In its simplest form, a trust is a legal relationship in which one party holds property for the benefit of another. There are three participants in every trust relationship: a “settlor” who establishes the trust and provides the property to be held in trust; a “trustee,” who is charged by the settlor with the responsibility of managing the trust in keeping with the settlor’s instructions; and a “beneficiary,” who receives the benefits from the property held in trust.
The Permanent School Fund was established with passage of the Minnesota Enabling Act and adoption of Minnesota’s Constitution. These actions, along with the state’s acceptance of the federal land grants, created a relationship that encompasses the essential elements of a trust. The federal government, as the “settlor”, granted lands in "trust" to the state to support public education in perpetuity. As “trustee”, the state must manage school trust financial and land assets “consistent with the best interests of trust beneficiaries” pursuant to the Minnesota constitution and state law.
Trustees owe what are known as “fiduciary duties” to the trust beneficiaries. Trusteeship is a legal responsibility, and fiduciary duties are owed by all trustees by reason of their trustee status. Any person acting in an official state capacity who makes school trust-related decisions or recommendations is a trustee, and subject to the obligations articulated in the Minnesota Constitution and state law with the fiduciary duty to ensure that both current and future beneficiaries receive maximum economic returns from school trust assets.
