was made.
The Permanent School Fund is established pursuant to article XI, section 8, of the Minnesota Constitution. Assets derived from school trust lands shall be credited to the Permanent School Fund. The Fund is to be managed by the Commissioner of Management and Budget and invested by the State Board of Investment. The Board shall calculate the investment income earned by the Permanent School Fund at the end of each fiscal year.
The State Board of Investment is authorized to invest in governmental bonds, corporate bonds and notes, corporate stocks, and various other investments.
The Commissioner of Management and Budget shall biannually report to the Legislative Permanent School Fund Commission and the legislature on the management of the Permanent School Fund.
Revenue generated from the forest trust fund lands is deposited into the Forest Suspense Account. The costs for managing trust lands are certified by the Department of Management and Budget. Allowable costs are for improvement, administration, and management of forest trust fund lands, and for improvement of forest roads to enhance the value of the lands. The general fund is reimbursed for costs incurred by the Legislative Permanent School Fund Commission and the School Trust Lands Director. The Forest Management Investment Account is reimbursed for improvements, management, and forest roads. The balance is deposited into the Permanent School Fund.
No company shall knowingly issue any policy upon property in Minnesota for an amount which, together with any existing insurance thereon, exceeds the replacement cost of the buildings and any other covered improvements on the property. Any company willfully insuring property for more than that amount shall forfeit to the state, for the benefit of the school fund, double the premium collected on the policy.
The Commissioner of Natural Resources has the authority and responsibility of administering the school trust lands, and requires the commissioner to biannually report to the Legislative Permanent School Fund Commission and the legislature on the management of school trust lands that shows how the commissioner has and will continue to achieve specific goals.
The Commissioner of Natural Resources may accept for and on behalf of the Permanent School Fund a donation of lands, interest in lands, or improvements on lands. Such land will be classified as school trust land.
The Commissioner of Natural Resources may, at public or private sale, grant licenses permitting passage over, under, or across any part of any school, university, internal improvement, swamp, tax-forfeited or other land or public water under the control of the commissioner, of telephone, telegraph, and electric power lines, cables or conduits, underground or otherwise, or mains or pipe lines for gas, liquids, or solids in suspension. Any such license shall be cancelable upon reasonable notice by the commissioner for substantial violation of its terms, or if at any time its continuance will conflict with a public use of the land or water over or upon which it is granted, or for any other cause.
Except with the prior approval of the legislature in those cases of national emergency which have been declared by the Congress, mining and peat harvesting are prohibited in the Boundary Waters Canoe Area. In the event of a national emergency declared by Congress which requires, for the protection of national interests, exploitation of natural resources of the type found in the Boundary Waters Canoe Area, the Commissioner of Natural Resources shall investigate and determine if there are reasonable alternative methods for providing the needed resources. If the investigation shows there are reasonable alternatives to exploitation of natural resources in the area, no permit for development shall be issued. If the commissioner of natural resources determines there is a need to provide resources from within the Boundary Waters Canoe Area, and that there is no reasonable alternative available to meet the need, a permit may be issued upon approval by the state legislature.
The Commissioner of Natural Resources, on behalf of the state, may convey a road easement across state land under the commissioner's jurisdiction in exchange for a road easement for access to property owned by the United States, the state of Minnesota or any of its subdivisions, or a private party. The exercise of the easement across state land must not cause significant adverse environmental or natural resources management impacts. Exchanges are limited to existing access corridors. If the commissioner conveys a road easement over school trust land to a nongovernmental entity, the term of the road easement is limited to 50 years. The easement exchanged with the state may be limited to 50 years or may be perpetual.
"State forest lands" means all land and waters owned by the state within state forests, including all lands set apart under the Constitution of the state of Minnesota, article XI, section 11, and laws enacted pursuant thereto, but excepting lands acquired by the state for other specific purposes or tax-forfeited lands held in trust for the taxing districts unless incorporated into state forests as otherwise provided by law. "Forest lands under the authority of the commissioner" means state forest lands and other forest lands managed by the commissioner outside of state forests, except for tax-forfeited lands held in trust for the taxing districts and for the following units of the outdoor recreation system as defined in section § 86A.04: state parks, state trails, state wildlife management areas, state scientific and natural areas, state water-access sites, state historic sites, state rest areas, and state wilderness areas.
The Commissioner of Natural Resources shall have power to grant and execute leases and permits for the use of any forest lands if not inconsistent with the maintenance and management of those lands, on forestry principles for timber production. After deducting the reasonable costs incurred for preparing and issuing the lease, all remaining proceeds from the leasing of school trust land for roads on forest lands must be deposited into the Permanent School Fund.
"State public lands" or "state lands" include school, swamp, university, internal improvement, and other lands granted to the state by acts of Congress.
“School trust land” means land granted by the United States for use of schools within each township, swampland granted to the state, and internal improvement land that are reserved for Permanent School Fund purposes under the Minnesota Constitution, article XI, section 8, and land exchanged, purchased, or granted to the Permanent School Fund.
The minimum sale price for school trust lands is $5.00 an acre, including the value of timber reproduction. No more than 100,000 acres of school trust lands may be sold in one year.
The Commissioner of Natural Resources may have school trust lands appraised. Valuation and appraisal requirements are laid out in subd. 2 of this section. Also, the Commissioner shall hold frequent sales of school trust and other state lands.
When the revenue generated from school trust land and associated resources is diminished by management practices applied to the land and resources as determined by the Commissioner of Natural Resources, the Commissioner must compensate the permanent school fund.
The Commissioner of Natural Resources shall hold public sales of school and other state lands when it is advantageous to the state and to intending buyers and settlers.
School trust lands cannot be sold over-the-counter after a public auction if the lands were not bought at public auction.
No new leases may be issued for state lands bordering on or adjacent to meandered lakes and other public waters for cottage or camp purposes. For leases on school trust lands, 50% of the revenues from lakeshore lease lots shall be deposited in the lakeshore leasing and sales account of the Permanent School Fund, and the remaining 50% is deposited in the Permanent School Fund. The costs of survey, appraisal, and associated costs of selling, leasing, or exchange shall be paid for out of this account.
The state may expedite the exchange of a portion of the state-owned lands located within the Boundary Waters Canoe Area Wilderness. The state owns 116,559 acres of land within the wilderness area, 86,295 acres of which are school trust land. Exchange of school trust lands within the Boundary Waters Canoe Area Wilderness for federally owned lands located outside the wilderness area will preserve the spectacular wild areas while producing economic benefits for Minnesota's public schools.
Interest in school trust lands is extinguished where long-term economic return is prohibited by designation or policy while producing economic benefits for Minnesota's public schools. When the Commissioner of Natural Resources has determined sufficient money is available to acquire any of the lands, the commissioner shall proceed to extinguish the school trust interest by condemnation action. When requested by the commissioner, the attorney general shall commence condemnation of the identified school trust lands. The portion of the payment of the award and judgment that is for the value of the land shall be deposited into the Permanent School Fund. The remainder of the award and judgment payment shall first be remitted for reimbursement to the accounts from which expenses were paid, with any remainder deposited into the Permanent School Fund.
Twenty percent of income generated from mineral leases on state-owned lands—including school trust lands—is directed to the Minerals Management Account for the administration and management of state mineral resources. If a lease covers the bed of navigable waters, payments made under the lease shall be credited to the Permanent School Fund.
When the Minerals Management Account exceeds $3 million on March 31, June 30, September 30, or December 31, the amount exceeding $3 million shall be distributed to the Permanent School Fund, the Permanent University Fund, and taxing districts in the same proportion as the total lease revenue received in the previous biennium from these three land ownership classifications. Money in the Minerals Management Account appropriated by the legislature may be spent by the Commissioner of Natural Resources for mineral resource management and projects to enhance future mineral income and promote new mineral resource opportunities.
School trust land may be exchanged with other Class A land only if the School Trust Lands Director is appointed as temporary trustee of the school trust land for purposes of the exchange. The Legislative Permanent School Fund Commission shall provide independent legal counsel to review exchanges. Class A land is all land owned by the state and controlled or administered by the commissioner or by any division of the Department of Natural Resources.
Exchanges of public land—including school trust lands— may be expedited to, among other things, reduce management costs and aid in the reduction of forest fragmentation. School trust lands must be exchanged only for lands of equal or greater value. All expedited land exchanges require the unanimous approval of the Land Exchange Board.
The Legislative Permanent School Fund Commission advises the Department of Natural Resources and the School Trust Lands Director on the management of permanent school fund land. The commission consists of six members of the Senate (three from each major party) and six members of the House of Representatives (three from each major party). The commission reviews current statutes on management of school trust fund lands at least annually and recommends necessary changes in statutes, policy, and implementation in order to ensure provident utilization of the permanent school fund lands. By January 15 of each year, the commission submits a report to the legislature with recommendations for the management of school trust lands to secure long-term economic return for the Permanent School Fund.
The goal of the Permanent School Fund is to “secure the maximum long-term economic return from the school trust lands consistent with the fiduciary responsibilities imposed by the trust relationship established in the Minnesota Constitution, with sound natural resource conservation and management principles, and with other specific policy provided in state law.”
A school endowment fund consists of income from the Permanent School Fund. The Commissioner of Education is allowed to accept gifts of cash, marketable securities, or other personal property for the permanent school fund.
The Commissioner of Education shall apportion the school endowment fund semiannually (in March and September) in proportion to the number of pupils in average daily membership in each school district during the preceding year.
The School Trust Lands Director recommends management policies for Minnesota's school trust lands. As trustee, the state must manage the lands and revenues generated from the lands consistent with the best interests of the trust beneficiaries. When it is in the best interest of the school trust lands, ecological benefits shall be taken into consideration. The trustee must be concerned with both income for the current beneficiaries and the preservation of trust assets for future beneficiaries, which requires a balancing of short-term and long-term interests so that long-term benefits are not lost in an effort to maximize short-term gains.
The Legislative Permanent School Fund Commission shall recommend policies for the school trust lands director and The Commissioner of Natural Resources that are consistent with the Minnesota Constitution and state law. The commissioner and the School Trust Lands Director shall recommend to the governor and the Legislative Permanent School Fund Commission any necessary or desirable changes in statutes relating to the trust or their trust responsibilities. If the School Trust Lands Director has an irreconcilable disagreement with the Commissioner of Natural Resources pertaining to the fiduciary responsibilities consistent with the school trust lands, it is the duty of the director to report the subject of the disagreement to the Legislative Permanent School Fund Commission and the governor.
The School Trust Lands Director shall be appointed by the governor. The Commissioner of Education shall provide human resources, payroll, accounting, procurement, and other similar administrative services to the director. The director's appointment is subject to the advice and consent of the senate. The governor shall select the director on the basis of outstanding professional qualifications and knowledge of finance, business practices, minerals, forest and real estate management, and the fiduciary responsibilities of a trustee to the beneficiaries of a trust. The director serves for a term of four years. If a director resigns or is removed for cause, the governor shall appoint a director for the remainder of the term. The director’s duties and powers are laid out in subd. 4 of this section.
A tax imposed on each deed or instrument by which any real property in Minnesota is granted, assigned, transferred, or otherwise conveyed does not apply to a deed or other instrument of conveyance issued pursuant to a permanent school fund land exchange.
The State Board of Investment may purchase bonds for the Permanent School Fund.