School trust lands director duties modification provision, Legislative Permanent School Fund Commission required reports modifications

A bill for an act

relating to education; modifying the duties of the school trust lands director;

modifying required reports to the Legislative Permanent School Fund Commission;

requiring a report; amending Minnesota Statutes 2024, sections 84.027, subdivision

18; 127A.353, subdivision 4, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 84.027, subdivision 18, is amended to read:

Subd. 18.

Permanent school fund authority
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; reporting
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.

(a) The commissioner of

natural resources has the authority and responsibility to administer school trust lands under

sections
92.122
and
127A.31
.
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The commissioner shall biennially report to the Legislative

Permanent School Fund Commission and the legislature on the management of the school

trust lands that shows how the commissioner has and will continue to achieve the following

goals:
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(1) manage the school trust lands efficiently and in a manner that reflects the undivided

loyalty to the beneficiaries consistent with the commissioner's fiduciary duties;

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(2) reduce the management expenditures of school trust lands and maximize the revenues

deposited in the permanent school trust fund;

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(3) manage the sale, exchange, and commercial leasing of school trust lands, requiring

returns of not less than fair market value, to maximize the revenues deposited in the

permanent school trust fund and retain the value from the long-term appreciation of the

school trust lands;

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(4) manage the school trust lands to maximize the long-term economic return for the

permanent school trust fund while maintaining sound natural resource conservation and

management principles;

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(5) optimize school trust land revenues and maximize the value of the trust consistent

with balancing short-term and long-term interests, so that long-term benefits are not lost in

an effort to maximize short-term gains; and

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(6) maintain the integrity of the trust and prevent the misapplication of its lands and its

revenues.

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(b) When the commissioner finds an irresolvable conflict between maximizing the

long-term economic return and protecting natural resources and recreational values on

school trust lands, the commissioner shall give precedence to the long-term economic return

in managing school trust lands. By July 1, 2018, the permanent school fund must be

compensated for all school trust lands included under a designation or policy provision that

prohibits long-term economic return. The commissioner shall submit recommendations to

the appropriate legislative committees and divisions on methods of funding for the

compensation required under this paragraph, including recommendations for appropriations

from the general fund, nongeneral funds, and the state bond fund. Any uncompensated

designation or policy provision restrictions on the long-term economic return on school

trust lands remaining after July 1, 2018, must be compiled and submitted to the Legislative

Permanent School Fund Commission for review.

(c) By December 31, 2013, the report required under paragraph (a) must provide an

inventory and identification of all school trust lands that are included under a designation

or policy provision that prohibits long-term economic return. The report must include a plan

to compensate the permanent school fund through the purchase or exchange of the lands or

a plan to manage the school trust land to generate long-term economic return to the permanent

school fund. Subsequent reports under paragraph (a) must include a status report of the

commissioner's progress in maximizing the long-term economic return on lands identified

in the 2013 report.

(d) When management practices, policies, or designations by the commissioner diminish

or prohibit the long-term economic return on school trust land, the conflict must be resolved

as provided in section
92.122
.

Sec. 2.

Minnesota Statutes 2024, section 127A.353, subdivision 4, is amended to read:

Subd. 4.

Duties; powers.

(a) The school trust lands director shall:

(1) act in a fiduciary capacity for trust beneficiaries in accordance with the principles

under section
127A.351
;

(2) evaluate the school trust land asset position;

(3) determine the estimated current and potential market value of school trust lands;

(4) advise and provide recommendations to the governor on school trust land management

policies and other policies that may affect the goal of the permanent school fund under

section
127A.31
;

(5) advise and provide recommendations to the Executive Council and Land Exchange

Board on all matters regarding school trust lands presented to either body;

(6) advise and provide recommendations to the commissioner of natural resources on

managing school trust lands, including but not limited to advice and recommendations on:

(i) Department of Natural Resources school trust land management plans;

(ii) leases of school trust lands;

(iii) royalty agreements on school trust lands;

(iv) land sales and exchanges;

(v) cost certification; and

(vi)
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revenue generating
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revenue-generating
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options;

(7) serve as temporary trustee of school trust lands for school trust lands subject to

proposed or active eminent domain proceedings;

(8) serve as temporary trustee of school trust lands pursuant to section
94.342, subdivision

5;

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(9) submit to the Legislative Permanent School Fund Commission for review an annual

budget and management plan for the director that includes proposed legislative changes

that will improve the asset allocation of the school trust lands;

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(10)
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(9)
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develop and implement a ten-year strategic plan and a 25-year framework for

management of school trust lands, in conjunction with the commissioner of natural resources,

that is updated every five years, with goals to:

(i) retain core real estate assets;

(ii) increase the value of the real estate assets and the cash flow from those assets;

(iii) rebalance the portfolio in assets with high performance potential and the strategic

disposal of selected assets;

(iv) establish priorities for management actions;

(v) balance revenue enhancement and resource stewardship; and

(vi) advance strategies on school trust lands to capitalize on ecosystem services markets;

and

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(11) keep the beneficiaries, governor, legislature, and the public informed about the

work of the director by reporting
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(10) report
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to the Legislative Permanent School Fund

Commission
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in a public meeting at least once during each calendar quarter
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as required under

subdivision 5
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.

(b) In carrying out the duties under paragraph (a), the school trust lands director may:

(1) direct and control money appropriated to the director;

(2) establish job descriptions and employ staff within the limitations of money

appropriated to the director;

(3) enter into interdepartmental agreements with any other state agency;

(4) enter into joint powers agreements under chapter 471;

(5) evaluate and initiate real estate development projects on school trust lands in

conjunction with the commissioner of natural resources and with the advice of the Legislative

Permanent School Fund Commission to generate long-term economic return to the permanent

school fund; and

(6) submit recommendations on strategies for school trust land leases, sales, or exchanges

to the commissioner of natural resources and the Legislative Permanent School Fund

Commission.

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EFFECTIVE DATE.

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This section is effective July 1, 2026.

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Sec. 3.

Minnesota Statutes 2024, section 127A.353, is amended by adding a subdivision

to read:

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Subd. 5.

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Report.

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(a) By January 15 each year, the school trust lands director must submit

a written report to the Legislative Permanent School Fund Commission. The report must

inform trust beneficiaries, the governor, the legislature, and the public about school trust

land management activities, and must include information on:

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(1) the director's efforts to develop and advocate for sustainable asset management

strategies that reflect undivided loyalty to the trust beneficiaries;

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(2) school trust land management policies and activities, including new or emerging

revenue-generating opportunities;

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(3) the financial position of school trust land assets, including management costs for the

preceding fiscal year and the revenues deposited in the permanent school fund;

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(4) recommended statutory changes that would improve asset allocation, enhance financial

outcomes, or otherwise strengthen the long-term performance of school trust lands; and

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(5) amounts distributed from the permanent school fund to Minnesota's public school

districts and charter schools in the preceding fiscal year.

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(b) The commissioner of natural resources and the commissioner of education must

provide the director with the data necessary to complete the report.

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(c) The report must be submitted in accordance with section 3.195.

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EFFECTIVE DATE.

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This section is effective July 1, 2026.

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