Otter Tail County schools could benefit from proposed state trust fund amendment

Otter Tail County schools could see a new stream of money if Minnesota voters approve a constitutional amendment next November, a change supporters say would raise school trust fund aid without increasing taxes or pulling from the state general fund. For districts in Perham, Fergus Falls and across the county, the practical effect would be more formula dollars per student and, in turn, less pressure on local operating levies.

The proposal, HF3900, cleared the Minnesota House 133-0 and later advanced through the Senate in a 43-24 vote, putting the measure on track for the November 2026 ballot. If approved, it would increase the maximum annual distribution from the Permanent School Fund from 2.5% to 4.5% of the fund’s three-year average net value, beginning July 1, 2027. Supporters say that would mean an additional $27.19 per pupil, a 28% increase in funding from the fund.

The scale of the fund helps explain why the amendment matters. Minnesota’s Permanent School Fund dates to the state’s 1858 constitution and the federal school land grant, which set aside sections 16 and 36 of every township for the use of schools. Today, the school trust system includes about 2.5 million acres of land and about 1 million acres of severed mineral interests, with revenue coming from land, timber and minerals on those trust lands.

As of March 2025, the fund’s principal stood at $2.2 billion, and the 2024-25 school year distribution reached a record $58 million. The amendment would allow part of the payout to come from principal, not just interest and dividends, a change backers frame as using invested money more fully rather than sitting on returns that never reach classrooms.

A March 2026 Permanent School Fund Task Force report urged the state to keep the fund as a perpetual resource while balancing current and future beneficiaries and minimizing year-to-year volatility. That tradeoff sits at the center of the debate: a larger payout now could help districts cover day-to-day costs, but it also raises questions about how much growth remains for future students.

The political coalition behind the measure has been broad. House DFL Floor Leader Jamie Long, Rep. Sydney Jordan, Rep. Patricia Mueller, Rep. Ben Bakeberg and Rep. Roger Skraba all backed the idea in House debate, and the Association of Metropolitan School Districts urged approval of the ballot question. For Otter Tail County, where local schools continue to balance classroom needs against levy limits, the amendment could offer a rare statewide revenue increase tied directly to enrollment.