Minnesota Amendment 1 and the permanent school fund

Today the constitution says “the net interest and dividends arising from the fund shall be distributed to the different school districts of the state,” and that the principal is “perpetual and inviolate forever.”Minnesota Revisor of Statutes

As amended, the fund would be “managed as a perpetual financial resource” designed “to provide annual distributions while preserving the purchasing power of the fund over time and balancing the needs of current and future beneficiaries.” Reasonable administrative costs could be paid from the fund, and “the distribution policy shall be prescribed by law.”Minnesota Revisor of Statutes

Some things stay the same. The fund still holds the proceeds of the school trust lands, and the State Board of Investment, made up of the governor, state auditor, secretary of state, and attorney general, still invests it. Distributions are still apportioned to school districts in a manner set by law.Minnesota Revisor of Statutes

Chapter 114 also amends Minn. Stat. § 11A.16 so that the amount distributed each year “shall equal 4.5 percent of the average net asset value of the permanent school fund as of the end of the preceding three fiscal years.” That change takes effect July 1, 2027, for aid payable in fiscal year 2028, only if voters adopt the amendment.Minnesota Revisor of Statutes

Because the rate is in statute rather than the constitution, a future Legislature could change it within the new constitutional standard.Minnesota Revisor of Statutes

The Minnesota School Boards Association and allied groups, which support the amendment, describe the current payout as a “2-2.5% annual distribution.”Minnesota School Boards Association with AMSD, MASA, and MREA

The supporting groups say the fund grew from $675 million in 2010 to $2.3 billion in 2025, that the current payout averages about $68 per pupil, and that it would be about $81 per pupil under the amendment. Actual distributions would depend on the fund's performance.Minnesota School Boards Association with AMSD, MASA, and MREAISD 728

Distributions go to every public school district, charter school, and tribal school on a per-pupil basis.ISD 728Minnesota Revisor of Statutes

“Shall the Minnesota Constitution be amended to increase the funding going to all school districts from the permanent school fund, which is a fund that supports school districts without raising individual income or property taxes, effective July 1, 2027?”Laws 2026, ch. 114, sec. 2

The Legislature proposed the amendment in Laws 2026, chapter 114 (H.F. 3900). The governor signed it May 26, 2026. Constitutional amendments go to voters regardless of a signature.Minnesota Revisor of Statutes

A constitutional amendment is ratified only if a majority of all voters who cast a ballot in the election vote yes. A ballot left blank on the question counts toward that total but not toward yes.Minnesota Revisor of Statutes

Supporters

The Minnesota School Boards Association campaigns for the amendment with the Association of Metropolitan School Districts, the Minnesota Association of School Administrators, and the Minnesota Rural Education Association. The ISD 728 referendum FAQ links to their presentation.Minnesota School Boards Association with AMSD, MASA, and MREAISD 728

The Star Tribune editorial board endorsed the amendment on September 20, 2026, writing that “there is no downside to adopting this amendment.” The same editorial named “public concerns about unchecked costs” and voters' “lack of understanding that leaving the question blank on the ballot counts as a ‘no’ vote” as the two biggest barriers to its passage.Star Tribune

In the Legislature

The House passed the final bill 134 to 0 on May 16, 2026. An earlier House version passed 133 to 0 on May 4, which is why some reports give that number. The Senate passed the final bill 43 to 24 on May 16, after a motion to send it back to the conference committee failed 33 to 34.House roll callsSenate Journal

The dispute was over how easily a future Legislature could change the 4.5% rate. The only difference between the House and Senate bills was whether later changes to the distribution policy would need a two-thirds vote of both chambers. The conference committee dropped that requirement on a 7 to 1 vote, so an ordinary majority can change the rate.Session DailyAmerican Experiment

Sen. Robert Farnsworth (R-Hibbing), a Senate coauthor and conferee, argued for the two-thirds rule because he worried a future single-party government could change the payout. “I think we need to make sure that this doesn't turn into something that is used politically,” he said. Rep. Spencer Igo (R-Wabana Township), the House author, answered that a law threatening the constitutional language “would be deemed unconstitutional.” Farnsworth voted against adopting the conference report and then voted for the bill on final passage.Session DailyBill statusSenate Journal

Sen. Zach Duckworth (R-Lakeville) voted no. He said he would have liked more safeguards for the fund. “I hope that I’m wrong when I say this, but I get the sense that if this (constitutional amendment) becomes law, that this fund … is ultimately going to be doomed and not see the sort of financial health it has up to this date,” he said.Pioneer PressSenate Journal

Arguments against the amendment

At least two flyers critical of the amendment have circulated. This guide has not seen either flyer. Their points appear here as the supporting groups summarized them in their written responses.MSBA

The “Before You Vote Yes” flyer, answered in a school groups' response updated August 28, argued that the amendment drops the words “perpetual and inviolate forever,” gives future Legislatures more control over payouts, removes the rule that investment losses be repaid from future interest and dividends, newly lets the fund pay administrative costs, and pays out more now at the expense of future students.MSBA response

The “Vote No on the Minnesota Permanent School Fund Amendment” flyer, answered in a response updated September 3, argued that the amendment removes 168 years of constitutional protection, that the ballot question is misleading, that a 4.5% payout may be unsustainable, that it gives fund managers vague discretion, that it passed on a party-line vote, that schools will still need more money, and that future payouts are not guaranteed.MSBA response

The main financial argument

The central financial objection is that a fixed 4.5% payout could exceed what the fund earns. A June 23, 2026 explainer by Catrin Wigfall of the Center of the American Experiment describes both sides without endorsing either. It reports that opponents say a 4.5% payout “could leave the fund handing out more than it actually earned in a bad market stretch, which starts to eat into principal,” and that the three-year average “wouldn’t fully protect the fund through a multi-year downturn.” The explainer adds that the amendment “does not create new accountability requirements or establish a process for measuring the effectiveness of the additional dollars.”American Experiment

Supporters answer that the 4.5% rate and the three-year average came from the Legislature's 2024 task force, whose recommendation they say was unanimous, and that the amended constitution would require the fund to preserve its purchasing power.MSBA responseLaws 2026, ch. 114

If you have a copy of either flyer, please send it through the report-an-error link at the end of this page so this guide can cite it directly.

The district's figure is $391,484.79, using “an assumption of $96 of full-year earnings in the formula.” The district does not say how the $96 relates to the supporters' $81 per-pupil estimate.ISD 728

The amendment does not change the ISD 728 question on the same ballot, its bonds, or its levy. The amendment changes a statewide trust fund's payout. The ISD 728 question authorizes local property taxes. Either can pass or fail without affecting the other.Minnesota Revisor of StatutesISD 728 School Board

The Elk River schools referendum guide covers the district's own ballot question.