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Whole Trust

New Component

Viewing Minnesota’s school trust as a “whole trust” is a paradigm shift for school trust land managers and trustees. The idea is simple—that the sum of all of Minnesota’s school trust assets are greater than its individual parts. It has historically been understood that the school trust consists of 2.5 million acres of united surface-mineral estate, 1 million acres of severed mineral estate and a financial asset currently valued at more than $1.6 billion. This “separate and distinct asset” limits the economic potential of a perpetual trust such as Minnesota’s school trust.

Considering the trust under a whole trust concept provides an opportunity to balance the income needs of current beneficiaries with the duty to preserve long-term economic value for future beneficiaries. This is consistent with Minnesota’s statutory goals to distribute investment dividends and interest to support current beneficiaries while preserving the ability to support future beneficiaries by securing maximum long-term economic returns through sound natural resource conservation management.

Adopting the whole trust concept could aid in balancing equities among current and future beneficiaries. All of Minnesota’s school trust assets (financial, mineral, timber, real property, etc.) must be managed in a way to recognize long-term economic returns. The whole trust concept achieves this goal by:

  • Categorizing the school trust assets based on income potential
  • Establishing long-term asset yield and return expectations from all assets
  • Evaluating the revenue opportunities for all assets across the ownership
  • Appraising the school trust assets to understand the multiple revenue streams
  • Constructing rigorous processes to safeguard against unintentionally devaluing assets
  • Implementing management plans to produce multiple revenue streams from all assets
  • Identifying inflationary expectations reflective of future beneficiary income needs
  • Strategically divesting of school trust lands to convert real property to a financial asset

Additional information and presentations of the Whole Trust concept can be found in the following publications:

Principles of State Trust Portfolio Management
Investment Management Concepts
Uniform Prudent Management of Institutional Funds Act
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