Minnesota voters have approved a constitutional amendment that will send more money to public schools starting in 2027. The measure increases the annual payout from the state’s $2.3 billion Permanent School Fund from 2.5% to 4.5%, potentially adding millions of dollars to school budgets statewide. Here’s what changes, how the new funding formula works, and what it could mean for local districts.
Minnesota Voters Approve a Constitutional Amendment to Increase School Funding
Minnesota voters have approved a constitutional amendment that will increase the amount of money distributed to public school districts through the state’s Permanent School Fund. The measure appeared on the November 3, 2026, ballot as Constitutional Amendment 1 and asked voters whether the state should increase school funding without raising individual income or property taxes. According to unofficial results published by the Minnesota Secretary of State, the amendment received 2,068,086 yes votes and 666,643 no votes. That represents approximately 72.90% support based on the estimated total number of voters. All 4,105 precincts had reported results by November 4. The approval means Minnesota can move forward with a revised funding formula that directs a larger share of the state’s permanent school fund toward public education. The amendment will change Article XI, Section 8 of the Minnesota Constitution, establishing the fund as a perpetual financial resource intended to support school districts while balancing the needs of current and future generations of students.
The Permanent School Fund Payout Will Increase From 2.5% to 4.5%
The biggest practical change involves how much money Minnesota public schools can receive from the Permanent School Fund each year. Under the previous distribution formula, school districts received an amount equivalent to approximately 2.5% of the fund’s value. The approved amendment raises that rate to 4.5% of the fund’s average net asset value over the preceding three fiscal years. Using a three-year rolling average is important because investment values naturally rise and fall. Rather than basing annual school distributions on a single year’s performance, the formula is designed to provide a more predictable funding stream. The revised policy is scheduled to take effect July 1, 2027, with the additional aid payable in fiscal year 2028. Before the election, supporters estimated that the change could increase the annual amount available per student from approximately $68 to $101. That represents an estimated $33 increase per student, although the actual amount will depend on the fund’s value and the applicable distribution calculations. The approach follows recommendations from a Minnesota School Fund Task Force established by the Legislature in 2024, which examined how to balance reliable school funding with the long-term preservation of the fund.
Schools Will Receive More Money Without Raising Property Taxes
For school districts dealing with rising operating expenses, the increased distribution could provide additional financial breathing room without requiring higher property taxes or individual income taxes. Supporters of the amendment estimated that the revised formula could generate approximately $28 million in additional annual funding for public schools across Minnesota. The additional money will be distributed through the state’s existing school funding system, giving districts more resources to address their individual priorities. That could include expenses related to staffing, classroom materials, transportation, building maintenance and other educational services. The benefits will extend across Minnesota rather than being restricted to a particular city or region. For example, Minneapolis and St. Paul public schools are each expected to receive approximately $1 million more annually, according to reporting by Sahan Journal. However, the exact amount available to individual districts will depend on the final distribution calculations. The amendment does not create a new property tax or income tax requirement to finance the increase. Instead, it changes how much of the existing investment fund can be distributed to schools. This distinction is particularly important for districts looking for additional resources while communities face broader concerns about household expenses and local tax burdens.
Minnesota’s $2.3 Billion Permanent School Fund Gets a New Distribution Formula
Minnesota’s Permanent School Fund has a much longer history than the latest constitutional amendment. Established in 1858, the fund was created to generate lasting financial support for public education through revenue from state trust lands. These lands produce income through activities such as timber harvesting, mining and other permitted uses, with the proceeds invested to support schools. Over time, the fund has grown considerably, increasing from approximately $675 million in 2010 to around $2.3 billion in fiscal year 2025. Despite that growth, the previous distribution formula had remained relatively restrictive. The new amendment updates the fund’s management principles, requiring it to operate as a perpetual financial resource while preserving its purchasing power over time. Its principal is intended to remain invested rather than being routinely spent, allowing future generations of students to benefit from its returns. Several state agencies have responsibilities connected to the fund. The Minnesota State Board of Investment oversees investment activities, while the Department of Natural Resources manages aspects of the state’s trust lands and the Department of Education handles the distribution of school funding. The revised formula is intended to balance larger annual payments to public schools with the need to maintain the fund’s long-term financial strength.
