--- ## title: Permanent School Fund Detail --- ## SCHOOL DISTRICT 197 · School Board ## Referendum Review With a closer look at the Permanent School Fund amendment Peter Olson-Skog, Superintendent | August 24, 2026 The district provides information. Voters make the decision. ## TONIGHT Three parts The detail we committed to sharing on the Permanent School Fund in the larger context of the local referendum. 01 Where we are The gap, what we have already cut, and what is left. A short review — most of this the board has seen. 02 ## The Permanent School Fund What the fund is, what the amendment would actually change, and what it would mean here. 03 Two questions, one ballot How they differ, why residents are conflating them, and how we answer that accurately. ## PART ONE Where we are A short review of the budget picture and reductions to date. ## THE PROBLEM Costs climb faster than revenue. Every year. State funding has not kept pace with inflation for two decades. Had the general education formula simply tracked inflation, District 197 would have received about $7.7 million more last year alone. ~3% ## ANNUAL COST GROWTH What it costs to run our schools, year over year. ~1% ## ANNUAL REVENUE GROWTH What the state formula and local sources typically deliver. ## $2M ## THE GAP, EVERY YEAR And it accumulates. Skip a year of reductions and the hole is $4 million. The gap is structural, not a one-year event. That is why one-time tools do not close it. ## WHAT IS DRIVING IT Health insurance is the clearest example ~44% More than we paid four years ago Four straight renewals of 8%, 8%, 14% and 8%. Compounded, our cost today is about 44% higher than it was four years ago. Not ours to control Health insurance, special education, transportation and utilities are obligations, not preferences. Our employees pay it too The employee share rose by the same percentages. Staff are absorbing these increases alongside everyone else. Familiar to every household This is the one line in our budget that residents experience directly in their own lives. ## BEFORE ASKING We started with our own budget $3.2 million reduced over two years before bringing any question to voters. Nearly all of it permanent structural change rather than one-time patches. ## $3.2M ## CUT OVER TWO YEARS Reductions made before any levy question went to the ballot. ## $2.55M ## FOR 2026–27 ALONE $1.73M from positions; $825,000 from everything else. One-third less ## THAN STATE AVERAGE SPENT ON ADMIN Per MDE’s FY25 report as a percentage of budget The MDE report predates nearly all of these reductions — the next one should show us further below average, not closer to it. ## WHAT IS LEFT Everything left will be felt in classrooms The reductions we could make away from the classroom are largely behind us. If the levy does not pass, another $2 to $4 million comes out for the following year — and that is just to hold the fund balance where it is. Rebuilding to the board’s target would require more. Staff reductions Larger class sizes and caseloads Reduced programmingReduced transportation Nothing specific has been decided. Any reduction goes through the normal public budget process with board action in the spring. ## ON THE BALLOT What we are asking voters to decide 4.027% of net tax capacity ## $4.6M per year, beginning payable 2027 10 years the maximum term state law allows ## $46M estimated total over the term $14 per month on a $400,000 home $168 per year on that same home Pays existing costs — textbooks, safety and security, technology, utilities, transportation — a different way. It builds nothing new and starts no new programs. Reduced from $5 million to $4.6 million following community feedback. Positive Review and Comment received from the Commissioner of Education. ## PART TWO ## The Permanent School Fund The detail I committed to bringing back on August 10. ## BACKGROUND A trust older than our oldest buildings The Permanent School Fund is not new money and not a new program. It has been sending money to Minnesota districts for more than 165 years. 1858 ## ESTABLISHED AT STATEHOOD ## Created when Minnesota entered the Union, funded by federal land grants set aside for public education. ## $2.2B ## CURRENT PRINCIPAL Built from state trust lands — timber sales, mineral leases and similar natural resource revenue. ## $58M ## DISTRIBUTED LAST YEAR Spread across every school district in Minnesota — more than 860,000 students. The principal is never spent. Only the earnings are distributed — that is what makes it permanent. ## THE AMENDMENT What would actually change The amendment modernizes how much the fund pays out each year. It creates no new tax and no new revenue source. ## TODAY Interest and dividends only The constitution currently permits distribution of earned income alone — in practice up to roughly 2.5% of the fund’s value. In low-interest years, that payout falls. ## IF APPROVED 4.5% of a three-year average A standard endowment payout formula. Smooths year-to-year swings, protects the principal long term, and makes district revenue more predictable. Effective July 1, 2027. Passed the Legislature with bipartisan support — 133–0 in the House and 43–24 in the Senate. ## EXACT WORDING What voters will read “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?” Note what the question itself tells voters: it raises no individual income or property taxes. That phrase is inside the ballot question, which is part of why residents read it as the painless option — and why they may assume it does more than it does. Our levy question carries the opposite signal in bold: BY VOTING “YES” ON THIS BALLOT QUESTION, YOU ARE VOTING FOR A PROPERTY TAX INCREASE. Both notices are state-required wording, not district phrasing. ## SCALE Spread across the whole state The fund distributes real money — but it is divided among every district in Minnesota, which is what determines the size of our share. ## $58M ## DISTRIBUTED STATEWIDE Total sent to Minnesota school districts in the most recent year. 860,000+ ## STUDENTS SHARING IT Enrollment across all Minnesota public school districts. 0.2% ## OUR ESTIMATED GAIN About 10% of a single year’s funding gap — roughly one dollar in ten. Our share of the increase is an estimate; finance office to confirm the underlying dollar figure. ## A COUNTING DIFFERENCE WORTH KNOWING On a constitutional amendment, a blank counts as No Constitutional amendment Passage requires a majority of everyone voting in the election — not just those who answer the question. A voter who skips it has, in effect, voted no. This is already stated on our website. Our capital project levy Decided by a simple majority of those who vote on the question itself. A blank is simply not counted — it is not a no. The positive MDE Review and Comment is what keeps the threshold at a simple majority rather than 60%. Minn. Stat. § 123B.63 subd. 3; Minn. Const. art. IX. ## PART THREE Two questions, one ballot What residents are already asking, and how we answer it accurately. ## SIDE BY SIDE Different animals entirely ## Permanent School Fund amendment Capital project levy Who decidesEvery voter in MinnesotaOnly voters inside our district What it costs youNothing — no new taxesAbout $14 a month on a $400,000 home What we would receiveRoughly 0.2% more revenueAbout $4.6 million a year Against a $2M annual gap Helps a little — about 10% of one year’s gap Closes it for the near future and rebuilds fund balance, assuming consistent state and federal funding They are not alternatives. Passage of the statewide amendment would not remove the need for the local question. ## WHAT WE ARE HEARING The confusion is already out there Residents are encountering both questions and reasonably assuming one covers the other. Two board members flagged this after the last meeting. ## THE ASSUMPTION “The schools are getting more money from the state — so why do they need my property taxes too?” ## WHY IT IS UNDERSTANDABLE The amendment’s ballot language says outright that it raises no income or property taxes. Ours says the opposite in bold. ## OUR CORRECTION Both are accurate. They differ by roughly a factor of ten. We say so plainly, with the numbers, and let people decide. ## DISCUSSION Questions from the board One question costs nothing and helps a little. The amendment would send slightly more money to every Minnesota district at no cost to taxpayers. The other costs about $14 a month and does the work. Roughly $4.6 million a year against a $2 million annual compounding gap. In the near future it protects programming and moves the fund balance back toward policy levels. It also buys time to keep pressing the state to keep up with inflation. They are not substitutes for each other. levy@isd197.org | isd197.org/vote2026