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>> We are going to be key.

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An eye on this committee

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hearing. It is right now.

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It is 8.37

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on Wednesday, March 4th, a

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quorum is present and we will

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now come to order

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today where I'm really excited

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for this agenda. We're going to

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hear a presentation from the

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permanent School fund

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distribution group and then

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we're going to hear 2 bills

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Senate filed. 35 93 and Senate

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file 12. 0, 1,

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I we have a gun through the

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expectations of the audience a

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couple of times. But I now see

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we have a whole new crew over

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here. So I just want to remind

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everyone I'm here today that

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you have to stay seated when

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you're in the hearing room,

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there's no standing or sitting

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in the walkways are aisles.

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If there are any specific

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accommodations, please

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communicate with a surgeon

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staff. Signs are not permitted,

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clapping and other disruptions

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are not allowed. And if you do

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not follow these protocols, you

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will be asked to leave.

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Remember members to use your on

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and off switch that controls

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your microphone. And I would

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just want to say thank you to

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the sergeants for always being

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attentive and keeping us safe.

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And so we are going to bring

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begin with a presentation about

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the permanent School fund

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distribution working group.

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Last year. We created a working

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group and asked them to look

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into.

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>> How and why we are

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investing.

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>> A permanent school funds and

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are we getting the biggest bang

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for our buck when when using

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these investments as a way to

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also support our school kids

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and continue to use that

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investment into the future.

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And so the the group met

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a number of times and have come

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up with a report and some

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recommendations and based on

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those reccomendations you're

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going to hear appeal.

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And so I would like to invite

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the working Group report crew

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up Andrew Crack, who is the

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deputy director, head of active

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Strategies with the Minnesota

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State Board of Investment.

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And Erin van der Linde,

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director of the Office of

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School Trust Lands and John

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Yuill, the director legal and

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policy services of the

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Minnesota State Board of

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Investment. If you'd like to

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come up and take a seat,

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just reminding you to please

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state your name and your

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position and then you can begin

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and I think we'll start with

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Mr. Correct.

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>> Thank you. Chair finished my

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name is Andrew Correct, as you

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mentioned and the deputy

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director of the Minnesota State

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Board of Investment as a member

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of the Permanent School Fund

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Task Force. I'd like to thank

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the members here for having us

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today to give you a summary of

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the findings of the task force

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and to answer any questions you

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might have about the

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recommendations of the task

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force and the legislation

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that's been proposed.

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Wait a minute will join us or

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presentation of

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so we intend to proceed over

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the next several minutes is to

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give you some background on the

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task force and the work that we

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engaged in as well as some

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background on the permanent

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school fund itself and school

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trust lands at which point all

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turn things over for a few

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minutes to Aaron.

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And then we will walk through

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the research and

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would you speak a little bit

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closer to the microphone?

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Thank you for that problem.

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And then we'll spend some time

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going through the specific work

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research and analysis that the

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task force performed before we

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review the recommendations that

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came out of the task force and

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then we'll conclude and take

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any questions that you all may

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have. But please feel free to

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interrupt as we go through with

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any questions that come up.

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So the task force, the

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Permanent School Fund Task

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Force was created by the

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Legislature in May of 2024,

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the membership requirements to

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be part of the task force were

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to have outstanding

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professional experience in one

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of the following areas,

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institutional asset Management,

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Investment Finance Trust

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Administration investment fund,

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accounting investment, banking,

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or the practice of law in

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capital markets. Securities

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funds trusts, foundations or

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endowments.

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Ultimately the task force

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membership comprised 9 members.

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One member who was a designee

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of that Department of Education

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or the commissioner of

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Education, daily linemen,

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another member appointed by the

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state Board of Investment which

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myself,

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4 members appointed by the

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Governor, Denise District,

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Tracy Farak, Tracy lot CA and

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Aaron Van der Linde

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and 3 members appointed by a

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vote of the Legislative

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Permanent School Fund

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Commission for Terry spent all

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Madden Paul Pelletier and Julie

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Sandstede.

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We were given a legislative

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charge and the duties of the

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task force were spelled out.

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The task force was directed to

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examine the historical returns

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on the Permanent School Fund

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Endowment and to evaluate and

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recommend potential changes to

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the distribution of earnings.

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The task force may examine

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school trust endowment policies

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and other states. And the task

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force recommendations may

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include proposed changes to

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state statutes and Minnesota's

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constitutional provisions

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governing the school Trust Fund

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Endowment.

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The task force met many times

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over are close to a year and a

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half and ultimately delivered a

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report to the Legislature on

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January. 15th of this year,

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gonna spend a few moments going

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over some background, which may

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be a preview from for many of

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you. But for those who aren't

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familiar with the permanent

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school fund in the school trust

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lands, we're going. We're going

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to take a few minutes to

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review.

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The Minnesota Constitution

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established the permanent

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school fund in 18 58 to create

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a permanent self-sustaining

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source of education funding in

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the state,

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Minnesota law, both statute and

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constitution specify how the

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fun shall be managed. And the

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formula by which the amount

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available for distribution is

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calculated.

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Today. There are 3 state

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agencies that are primarily

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involved with the ongoing

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operations of the fund.

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We have the Department of

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Natural Resources who's

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responsible for land management

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decisions on that specific

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parcels of land that our school

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trip that our school trust

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lands.

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The revenues that come from

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land management are then

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transferred to the permanent

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School fund.

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The State Board of Investment

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takes those dollars and invest

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them in financial instruments.

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Stocks and bonds and the state

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State Board of Investment or

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SBI is responsible for

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investment management decisions

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and ensuring that the proper

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amounts are distributed from

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the fund.

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Once those dollars are

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distributed from the fund's,

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they ultimately end up with the

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Department of Education who is

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responsible for a portion of

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those funds to school districts

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around the state.

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Madam Chair members, Aaron Van

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Dillen School Trust Lands.

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Director, a few quick slides on

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just the background and

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history. A school trust lands.

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I recognize that I gave a

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similar presentation to a

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policy last week, but some of

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you are my committee. So

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as Andrew said, we received

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these lands from the federal

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government and 18 58 its

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statehood. We ended up with 4

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successive federal grants that

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total about 8.1 million acres

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to cede the fund its statehood.

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We sold off the majority of

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those lands in southern

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Minnesota.

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We have 2.5 million or 2.5 of

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the 8.1 million acres left of

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those 2.0. 5, 2, 0.2 are in 10

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northern counties.

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You can see on this map where

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they are. We do have a Landen,

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some reservation boundaries.

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We recognize that.

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But most of those lands

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generate revenue from and you

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can switch.

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Thanks, John

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Revenue from minerals,

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royalties, and rents timber

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sales. And then real estate

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transactions likely says sales

271
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easements and things of that

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nature. So if you look at the

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permanent school fund right

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now, the value of that funding

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and really get into this a

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little bit later is 2.3 billion

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dollars. That value has come

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mainly from mineral resources.

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About 80% of our historic

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revenue has come from our

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middle rents and royalties.

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There's this small breakdown

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between real estate and timber

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receipts,

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roughly 9, 7%, of that balance

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and then 4% for some of the

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investment income from not to

288
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work at SBI does. But some of

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the investments that we have

290
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internally with some of the

291
00:09:07,980 --> 00:09:10,380
funds that are managed by DNR.

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So

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the next slide, please just

294
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real quick. What happens when

295
00:09:15,870 --> 00:09:17,570
those funds are deposited into

296
00:09:17,570 --> 00:09:18,710
the state board investments and

297
00:09:18,710 --> 00:09:19,870
are set? They spin off that

298
00:09:19,870 --> 00:09:21,870
revenue. This is the revenue

299
00:09:21,870 --> 00:09:24,870
that's Pence distributed to the

300
00:09:24,930 --> 00:09:26,550
school district. So it's the

301
00:09:26,550 --> 00:09:27,930
beneficiaries of this trust are

302
00:09:27,930 --> 00:09:29,730
the 380 plus school districts

303
00:09:29,730 --> 00:09:31,120
and all of the charter schools

304
00:09:31,120 --> 00:09:32,250
in the state.

305
00:09:32,250 --> 00:09:33,370
That's who we see our

306
00:09:33,370 --> 00:09:35,700
beneficiaries. As and so over

307
00:09:35,700 --> 00:09:37,270
the last 10 years, we've

308
00:09:37,270 --> 00:09:39,190
distributed over what it's over

309
00:09:39,190 --> 00:09:41,500
300, something like that.

310
00:09:41,500 --> 00:09:44,500
And it's 58 million last year.

311
00:09:44,640 --> 00:09:46,390
The work of this task force

312
00:09:46,390 --> 00:09:48,580
really looked at how we make

313
00:09:48,580 --> 00:09:49,960
these changes. And Andrew,

314
00:09:49,960 --> 00:09:50,700
we'll get into that here

315
00:09:50,700 --> 00:09:53,350
shortly. We're trying to do is

316
00:09:53,350 --> 00:09:55,240
more or less provide of 30 to

317
00:09:55,240 --> 00:09:57,400
40% increase to the annual

318
00:09:57,400 --> 00:09:58,540
distributions with these

319
00:09:58,540 --> 00:09:59,920
changes. So I'll turn it back

320
00:09:59,920 --> 00:10:02,100
over to Andrew. Thank you.

321
00:10:02,100 --> 00:10:03,870
Thank you, Aaron.

322
00:10:03,870 --> 00:10:04,910
So chair Commissioner, I'd like

323
00:10:04,910 --> 00:10:06,650
to proceed now and talk a

324
00:10:06,650 --> 00:10:07,920
little bit about the work of

325
00:10:07,920 --> 00:10:09,160
the task force over the months

326
00:10:09,160 --> 00:10:11,420
that we were together

327
00:10:11,420 --> 00:10:13,660
early on in the task force

328
00:10:13,660 --> 00:10:14,970
meetings, we started to

329
00:10:14,970 --> 00:10:17,230
coalesce and reach consensus

330
00:10:17,230 --> 00:10:19,140
around some guiding principles

331
00:10:19,140 --> 00:10:21,810
and these guiding principles we

332
00:10:21,810 --> 00:10:23,590
determined should be aligned

333
00:10:23,590 --> 00:10:25,260
with whatever recommendation

334
00:10:25,260 --> 00:10:26,820
comes out of the task force and

335
00:10:26,820 --> 00:10:28,200
therefore principles that we

336
00:10:28,200 --> 00:10:30,550
identified early on. The first

337
00:10:30,550 --> 00:10:31,640
is that the permanent school

338
00:10:31,640 --> 00:10:32,850
fund must be maintained as a

339
00:10:32,850 --> 00:10:34,850
perpetual financial resource.

340
00:10:35,250 --> 00:10:36,300
And what that means is that

341
00:10:36,300 --> 00:10:38,300
distributions from the fund

342
00:10:38,300 --> 00:10:39,890
must not and often duly draw

343
00:10:39,890 --> 00:10:41,450
down the funds, balance or

344
00:10:41,450 --> 00:10:43,900
otherwise impair its ability to

345
00:10:43,900 --> 00:10:45,100
serve its purpose as a lasting

346
00:10:45,100 --> 00:10:47,500
source of educational funding.

347
00:10:49,990 --> 00:10:51,870
The task force determined that

348
00:10:51,870 --> 00:10:52,700
our objective should be to

349
00:10:52,700 --> 00:10:54,760
establish a distribution policy

350
00:10:54,760 --> 00:10:56,760
that balances the needs of

351
00:10:56,760 --> 00:10:58,100
current and future

352
00:10:58,100 --> 00:10:59,800
beneficiaries.

353
00:10:59,800 --> 00:11:01,400
That means that the fund must

354
00:11:01,400 --> 00:11:02,900
grow in a way that preserves

355
00:11:02,900 --> 00:11:04,420
its purchasing power for the

356
00:11:04,420 --> 00:11:06,470
benefit of future generations

357
00:11:06,470 --> 00:11:08,270
while also providing consistent

358
00:11:08,270 --> 00:11:09,290
support to current

359
00:11:09,290 --> 00:11:11,290
beneficiaries. Today,

360
00:11:12,850 --> 00:11:14,410
we also sought to ensure

361
00:11:14,410 --> 00:11:15,400
consistent annual

362
00:11:15,400 --> 00:11:17,120
distributions.

363
00:11:17,120 --> 00:11:18,530
Our recommendations sought to

364
00:11:18,530 --> 00:11:20,190
minimize significant year to

365
00:11:20,190 --> 00:11:21,520
year variability in

366
00:11:21,520 --> 00:11:23,950
distributions in an effort to

367
00:11:23,950 --> 00:11:25,800
support stability and the

368
00:11:25,800 --> 00:11:27,200
ability of school districts to

369
00:11:27,200 --> 00:11:28,100
plan their budgets, which we

370
00:11:28,100 --> 00:11:30,180
know is very important.

371
00:11:30,180 --> 00:11:31,960
And lastly,

372
00:11:31,960 --> 00:11:32,930
we sought to allow for

373
00:11:32,930 --> 00:11:34,340
adaptability and investment

374
00:11:34,340 --> 00:11:35,920
management

375
00:11:35,920 --> 00:11:36,930
so that our recommendations

376
00:11:36,930 --> 00:11:37,960
would provide the state Board

377
00:11:37,960 --> 00:11:39,100
of investment with the

378
00:11:39,100 --> 00:11:41,190
necessary flexibility to manage

379
00:11:41,190 --> 00:11:42,390
the fund, according to

380
00:11:42,390 --> 00:11:44,340
industry, best practices so

381
00:11:44,340 --> 00:11:45,560
that we can seek to manage to

382
00:11:45,560 --> 00:11:47,200
maximize the long-term value of

383
00:11:47,200 --> 00:11:48,510
the fund without taking undue

384
00:11:48,510 --> 00:11:50,510
risk.

385
00:11:53,950 --> 00:11:55,460
The task force also spent a lot

386
00:11:55,460 --> 00:11:57,860
of time discussing debating

387
00:11:58,900 --> 00:12:00,190
thinking about the scope of our

388
00:12:00,190 --> 00:12:02,340
activities. The task force was

389
00:12:02,340 --> 00:12:04,360
specifically mandated to review

390
00:12:04,360 --> 00:12:05,540
the fund's current legal

391
00:12:05,540 --> 00:12:06,770
framework and investment in

392
00:12:06,770 --> 00:12:08,640
distribution practices. And

393
00:12:08,640 --> 00:12:10,300
over the course of that work,

394
00:12:10,300 --> 00:12:11,810
we identified several issues

395
00:12:11,810 --> 00:12:12,860
which I believe all 9 of us

396
00:12:12,860 --> 00:12:14,490
felt very important and they,

397
00:12:14,490 --> 00:12:16,890
in fact, are deserve additional

398
00:12:16,890 --> 00:12:18,330
consideration and discussion.

399
00:12:18,330 --> 00:12:20,260
But that were out of the scope

400
00:12:20,260 --> 00:12:21,540
that the legislature provided

401
00:12:21,540 --> 00:12:22,600
to the Permanent School Fund

402
00:12:22,600 --> 00:12:23,900
task force.

403
00:12:23,900 --> 00:12:25,160
And those other issues include

404
00:12:25,160 --> 00:12:26,530
but are not limited to some of

405
00:12:26,530 --> 00:12:28,640
the following questions having

406
00:12:28,640 --> 00:12:29,960
to do with the management of

407
00:12:29,960 --> 00:12:31,920
school trust lands.

408
00:12:31,920 --> 00:12:33,830
Those are decisions that are

409
00:12:33,830 --> 00:12:35,260
made under the purview of the

410
00:12:35,260 --> 00:12:37,800
DNR. And we're outside the

411
00:12:37,800 --> 00:12:38,380
scope of the Permanent School

412
00:12:38,380 --> 00:12:40,380
Fund Task Force

413
00:12:40,820 --> 00:12:42,360
Review. Our analysis of

414
00:12:42,360 --> 00:12:43,850
apportionment of distributions

415
00:12:43,850 --> 00:12:46,490
from the fund put another way,

416
00:12:46,490 --> 00:12:48,120
the questions about which

417
00:12:48,120 --> 00:12:49,510
districts received, how much

418
00:12:49,510 --> 00:12:52,220
money and why we also felt that

419
00:12:52,220 --> 00:12:53,480
those discussions were outside

420
00:12:53,480 --> 00:12:55,480
the purview of the task force.

421
00:12:55,480 --> 00:12:56,650
Apportionment is separately

422
00:12:56,650 --> 00:12:57,560
addressed in Minnesota

423
00:12:57,560 --> 00:12:59,560
statutes, one, 27 8.33,

424
00:13:02,380 --> 00:13:02,930
if you review the

425
00:13:02,930 --> 00:13:03,960
constitutional language,

426
00:13:03,960 --> 00:13:04,490
you'll see that the

427
00:13:04,490 --> 00:13:06,350
Constitution makes reference to

428
00:13:06,350 --> 00:13:07,270
the school districts of the

429
00:13:07,270 --> 00:13:09,130
state.

430
00:13:09,130 --> 00:13:11,340
We felt that the task force it

431
00:13:11,340 --> 00:13:12,220
was outside the scope of the

432
00:13:12,220 --> 00:13:14,200
task force to attempt to define

433
00:13:14,200 --> 00:13:15,930
or redefine what is or is not a

434
00:13:15,930 --> 00:13:17,100
school district in the state of

435
00:13:17,100 --> 00:13:19,100
Minnesota.

436
00:13:19,540 --> 00:13:20,490
We also determined it was

437
00:13:20,490 --> 00:13:21,670
outside the scope of the task

438
00:13:21,670 --> 00:13:23,430
force to address any

439
00:13:23,430 --> 00:13:24,990
restrictions on the use of

440
00:13:24,990 --> 00:13:26,770
funds that were distributed for

441
00:13:26,770 --> 00:13:28,500
the use of dollars distributed

442
00:13:28,500 --> 00:13:29,130
from the fund's 2 school

443
00:13:29,130 --> 00:13:30,440
districts.

444
00:13:30,440 --> 00:13:31,990
And then finally, the fund's

445
00:13:31,990 --> 00:13:33,630
investment policy and asset

446
00:13:33,630 --> 00:13:35,270
allocation decisions. The court

447
00:13:35,270 --> 00:13:37,140
investment questions are the

448
00:13:37,140 --> 00:13:38,180
purview of the state Board of

449
00:13:38,180 --> 00:13:39,190
Investment. And that's where

450
00:13:39,190 --> 00:13:40,510
outside of the scope of the

451
00:13:40,510 --> 00:13:41,580
Permanent School Fund task

452
00:13:41,580 --> 00:13:43,580
force.

453
00:13:47,280 --> 00:13:48,250
So consistent with our

454
00:13:48,250 --> 00:13:50,900
legislative charge of the task

455
00:13:50,900 --> 00:13:51,880
force and proceeded to review

456
00:13:51,880 --> 00:13:53,690
the current legal framework,

457
00:13:53,690 --> 00:13:55,900
both constitutional and

458
00:13:55,900 --> 00:13:56,470
statutory that governs the

459
00:13:56,470 --> 00:13:58,470
permanent school fund.

460
00:13:59,100 --> 00:14:00,230
And we identified that the

461
00:14:00,230 --> 00:14:01,380
current constitutional

462
00:14:01,380 --> 00:14:03,310
framework imposes to

463
00:14:03,310 --> 00:14:04,760
significant constraints on

464
00:14:04,760 --> 00:14:05,650
distributions from the

465
00:14:05,650 --> 00:14:08,500
permanent school front. First

466
00:14:08,180 --> 00:14:09,870
distributions from the fund are

467
00:14:09,870 --> 00:14:11,330
limited to net interest and

468
00:14:11,330 --> 00:14:13,430
dividend income and excludes

469
00:14:13,430 --> 00:14:14,870
capital gains from asset

470
00:14:14,870 --> 00:14:16,520
appreciation. So what that

471
00:14:16,520 --> 00:14:18,150
means is if the fund owns a

472
00:14:18,150 --> 00:14:19,720
stock or a bond that increases

473
00:14:19,720 --> 00:14:21,540
in value over time, there is no

474
00:14:21,540 --> 00:14:23,280
mechanism for that value to be

475
00:14:23,280 --> 00:14:24,790
realized and monetized and the

476
00:14:24,790 --> 00:14:26,600
proceeds from that gain in

477
00:14:26,600 --> 00:14:27,580
value to be distributed to

478
00:14:27,580 --> 00:14:29,210
students.

479
00:14:29,210 --> 00:14:30,500
Secondly,

480
00:14:30,500 --> 00:14:32,220
capital gains and if necessary,

481
00:14:32,220 --> 00:14:33,970
interest and dividend income

482
00:14:33,970 --> 00:14:35,400
must be used for the

483
00:14:35,400 --> 00:14:37,470
Constitution to offset losses

484
00:14:37,470 --> 00:14:39,300
prior losses,

485
00:14:39,300 --> 00:14:40,260
this could have the effect of

486
00:14:40,260 --> 00:14:41,510
reducing or eliminating

487
00:14:41,510 --> 00:14:43,330
distributions from the fund in

488
00:14:43,330 --> 00:14:45,330
Los recovery years.

489
00:14:45,930 --> 00:14:46,920
It was the conclusion of the

490
00:14:46,920 --> 00:14:48,120
task force that there are.

491
00:14:48,120 --> 00:14:49,180
There are several issues with

492
00:14:49,180 --> 00:14:51,180
this constitutional framework.

493
00:14:51,320 --> 00:14:52,420
First,

494
00:14:52,420 --> 00:14:53,540
we concluded that this

495
00:14:53,540 --> 00:14:55,200
framework unduly restricts

496
00:14:55,200 --> 00:14:57,600
distributions from the fund.

497
00:14:57,840 --> 00:15:00,120
The fund grows at of substance

498
00:15:00,120 --> 00:15:01,530
to grow significantly, which

499
00:15:01,530 --> 00:15:02,430
we're going to dress in a few

500
00:15:02,430 --> 00:15:03,950
moments. But only a small

501
00:15:03,950 --> 00:15:05,980
portion of that growth can be

502
00:15:05,980 --> 00:15:07,890
distributed to districts due to

503
00:15:07,890 --> 00:15:10,300
the restriction 2 net interest

504
00:15:10,300 --> 00:15:12,300
and dividend income.

505
00:15:12,280 --> 00:15:13,700
We also identified that these

506
00:15:13,700 --> 00:15:14,660
restrictions create an

507
00:15:14,660 --> 00:15:16,200
imbalance between the interests

508
00:15:16,200 --> 00:15:17,310
of current and future

509
00:15:17,310 --> 00:15:19,800
beneficiaries, because the

510
00:15:19,800 --> 00:15:20,820
front grows at a healthy rate.

511
00:15:20,820 --> 00:15:21,990
But only a small portion of

512
00:15:21,990 --> 00:15:23,190
that growth can be distributed

513
00:15:23,190 --> 00:15:25,190
to students.

514
00:15:25,240 --> 00:15:27,310
Imbalances created that favors

515
00:15:27,310 --> 00:15:28,570
thought the students of future

516
00:15:28,570 --> 00:15:30,210
generations at the expense of

517
00:15:30,210 --> 00:15:32,210
students. Today,

518
00:15:33,440 --> 00:15:34,920
these restrictions can result

519
00:15:34,920 --> 00:15:36,320
in inconsistent nearly

520
00:15:36,320 --> 00:15:37,280
distribution amounts to

521
00:15:37,280 --> 00:15:38,520
districts.

522
00:15:38,520 --> 00:15:39,910
And lastly, because these

523
00:15:39,910 --> 00:15:41,940
restrictions, art specified in

524
00:15:41,940 --> 00:15:43,550
the state constitution, it is

525
00:15:43,550 --> 00:15:45,270
very difficult to adapt to

526
00:15:45,270 --> 00:15:46,810
changing circumstances or the

527
00:15:46,810 --> 00:15:48,810
current best practices.

528
00:15:53,540 --> 00:15:54,820
Next consistent with the

529
00:15:54,820 --> 00:15:56,800
legislative mandate, the task

530
00:15:56,800 --> 00:15:57,980
force to examine the historical

531
00:15:57,980 --> 00:15:59,160
returns of the fund. And what

532
00:15:59,160 --> 00:16:00,500
we found was good news, which

533
00:16:00,500 --> 00:16:02,900
is that the performance of the

534
00:16:02,900 --> 00:16:03,340
fund has been very strong

535
00:16:03,340 --> 00:16:04,910
overtime on both an absolute

536
00:16:04,910 --> 00:16:07,830
basis and on a relative basis,

537
00:16:07,830 --> 00:16:09,000
the average annual investment

538
00:16:09,000 --> 00:16:09,990
return of the fund over the

539
00:16:09,990 --> 00:16:11,810
last decade has been 8% and

540
00:16:11,810 --> 00:16:12,980
it's been even higher than that

541
00:16:12,980 --> 00:16:14,320
and more recent periods as

542
00:16:14,320 --> 00:16:15,220
you'll see in the chart on the

543
00:16:15,220 --> 00:16:17,430
right side of your page, the

544
00:16:17,430 --> 00:16:18,510
fund has performed well,

545
00:16:18,510 --> 00:16:19,860
again, an absolute sense.

546
00:16:19,860 --> 00:16:21,110
It's also outperformed its

547
00:16:21,110 --> 00:16:22,190
benchmark overall. Those

548
00:16:22,190 --> 00:16:23,980
measure time periods

549
00:16:23,980 --> 00:16:25,600
for those who are not familiar

550
00:16:25,600 --> 00:16:26,260
with how the permanent school

551
00:16:26,260 --> 00:16:28,900
fund is invested, it is

552
00:16:28,900 --> 00:16:29,270
invested according to an asset

553
00:16:29,270 --> 00:16:31,610
allocation. That is 50% common

554
00:16:31,610 --> 00:16:33,610
stocks. 48 1% bonds and 2%

555
00:16:34,370 --> 00:16:36,250
cash. And from the perspective

556
00:16:36,250 --> 00:16:37,850
of the SBI, we would call that

557
00:16:37,850 --> 00:16:39,570
a very vanilla down the fairway

558
00:16:39,570 --> 00:16:41,550
asset allocation that is

559
00:16:41,550 --> 00:16:43,530
implemented with institutional

560
00:16:43,530 --> 00:16:45,900
quality external investment

561
00:16:45,900 --> 00:16:46,900
managers investing in broadly

562
00:16:46,900 --> 00:16:48,380
diversified portfolios of

563
00:16:48,380 --> 00:16:50,180
stocks and bonds. And the SBI

564
00:16:50,180 --> 00:16:52,260
is able to use our scale to

565
00:16:52,260 --> 00:16:53,300
drive the cost of that

566
00:16:53,300 --> 00:16:54,540
investment management as low as

567
00:16:54,540 --> 00:16:56,540
we possibly can.

568
00:17:01,100 --> 00:17:02,110
The result of that strong

569
00:17:02,110 --> 00:17:03,190
performance has been that the

570
00:17:03,190 --> 00:17:05,210
fund has grown substantially

571
00:17:05,210 --> 00:17:06,870
strong investment returns in

572
00:17:06,870 --> 00:17:08,100
addition to revenues coming

573
00:17:08,100 --> 00:17:09,200
into the fund through land

574
00:17:09,200 --> 00:17:10,670
management have resulted in the

575
00:17:10,670 --> 00:17:12,420
fund doubling in value over the

576
00:17:12,420 --> 00:17:13,740
last 10 years and more than

577
00:17:13,740 --> 00:17:14,990
tripling in value over the last

578
00:17:14,990 --> 00:17:16,990
15 years

579
00:17:17,520 --> 00:17:19,100
because the Constitution limits

580
00:17:19,100 --> 00:17:20,420
distributions to interest and

581
00:17:20,420 --> 00:17:22,110
dividends. Distributions from

582
00:17:22,110 --> 00:17:23,810
the fund have averaged only 2

583
00:17:23,810 --> 00:17:24,850
and a half percent of the

584
00:17:24,850 --> 00:17:26,780
fund's value over that period.

585
00:17:26,780 --> 00:17:28,200
So again,

586
00:17:28,200 --> 00:17:29,520
the vast majority of the growth

587
00:17:29,520 --> 00:17:31,110
of the fund is constantly

588
00:17:31,110 --> 00:17:32,520
compounding accruing for the

589
00:17:32,520 --> 00:17:34,360
benefit of future generations

590
00:17:34,360 --> 00:17:35,580
and doesn't serve the purposes

591
00:17:35,580 --> 00:17:37,690
of the generations in the here.

592
00:17:37,690 --> 00:17:39,690
And now

593
00:17:43,550 --> 00:17:45,570
next to the task force began

594
00:17:45,570 --> 00:17:47,340
its the process of engaging in

595
00:17:47,340 --> 00:17:49,660
some research and analysis

596
00:17:49,660 --> 00:17:51,520
looking at best practices in

597
00:17:51,520 --> 00:17:53,420
common practices at other

598
00:17:53,420 --> 00:17:55,420
similar institutions and

599
00:17:55,630 --> 00:17:58,300
interests around the country.

600
00:17:58,400 --> 00:17:59,600
Broadly speaking, we examined

601
00:17:59,600 --> 00:18:01,190
distribution policies from 3

602
00:18:01,190 --> 00:18:02,420
different groups of trust in

603
00:18:02,420 --> 00:18:05,900
down its first is in Dallas and

604
00:18:05,900 --> 00:18:06,210
higher education and

605
00:18:06,210 --> 00:18:08,210
institutions. So think college

606
00:18:08,210 --> 00:18:09,920
and university endowments.

607
00:18:09,920 --> 00:18:11,240
These are different from the

608
00:18:11,240 --> 00:18:12,560
permanent school fund and that

609
00:18:12,560 --> 00:18:13,540
these are typically not

610
00:18:13,540 --> 00:18:15,320
government-sponsored to trust

611
00:18:15,320 --> 00:18:16,730
that are typically not funded

612
00:18:16,730 --> 00:18:18,480
by natural resource revenue.

613
00:18:18,480 --> 00:18:19,920
But we would observe that they

614
00:18:19,920 --> 00:18:21,690
do serve a very similar purpose

615
00:18:21,690 --> 00:18:23,140
to the permanent school fund

616
00:18:23,140 --> 00:18:25,140
that educational endowments

617
00:18:25,340 --> 00:18:27,900
exist to provide permanent

618
00:18:27,900 --> 00:18:28,270
funding, to serve the

619
00:18:28,270 --> 00:18:29,690
educational mission of the

620
00:18:29,690 --> 00:18:30,540
institution, that they're

621
00:18:30,540 --> 00:18:32,170
associated with it in that way.

622
00:18:32,170 --> 00:18:33,500
They're very similar to the

623
00:18:33,500 --> 00:18:35,500
permanent school fund.

624
00:18:35,310 --> 00:18:37,100
We also looked at similar

625
00:18:37,100 --> 00:18:39,400
educational trust in other

626
00:18:39,400 --> 00:18:40,940
states. Other states have

627
00:18:40,940 --> 00:18:41,950
permanent school funds that are

628
00:18:41,950 --> 00:18:43,700
quite similar to Minnesota's

629
00:18:43,700 --> 00:18:44,530
Permanent School fund, although

630
00:18:44,530 --> 00:18:45,730
that is a much smaller sample,

631
00:18:45,730 --> 00:18:46,470
which we'll discuss in a

632
00:18:46,470 --> 00:18:48,410
moment. And we we observed best

633
00:18:48,410 --> 00:18:50,360
practices amongst that cohort.

634
00:18:50,360 --> 00:18:51,640
And then finally we looked at

635
00:18:51,640 --> 00:18:53,990
policies about related to other

636
00:18:53,990 --> 00:18:55,420
trust funds in the state of

637
00:18:55,420 --> 00:18:56,890
Minnesota. These are trust

638
00:18:56,890 --> 00:18:57,800
funds that do not have an

639
00:18:57,800 --> 00:18:59,800
explicitly educational mandate,

640
00:19:00,500 --> 00:19:00,850
but they do have some

641
00:19:00,850 --> 00:19:01,690
commonalities with the

642
00:19:01,690 --> 00:19:03,690
permanent school fund.

643
00:19:04,310 --> 00:19:05,890
We were assisted in our

644
00:19:05,890 --> 00:19:08,290
research by information and

645
00:19:09,300 --> 00:19:10,420
data that was provided to us by

646
00:19:10,420 --> 00:19:12,700
Nikita Investment Group,

647
00:19:12,700 --> 00:19:12,910
which is a nationally

648
00:19:12,910 --> 00:19:14,910
recognized independent

649
00:19:14,910 --> 00:19:16,220
investment consultant that

650
00:19:16,220 --> 00:19:17,510
works regularly with the State

651
00:19:17,510 --> 00:19:19,160
Board of Investment. They

652
00:19:19,160 --> 00:19:21,300
helped us fight with the study

653
00:19:21,300 --> 00:19:22,730
evaluated that first group

654
00:19:22,730 --> 00:19:24,490
endowments and higher education

655
00:19:24,490 --> 00:19:26,320
institutions around the country

656
00:19:26,320 --> 00:19:27,900
with a very broad sample size

657
00:19:27,900 --> 00:19:29,360
of institutions to help us

658
00:19:29,360 --> 00:19:31,280
identify best practices.

659
00:19:31,280 --> 00:19:33,420
We also then started to

660
00:19:33,420 --> 00:19:35,110
evaluate the suitability of

661
00:19:35,110 --> 00:19:35,920
different potential

662
00:19:35,920 --> 00:19:37,750
distribution policies for this

663
00:19:37,750 --> 00:19:38,760
fund for the Minnesota's

664
00:19:38,760 --> 00:19:41,320
Permanent School Fund. The task

665
00:19:41,320 --> 00:19:43,200
force worked with both SBI

666
00:19:43,200 --> 00:19:44,660
staff, not just myself, but

667
00:19:44,660 --> 00:19:46,280
that but a broader set of the

668
00:19:46,280 --> 00:19:48,600
SBI staff to help create models

669
00:19:48,600 --> 00:19:50,430
based on historical data and

670
00:19:50,430 --> 00:19:51,920
the FBI's forwardlooking market

671
00:19:51,920 --> 00:19:54,210
expectations. We also built on

672
00:19:54,210 --> 00:19:56,200
work from an investments which

673
00:19:56,200 --> 00:19:57,400
is another nationally

674
00:19:57,400 --> 00:19:58,540
recognized independent

675
00:19:58,540 --> 00:19:59,940
investment consultant that

676
00:19:59,940 --> 00:20:01,190
works regularly with the state

677
00:20:01,190 --> 00:20:03,190
Board of Investment.

678
00:20:07,960 --> 00:20:11,230
As we looked at the broad

679
00:20:11,230 --> 00:20:13,370
sample of other institutional

680
00:20:13,370 --> 00:20:15,450
other educational trust around

681
00:20:15,450 --> 00:20:17,580
the country, we were able to

682
00:20:17,580 --> 00:20:19,580
observe several commonalities.

683
00:20:20,350 --> 00:20:21,250
There were there were a wide

684
00:20:21,250 --> 00:20:22,320
variety of distribution

685
00:20:22,320 --> 00:20:23,670
policies across these

686
00:20:23,670 --> 00:20:24,950
institutions. And you can see

687
00:20:24,950 --> 00:20:26,990
some of those different

688
00:20:26,990 --> 00:20:28,610
distribution policies in the

689
00:20:28,610 --> 00:20:29,890
box on the right side of this

690
00:20:29,890 --> 00:20:30,940
page. I'm not gonna go through

691
00:20:30,940 --> 00:20:33,280
everyone. But what you'll

692
00:20:33,280 --> 00:20:35,150
observe is that almost all of

693
00:20:35,150 --> 00:20:36,400
these distribution methods that

694
00:20:36,400 --> 00:20:37,610
we use on all the ones that you

695
00:20:37,610 --> 00:20:39,160
see on the page here are based

696
00:20:39,160 --> 00:20:41,330
on a calculation related to the

697
00:20:41,330 --> 00:20:43,140
market value of their

698
00:20:43,140 --> 00:20:44,970
respective fund,

699
00:20:44,970 --> 00:20:46,610
most commonly institutions

700
00:20:46,610 --> 00:20:48,600
distribute some percentage of

701
00:20:48,600 --> 00:20:49,930
their market value over a

702
00:20:49,930 --> 00:20:52,520
rolling over a rolling average

703
00:20:52,520 --> 00:20:54,760
of prior years. These

704
00:20:54,760 --> 00:20:56,800
distribution policies typically

705
00:20:56,800 --> 00:20:57,870
apply a fixed percentage to the

706
00:20:57,870 --> 00:20:59,600
average market value over over

707
00:20:59,600 --> 00:21:01,570
a a sample of prior years,

708
00:21:01,570 --> 00:21:02,600
sometimes adjusting for

709
00:21:02,600 --> 00:21:04,420
inflation. Sometime some sort

710
00:21:04,420 --> 00:21:05,490
of hybrid between a fixed

711
00:21:05,490 --> 00:21:07,650
percentage and an inflation

712
00:21:07,650 --> 00:21:08,800
adjustment. But what we

713
00:21:08,800 --> 00:21:10,700
observed is that the a

714
00:21:10,700 --> 00:21:12,530
percentage of market value

715
00:21:12,530 --> 00:21:13,940
calculated on a rolling average

716
00:21:13,940 --> 00:21:16,940
was the most common practice.

717
00:21:21,440 --> 00:21:23,180
Further research indicated that

718
00:21:23,180 --> 00:21:25,980
when most endowments just in

719
00:21:25,980 --> 00:21:27,650
this sample distribute between

720
00:21:27,650 --> 00:21:30,500
4 and 5% of their average value

721
00:21:30,500 --> 00:21:31,430
annually and in fact, the

722
00:21:31,430 --> 00:21:33,540
single most common and

723
00:21:33,540 --> 00:21:34,690
percentage that these

724
00:21:34,690 --> 00:21:35,740
institutions are right, that is

725
00:21:35,740 --> 00:21:36,790
4 and a half percent. It's the

726
00:21:36,790 --> 00:21:38,880
midpoint of that range.

727
00:21:38,880 --> 00:21:40,830
Those institutions which again

728
00:21:40,830 --> 00:21:42,260
have a similar purpose to the

729
00:21:42,260 --> 00:21:43,890
permanent school fund and in up

730
00:21:43,890 --> 00:21:45,190
to help supporting their

731
00:21:45,190 --> 00:21:46,460
educational mission in

732
00:21:46,460 --> 00:21:48,460
perpetuity, considered

733
00:21:48,740 --> 00:21:49,860
distribution amounts in this

734
00:21:49,860 --> 00:21:51,240
range to be sustainable for

735
00:21:51,240 --> 00:21:52,740
their institutions needs

736
00:21:52,740 --> 00:21:54,280
balancing current funding needs

737
00:21:54,280 --> 00:21:55,870
with the long-term preservation

738
00:21:55,870 --> 00:21:57,500
of their funds purchasing

739
00:21:57,500 --> 00:21:59,500
power.

740
00:21:59,550 --> 00:22:00,990
We reviewed a range of options

741
00:22:00,990 --> 00:22:01,890
for calculating annual

742
00:22:01,890 --> 00:22:03,200
distributions to Minnesota

743
00:22:03,200 --> 00:22:04,460
school districts. And the task

744
00:22:04,460 --> 00:22:05,780
force concluded that

745
00:22:05,780 --> 00:22:06,820
distributing 4 and a half

746
00:22:06,820 --> 00:22:08,420
percent of the average market

747
00:22:08,420 --> 00:22:09,880
value of the fund over the

748
00:22:09,880 --> 00:22:11,850
previous 3 years aligns with

749
00:22:11,850 --> 00:22:13,270
common practices among

750
00:22:13,270 --> 00:22:14,350
educational trust funds and

751
00:22:14,350 --> 00:22:15,570
endowments and is also

752
00:22:15,570 --> 00:22:17,900
consistent with our funds

753
00:22:17,900 --> 00:22:18,590
objectives. 4 and a half

754
00:22:18,590 --> 00:22:20,760
percent and three-year rolling

755
00:22:20,760 --> 00:22:22,630
average were the most common

756
00:22:22,630 --> 00:22:24,770
solutions that other similar

757
00:22:24,770 --> 00:22:25,880
trust funds had arrived at

758
00:22:25,880 --> 00:22:27,880
independently.

759
00:22:32,420 --> 00:22:33,800
We evaluated distribution

760
00:22:33,800 --> 00:22:35,660
policies of similar school

761
00:22:35,660 --> 00:22:37,520
funds in other states. This is

762
00:22:37,520 --> 00:22:38,640
admittedly a much smaller

763
00:22:38,640 --> 00:22:40,240
sample size than the prior

764
00:22:40,240 --> 00:22:41,690
cohort of which there are many

765
00:22:41,690 --> 00:22:42,950
hundreds of educational

766
00:22:42,950 --> 00:22:44,390
endowments to look at and

767
00:22:44,390 --> 00:22:46,150
assess best practices. There

768
00:22:46,150 --> 00:22:47,440
are fewer permanent school

769
00:22:47,440 --> 00:22:48,340
funds around the country.

770
00:22:48,340 --> 00:22:49,380
There are only 50 states.

771
00:22:49,380 --> 00:22:50,550
Many of them do not have

772
00:22:50,550 --> 00:22:52,820
permanent school funds. So

773
00:22:52,820 --> 00:22:54,390
while the sample was not large,

774
00:22:54,390 --> 00:22:55,300
are robust enough to

775
00:22:55,300 --> 00:22:56,970
necessarily kindest to that,

776
00:22:56,970 --> 00:22:58,370
the quote, right answer.

777
00:22:58,370 --> 00:22:59,650
We were able to observe some

778
00:22:59,650 --> 00:23:01,830
common practices that we think

779
00:23:01,830 --> 00:23:03,710
are applicable to our research.

780
00:23:03,710 --> 00:23:06,500
What we observed is that

781
00:23:06,500 --> 00:23:07,470
most of these similar school

782
00:23:07,470 --> 00:23:09,400
funds around the country also

783
00:23:09,400 --> 00:23:10,470
similar to educational

784
00:23:10,470 --> 00:23:12,300
endowments based their annual

785
00:23:12,300 --> 00:23:13,490
distributions on a rolling

786
00:23:13,490 --> 00:23:15,190
average calculation. And they

787
00:23:15,190 --> 00:23:16,640
do this to moderate the impact

788
00:23:16,640 --> 00:23:18,500
of market volatility and none

789
00:23:18,500 --> 00:23:20,580
of them limited distributions

790
00:23:20,580 --> 00:23:22,130
to interest and dividend income

791
00:23:22,130 --> 00:23:23,500
as the state of Minnesota

792
00:23:23,500 --> 00:23:24,510
debts.

793
00:23:24,510 --> 00:23:25,790
We also observed that Minnesota

794
00:23:25,790 --> 00:23:27,680
is unusual in having the

795
00:23:27,680 --> 00:23:29,100
distribution policy for its

796
00:23:29,100 --> 00:23:30,570
permanent school fund spelled

797
00:23:30,570 --> 00:23:31,690
out explicitly in the

798
00:23:31,690 --> 00:23:33,320
Constitution

799
00:23:33,320 --> 00:23:34,440
other permanent school funds.

800
00:23:34,440 --> 00:23:36,510
Typically we observe that their

801
00:23:36,510 --> 00:23:38,160
distribution policy is

802
00:23:38,160 --> 00:23:40,000
articulated in statute foreign

803
00:23:40,000 --> 00:23:42,000
policy.

804
00:23:42,680 --> 00:23:43,880
Finally, we looked at other

805
00:23:43,880 --> 00:23:45,360
state trusts in Minnesota.

806
00:23:45,360 --> 00:23:46,440
It's an example of this would

807
00:23:46,440 --> 00:23:48,700
be the Environmental Trust Fund

808
00:23:48,700 --> 00:23:49,900
which is managed by the state

809
00:23:49,900 --> 00:23:50,850
Board of Investment. Again,

810
00:23:50,850 --> 00:23:52,130
these do not these trust funds

811
00:23:52,130 --> 00:23:53,300
do not have an educational

812
00:23:53,300 --> 00:23:54,750
mandate per se, but there are

813
00:23:54,750 --> 00:23:56,290
some similarities that we could

814
00:23:56,290 --> 00:23:59,340
observe. What we saw is that

815
00:23:59,340 --> 00:24:01,200
distributions from these funds

816
00:24:01,200 --> 00:24:02,580
once again, typically do not

817
00:24:02,580 --> 00:24:03,970
have their distribution policy,

818
00:24:03,970 --> 00:24:05,380
spelled out restrictions on

819
00:24:05,380 --> 00:24:06,940
distributions, articulated in

820
00:24:06,940 --> 00:24:08,780
the state constitution.

821
00:24:08,780 --> 00:24:10,900
And they also commonly

822
00:24:10,900 --> 00:24:11,890
determine distributions based

823
00:24:11,890 --> 00:24:13,820
on some concept of a percentage

824
00:24:13,820 --> 00:24:16,530
of the fund's value not tied to

825
00:24:16,530 --> 00:24:18,930
interest and dividend income.

826
00:24:25,310 --> 00:24:26,610
The task force members worked

827
00:24:26,610 --> 00:24:28,650
with SBI staff to start a model

828
00:24:28,650 --> 00:24:29,900
out some different scenarios

829
00:24:29,900 --> 00:24:31,370
and assess whether the

830
00:24:31,370 --> 00:24:33,160
implementation of this type of

831
00:24:33,160 --> 00:24:34,310
distribution policy would be

832
00:24:34,310 --> 00:24:35,700
appropriate for the Minnesota

833
00:24:35,700 --> 00:24:37,320
Permanent School Fund.

834
00:24:37,320 --> 00:24:40,800
We put together a variety of

835
00:24:40,800 --> 00:24:42,800
different scenarios and models

836
00:24:42,800 --> 00:24:44,850
guided by an evaluation of

837
00:24:44,850 --> 00:24:46,360
historical returns and revenue

838
00:24:46,360 --> 00:24:48,360
patterns forwardlooking return

839
00:24:48,580 --> 00:24:49,850
expectations that are

840
00:24:49,850 --> 00:24:51,130
consistent with the way that

841
00:24:51,130 --> 00:24:52,850
the SBI assesses asset

842
00:24:52,850 --> 00:24:54,690
allocation decisions and thinks

843
00:24:54,690 --> 00:24:55,650
about forward looking return

844
00:24:55,650 --> 00:24:56,990
expectations across all of the

845
00:24:56,990 --> 00:24:58,670
funds that we manage.

846
00:24:58,670 --> 00:25:00,760
We modeled scenarios that

847
00:25:00,760 --> 00:25:02,410
included periods of higher

848
00:25:02,410 --> 00:25:03,860
returns than history with it

849
00:25:03,860 --> 00:25:05,530
would suggest some that

850
00:25:05,530 --> 00:25:06,890
included negatives returns.

851
00:25:06,890 --> 00:25:07,790
Some highly volatile

852
00:25:07,790 --> 00:25:09,800
conditions, a wide variety of

853
00:25:09,800 --> 00:25:10,920
scenarios. We look at scenarios

854
00:25:10,920 --> 00:25:11,830
where the funds would

855
00:25:11,830 --> 00:25:13,760
distribute 3% of assets,

856
00:25:13,760 --> 00:25:15,990
4% of assets, 5% of assets.

857
00:25:15,990 --> 00:25:17,580
We looked at scenarios where

858
00:25:17,580 --> 00:25:19,440
think calculation was based on

859
00:25:19,440 --> 00:25:21,800
a point in time for its based

860
00:25:21,800 --> 00:25:22,590
on a rolling three-year average

861
00:25:22,590 --> 00:25:23,800
of the prior periods market

862
00:25:23,800 --> 00:25:25,480
value on a rolling five-year

863
00:25:25,480 --> 00:25:27,350
average. So we look to put a

864
00:25:27,350 --> 00:25:28,580
matrix of different potential

865
00:25:28,580 --> 00:25:30,310
scenarios. Not all of those

866
00:25:30,310 --> 00:25:31,680
appear on the screen in front

867
00:25:31,680 --> 00:25:33,800
of you. What we're attempting

868
00:25:33,800 --> 00:25:34,800
to show you here as it is a

869
00:25:34,800 --> 00:25:35,650
simplified representation of

870
00:25:35,650 --> 00:25:37,580
that analysis.

871
00:25:37,580 --> 00:25:38,980
What you'll see in the chart on

872
00:25:38,980 --> 00:25:40,970
the bottom left of your page

873
00:25:40,970 --> 00:25:42,430
out is a couple different

874
00:25:42,430 --> 00:25:44,400
scenarios, assuming that the

875
00:25:44,400 --> 00:25:45,390
permanent school fund did, in

876
00:25:45,390 --> 00:25:47,340
fact to distribute 4 and a half

877
00:25:47,340 --> 00:25:49,450
percent of the prior 3 years

878
00:25:49,450 --> 00:25:51,440
average market value. The

879
00:25:51,440 --> 00:25:52,920
middle line of those 3

880
00:25:52,920 --> 00:25:54,530
represents are kind of base

881
00:25:54,530 --> 00:25:56,930
case representing our best

882
00:25:57,290 --> 00:25:59,110
guess at forwardlooking return

883
00:25:59,110 --> 00:26:00,570
expectations in the market.

884
00:26:00,570 --> 00:26:02,190
And what you'll see is that the

885
00:26:02,190 --> 00:26:03,770
value of the permanent school

886
00:26:03,770 --> 00:26:05,710
fund after distributing 4 and a

887
00:26:05,710 --> 00:26:07,870
half percent per year to

888
00:26:07,870 --> 00:26:09,890
districts continues to increase

889
00:26:09,890 --> 00:26:11,880
over time. In that base case,

890
00:26:11,880 --> 00:26:14,210
the higher line indicates what

891
00:26:14,210 --> 00:26:15,820
could happen if returns are

892
00:26:15,820 --> 00:26:17,610
more favorable than our current

893
00:26:17,610 --> 00:26:19,000
expectations. So if the market,

894
00:26:19,000 --> 00:26:20,700
the roof, if the market is

895
00:26:20,700 --> 00:26:22,490
favorable, that obviously the

896
00:26:22,490 --> 00:26:23,700
the value of the trust fund

897
00:26:23,700 --> 00:26:24,870
would would increase even more

898
00:26:24,870 --> 00:26:26,500
over time. But more

899
00:26:26,500 --> 00:26:27,520
importantly, what we observe is

900
00:26:27,520 --> 00:26:29,790
that even in scenarios where

901
00:26:29,790 --> 00:26:31,250
returns are not as robust as

902
00:26:31,250 --> 00:26:32,400
our current expectations of the

903
00:26:32,400 --> 00:26:33,980
market works against us,

904
00:26:33,980 --> 00:26:35,320
we see that the value of the

905
00:26:35,320 --> 00:26:37,000
permanent school fund

906
00:26:37,000 --> 00:26:39,560
more lest stays stable. It does

907
00:26:39,560 --> 00:26:41,960
not decline over time.

908
00:26:42,730 --> 00:26:44,280
The right charge. Second, go

909
00:26:44,280 --> 00:26:45,770
back inside the chart on the

910
00:26:45,770 --> 00:26:46,910
right side is attempting to

911
00:26:46,910 --> 00:26:48,410
show what is happening to

912
00:26:48,410 --> 00:26:49,690
distributions coming out of the

913
00:26:49,690 --> 00:26:51,300
fund.

914
00:26:51,300 --> 00:26:52,850
So the first 2 sets a bar

915
00:26:52,850 --> 00:26:54,600
charts that you see there for

916
00:26:54,600 --> 00:26:56,600
years, 2020 for 2025. Those

917
00:26:56,760 --> 00:26:58,900
reflect the reality. Those are

918
00:26:58,900 --> 00:26:59,360
the actual dollars that were

919
00:26:59,360 --> 00:27:00,540
distributed from the permanent

920
00:27:00,540 --> 00:27:02,220
School fund in those years.

921
00:27:02,220 --> 00:27:04,620
Starting in 2026, were modeling

922
00:27:04,650 --> 00:27:05,940
out what the distributions

923
00:27:05,940 --> 00:27:07,410
would look like in dollar

924
00:27:07,410 --> 00:27:10,190
terms. If the the fund adopted

925
00:27:10,190 --> 00:27:11,310
of 4 and a half percent

926
00:27:11,310 --> 00:27:12,690
distribution rate calculated

927
00:27:12,690 --> 00:27:13,980
over rolling 3 years and you'll

928
00:27:13,980 --> 00:27:15,440
see that immediately. The

929
00:27:15,440 --> 00:27:17,300
distribution distributions from

930
00:27:17,300 --> 00:27:18,630
the fund Trump significantly,

931
00:27:18,630 --> 00:27:20,590
they nearly double and in our

932
00:27:20,590 --> 00:27:21,590
base case, which would

933
00:27:21,590 --> 00:27:23,330
represent the middle bar in

934
00:27:23,330 --> 00:27:24,740
each of those 2 in each of

935
00:27:24,740 --> 00:27:26,740
those years. The distributions

936
00:27:26,740 --> 00:27:28,570
grow moderately over time as

937
00:27:28,570 --> 00:27:30,810
the value of the fund increases

938
00:27:30,810 --> 00:27:32,230
in more favorable scenarios

939
00:27:32,230 --> 00:27:33,450
where the markets work in our

940
00:27:33,450 --> 00:27:35,140
favor than the value of those

941
00:27:35,140 --> 00:27:36,850
distributions increases even

942
00:27:36,850 --> 00:27:38,120
more so. But again,

943
00:27:38,120 --> 00:27:39,700
importantly, in the scenarios

944
00:27:39,700 --> 00:27:41,730
where returns in the market are

945
00:27:41,730 --> 00:27:43,590
less favorable and are negative

946
00:27:43,590 --> 00:27:44,900
scenario.

947
00:27:44,900 --> 00:27:45,500
We would observe the

948
00:27:45,500 --> 00:27:47,920
distributions while they what a

949
00:27:47,920 --> 00:27:49,310
moderate and in some cases can

950
00:27:49,310 --> 00:27:50,680
decline moderate somewhat over

951
00:27:50,680 --> 00:27:52,380
time. They're all higher than

952
00:27:52,380 --> 00:27:53,410
the distribution amount that's

953
00:27:53,410 --> 00:27:54,770
coming out of the funds today

954
00:27:54,770 --> 00:27:56,340
under the current legal

955
00:27:56,340 --> 00:27:58,340
framework

956
00:28:02,240 --> 00:28:04,500
as we evaluated these potential

957
00:28:04,500 --> 00:28:05,190
changes. The task force had

958
00:28:05,190 --> 00:28:06,610
several observations that we

959
00:28:06,610 --> 00:28:09,800
want to communicate first is

960
00:28:09,800 --> 00:28:10,620
that choosing a distribution

961
00:28:10,620 --> 00:28:13,330
rate does represent a tradeoff

962
00:28:13,330 --> 00:28:15,780
between current payouts to the

963
00:28:15,780 --> 00:28:17,610
students in here and districts

964
00:28:17,610 --> 00:28:19,120
in the here and now and

965
00:28:19,120 --> 00:28:22,120
long-term growth of the fund.

966
00:28:23,200 --> 00:28:25,200
We observed that it a potential

967
00:28:25,200 --> 00:28:26,250
distribution rate of 4 and a

968
00:28:26,250 --> 00:28:28,160
half percent can be expected to

969
00:28:28,160 --> 00:28:29,530
nearly double distributions

970
00:28:29,530 --> 00:28:31,350
from the fund in the near term

971
00:28:31,350 --> 00:28:32,880
while also achieving our

972
00:28:32,880 --> 00:28:34,380
objective of allowing the fund

973
00:28:34,380 --> 00:28:35,790
to grow over the long term and

974
00:28:35,790 --> 00:28:38,190
preserve its purchasing power.

975
00:28:39,170 --> 00:28:40,610
The fun value can certainly

976
00:28:40,610 --> 00:28:42,820
decline. That is the case today

977
00:28:42,820 --> 00:28:43,790
and would continue to be the

978
00:28:43,790 --> 00:28:46,500
case and in the adopting a new

979
00:28:46,500 --> 00:28:48,100
distribution policy. But we

980
00:28:48,100 --> 00:28:49,380
deserve the fun value will

981
00:28:49,380 --> 00:28:50,910
decline. Only women. The

982
00:28:50,910 --> 00:28:52,920
distribution rate exceeds the

983
00:28:52,920 --> 00:28:54,810
combined value of investment

984
00:28:54,810 --> 00:28:55,780
returns. Coming from the

985
00:28:55,780 --> 00:28:57,160
invest, the funds investment

986
00:28:57,160 --> 00:28:58,570
portfolio

987
00:28:58,570 --> 00:29:00,240
and revenues entering the fun

988
00:29:00,240 --> 00:29:02,240
from land management.

989
00:29:03,500 --> 00:29:04,430
We observed that using a

990
00:29:04,430 --> 00:29:05,910
three-year rolling average

991
00:29:05,910 --> 00:29:07,160
reduces the year to year

992
00:29:07,160 --> 00:29:08,880
volatility of distributions,

993
00:29:08,880 --> 00:29:10,200
which is consistent with one of

994
00:29:10,200 --> 00:29:11,330
the principles that the task

995
00:29:11,330 --> 00:29:13,140
force identified early on

996
00:29:13,140 --> 00:29:15,200
while also remaining responsive

997
00:29:15,200 --> 00:29:17,700
to prolonged market downturns.

998
00:29:17,700 --> 00:29:18,230
So in a scenario where the

999
00:29:18,230 --> 00:29:19,320
stock market goes down

1000
00:29:19,320 --> 00:29:20,670
substantially

1001
00:29:20,670 --> 00:29:22,140
this year, next year or the

1002
00:29:22,140 --> 00:29:23,380
year after that many years in a

1003
00:29:23,380 --> 00:29:25,230
row, the average market value

1004
00:29:25,230 --> 00:29:26,730
of the fund on a rolling

1005
00:29:26,730 --> 00:29:28,730
three-year basis decrease.

1006
00:29:28,920 --> 00:29:29,690
And that's the funds

1007
00:29:29,690 --> 00:29:31,100
distributed from the fund would

1008
00:29:31,100 --> 00:29:32,440
also decrease. And that's a

1009
00:29:32,440 --> 00:29:34,500
mechanism that protects on

1010
00:29:34,500 --> 00:29:35,130
dueling drawing down the

1011
00:29:35,130 --> 00:29:38,160
balance of the fund over time.

1012
00:29:38,160 --> 00:29:39,600
Finally, we observed that the 4

1013
00:29:39,600 --> 00:29:40,830
and a half percent distribution

1014
00:29:40,830 --> 00:29:42,510
rate and a three-year rolling

1015
00:29:42,510 --> 00:29:44,240
average period are aligned with

1016
00:29:44,240 --> 00:29:46,500
industry best practices.

1017
00:29:46,500 --> 00:29:47,270
And the task force feels that

1018
00:29:47,270 --> 00:29:48,920
they that this proposal

1019
00:29:48,920 --> 00:29:50,610
achieves an effective balance

1020
00:29:50,610 --> 00:29:52,400
between providing stable

1021
00:29:52,400 --> 00:29:53,880
distributions and preserving

1022
00:29:53,880 --> 00:29:54,780
the purchasing power of the

1023
00:29:54,780 --> 00:29:57,180
fund for future generations.

1024
00:30:00,600 --> 00:30:01,720
So now we come to the specific

1025
00:30:01,720 --> 00:30:03,270
recommendations that the task

1026
00:30:03,270 --> 00:30:05,810
force has in our report.

1027
00:30:05,810 --> 00:30:07,190
And there are 3 components to

1028
00:30:07,190 --> 00:30:09,190
this recommendation. First,

1029
00:30:10,450 --> 00:30:12,840
the task force recommends

1030
00:30:12,840 --> 00:30:14,400
amending the state constitution

1031
00:30:14,400 --> 00:30:16,110
and statutes to manage the

1032
00:30:16,110 --> 00:30:17,540
funds in accordance with the

1033
00:30:17,540 --> 00:30:18,770
guiding principles that we

1034
00:30:18,770 --> 00:30:20,400
articulated and identified

1035
00:30:20,400 --> 00:30:22,440
early on our work.

1036
00:30:23,490 --> 00:30:25,220
The task force recommends that

1037
00:30:25,220 --> 00:30:26,910
the Constitution should state

1038
00:30:26,910 --> 00:30:28,480
the enduring principles and

1039
00:30:28,480 --> 00:30:30,550
objectives of the fund. But

1040
00:30:30,550 --> 00:30:31,960
that specific operating

1041
00:30:31,960 --> 00:30:33,800
details, including the

1042
00:30:33,800 --> 00:30:35,800
distribution policy,

1043
00:30:35,250 --> 00:30:36,640
governance and investment

1044
00:30:36,640 --> 00:30:37,940
management policies should be

1045
00:30:37,940 --> 00:30:39,990
established in statute and not

1046
00:30:39,990 --> 00:30:41,490
in the state constitution to

1047
00:30:41,490 --> 00:30:42,760
allow for adaptability in the

1048
00:30:42,760 --> 00:30:44,760
future.

1049
00:30:45,290 --> 00:30:46,440
The task force recommends

1050
00:30:46,440 --> 00:30:48,700
adopting the 4 and a half

1051
00:30:48,700 --> 00:30:49,570
percent distribution rate

1052
00:30:49,570 --> 00:30:51,390
calculated using a three-year

1053
00:30:51,390 --> 00:30:52,780
rolling average of the fund's

1054
00:30:52,780 --> 00:30:54,780
value.

1055
00:30:59,180 --> 00:31:00,820
>> Chair Kunesh. I'd like to

1056
00:31:00,820 --> 00:31:02,390
talk for a moment just about

1057
00:31:02,390 --> 00:31:03,620
the changes in how we

1058
00:31:03,620 --> 00:31:05,260
translated those to the to the

1059
00:31:05,260 --> 00:31:06,800
bill in front of the committee.

1060
00:31:06,800 --> 00:31:08,900
>> Thank you, Israel. If you

1061
00:31:08,900 --> 00:31:09,310
introduce yourself for the

1062
00:31:09,310 --> 00:31:10,180
committee and then you can

1063
00:31:10,180 --> 00:31:11,540
begin.

1064
00:31:11,540 --> 00:31:12,460
>> Thank you, chair and good

1065
00:31:12,460 --> 00:31:13,470
morning members. My name is

1066
00:31:13,470 --> 00:31:14,760
John. The last time the general

1067
00:31:14,760 --> 00:31:15,930
counsel of the Minnesota State

1068
00:31:15,930 --> 00:31:17,450
Board of Investment. And I'm

1069
00:31:17,450 --> 00:31:18,960
going take a minute just to

1070
00:31:18,960 --> 00:31:20,840
talk about how we take all

1071
00:31:20,840 --> 00:31:22,360
those concepts that Mr.

1072
00:31:22,360 --> 00:31:25,110
Correct. Just reporting on as

1073
00:31:25,110 --> 00:31:26,510
part of the task force work and

1074
00:31:26,510 --> 00:31:29,510
translated that to the language

1075
00:31:29,630 --> 00:31:30,650
in the bill that you see in

1076
00:31:30,650 --> 00:31:33,980
front of you so has Mr. Craig

1077
00:31:33,980 --> 00:31:34,890
noted there were several

1078
00:31:34,890 --> 00:31:36,440
principles that the task force

1079
00:31:36,440 --> 00:31:37,670
offered very important that

1080
00:31:37,670 --> 00:31:38,690
should be captured in the

1081
00:31:38,690 --> 00:31:40,140
Constitution.

1082
00:31:40,140 --> 00:31:42,510
One of those and perhaps the

1083
00:31:42,510 --> 00:31:44,700
most important is that the fund

1084
00:31:44,700 --> 00:31:46,630
remainder perpetual resource.

1085
00:31:46,630 --> 00:31:49,600
That is how it is envisioned

1086
00:31:49,600 --> 00:31:50,410
right now in the Constitution.

1087
00:31:50,410 --> 00:31:51,740
We thought that concept should

1088
00:31:51,740 --> 00:31:53,940
be captured in the Constitution

1089
00:31:53,940 --> 00:31:55,500
going forward. So you will see

1090
00:31:55,500 --> 00:31:58,190
that in the language proposed

1091
00:31:58,190 --> 00:31:59,760
for the constitutional

1092
00:31:59,760 --> 00:32:00,990
amendment.

1093
00:32:00,990 --> 00:32:02,340
Another principle is that the

1094
00:32:02,340 --> 00:32:04,320
sole purpose of the fund should

1095
00:32:04,320 --> 00:32:06,120
be to make distributions to

1096
00:32:06,120 --> 00:32:07,160
school districts for the

1097
00:32:07,160 --> 00:32:08,810
benefit of students and should

1098
00:32:08,810 --> 00:32:10,210
not be used for any other

1099
00:32:10,210 --> 00:32:12,860
purpose. And so that concept is

1100
00:32:12,860 --> 00:32:15,250
also captured in the language

1101
00:32:15,250 --> 00:32:17,130
in the bill, noting that the

1102
00:32:17,130 --> 00:32:18,590
sole purpose of the fund is to

1103
00:32:18,590 --> 00:32:19,550
make those annual

1104
00:32:19,550 --> 00:32:21,550
distributions.

1105
00:32:23,280 --> 00:32:24,900
The next concept that the task

1106
00:32:24,900 --> 00:32:26,150
force that was very important

1107
00:32:26,150 --> 00:32:28,440
is that you need to balance the

1108
00:32:28,440 --> 00:32:30,400
interests of current and future

1109
00:32:30,400 --> 00:32:31,940
generations. And you talked

1110
00:32:31,940 --> 00:32:33,230
about the current distribution

1111
00:32:33,230 --> 00:32:35,100
formula occurring potential

1112
00:32:35,100 --> 00:32:36,760
benefits to future generations

1113
00:32:36,760 --> 00:32:38,730
more than current generations.

1114
00:32:38,730 --> 00:32:40,820
And so what we captured the

1115
00:32:40,820 --> 00:32:43,220
concept of balancing those

1116
00:32:43,450 --> 00:32:45,800
interest in the language that

1117
00:32:45,800 --> 00:32:48,100
also includes preserving the

1118
00:32:48,100 --> 00:32:49,610
purchase power. So how you

1119
00:32:49,610 --> 00:32:51,230
invest the dollars needs to be

1120
00:32:51,230 --> 00:32:52,730
done in a way that preserves

1121
00:32:52,730 --> 00:32:54,780
the purchasing power, keep the

1122
00:32:54,780 --> 00:32:57,100
fund a perpetual resource and

1123
00:32:57,100 --> 00:32:59,100
balance those interests.

1124
00:32:59,320 --> 00:33:01,660
And finally going back to the

1125
00:33:01,660 --> 00:33:03,800
original issue of how how funds

1126
00:33:03,800 --> 00:33:04,880
are distributed to the school

1127
00:33:04,880 --> 00:33:06,100
districts in the amount that

1128
00:33:06,100 --> 00:33:07,690
goes out, which you will note

1129
00:33:07,690 --> 00:33:09,650
in the constitutional language

1130
00:33:09,650 --> 00:33:11,430
is that there is not a specific

1131
00:33:11,430 --> 00:33:13,750
distribution formula in that

1132
00:33:13,750 --> 00:33:14,670
language and that the

1133
00:33:14,670 --> 00:33:16,100
Constitution notes that that

1134
00:33:16,100 --> 00:33:18,300
should be established by law.

1135
00:33:18,300 --> 00:33:19,200
So we're removing that

1136
00:33:19,200 --> 00:33:20,870
restriction right on

1137
00:33:20,870 --> 00:33:22,650
distributions to only interest

1138
00:33:22,650 --> 00:33:24,850
and dividends to allow for the

1139
00:33:24,850 --> 00:33:27,250
4.5% distribution rate on an

1140
00:33:28,400 --> 00:33:31,320
annual basis. And you will know

1141
00:33:31,320 --> 00:33:34,270
in the statutory language on

1142
00:33:34,270 --> 00:33:35,270
the distributions from the

1143
00:33:35,270 --> 00:33:36,670
fund, you will see that the

1144
00:33:36,670 --> 00:33:38,670
4.5% distribution rate rolling

1145
00:33:40,250 --> 00:33:42,860
average ending on the end of

1146
00:33:42,860 --> 00:33:44,790
the fiscal year is captured in

1147
00:33:44,790 --> 00:33:46,790
the statutory amendment and

1148
00:33:46,790 --> 00:33:47,960
could be addressed in the

1149
00:33:47,960 --> 00:33:50,300
future more easily if the

1150
00:33:50,300 --> 00:33:51,990
legislature determines that

1151
00:33:51,990 --> 00:33:53,260
this formula needs to be

1152
00:33:53,260 --> 00:33:54,640
changed.

1153
00:33:54,640 --> 00:33:56,870
So that is the basic overview

1154
00:33:56,870 --> 00:33:59,110
of how the task force meeting

1155
00:33:59,110 --> 00:34:00,860
specific recommendation for

1156
00:34:00,860 --> 00:34:03,200
changes to the constitution and

1157
00:34:03,200 --> 00:34:06,200
statutes noting that in order

1158
00:34:06,360 --> 00:34:09,400
to solve the initial problem of

1159
00:34:09,400 --> 00:34:10,850
the Constitution's restriction,

1160
00:34:10,850 --> 00:34:12,270
a constitutional amendment is

1161
00:34:12,270 --> 00:34:14,180
necessary for that. I'll turn

1162
00:34:14,180 --> 00:34:15,460
it back over to Andrew to wrap

1163
00:34:15,460 --> 00:34:17,460
things up

1164
00:34:19,800 --> 00:34:21,480
before the next slide.

1165
00:34:21,870 --> 00:34:23,870
>> But to conclude

1166
00:34:25,500 --> 00:34:27,990
the task force identified that

1167
00:34:27,990 --> 00:34:29,150
the fund has grown

1168
00:34:29,150 --> 00:34:30,270
significantly due to a

1169
00:34:30,270 --> 00:34:31,470
combination of investment

1170
00:34:31,470 --> 00:34:32,630
returns and land management

1171
00:34:32,630 --> 00:34:33,820
revenues.

1172
00:34:33,820 --> 00:34:34,650
But that outdated

1173
00:34:34,650 --> 00:34:36,470
constitutional and statutory

1174
00:34:36,470 --> 00:34:38,700
restrictions have limited the

1175
00:34:38,700 --> 00:34:39,650
ability of the funds to serve

1176
00:34:39,650 --> 00:34:41,900
its purpose of balancing the

1177
00:34:41,900 --> 00:34:42,700
needs of current and future

1178
00:34:42,700 --> 00:34:44,410
beneficiaries.

1179
00:34:44,410 --> 00:34:46,410
Our recommendations identified

1180
00:34:46,630 --> 00:34:48,600
that a modern market value

1181
00:34:48,600 --> 00:34:49,850
based distribution model would

1182
00:34:49,850 --> 00:34:51,930
better align the fund with best

1183
00:34:51,930 --> 00:34:54,280
practices used by Pierre States

1184
00:34:54,280 --> 00:34:55,380
and other educational

1185
00:34:55,380 --> 00:34:57,200
endowments.

1186
00:34:57,200 --> 00:34:58,230
We recommend that of 4 and a

1187
00:34:58,230 --> 00:34:59,430
half percent distribution rate

1188
00:34:59,430 --> 00:35:00,520
based on a three-year rolling

1189
00:35:00,520 --> 00:35:02,340
average can provide more stable

1190
00:35:02,340 --> 00:35:03,330
and predictable funding for

1191
00:35:03,330 --> 00:35:04,840
schools to current and current

1192
00:35:04,840 --> 00:35:06,570
beneficiaries, while preserving

1193
00:35:06,570 --> 00:35:08,110
the fund's long-term purchasing

1194
00:35:08,110 --> 00:35:09,430
power for the benefit of future

1195
00:35:09,430 --> 00:35:11,160
generations.

1196
00:35:11,160 --> 00:35:12,120
And finally, I'll just point

1197
00:35:12,120 --> 00:35:13,410
out that the 9 members of the

1198
00:35:13,410 --> 00:35:14,410
Permanent School Fund Task

1199
00:35:14,410 --> 00:35:16,550
Force spent close to a year and

1200
00:35:16,550 --> 00:35:20,800
a half together it in and over

1201
00:35:20,800 --> 00:35:21,330
the course of our work engaged

1202
00:35:21,330 --> 00:35:22,470
in a lot of conversation,

1203
00:35:22,470 --> 00:35:23,880
research, analysis and careful

1204
00:35:23,880 --> 00:35:25,670
consideration and all 9 members

1205
00:35:25,670 --> 00:35:26,860
unanimously endorsed the

1206
00:35:26,860 --> 00:35:29,260
recommendations of that report.

1207
00:35:30,190 --> 00:35:31,590
With that, we'll conclude and

1208
00:35:31,590 --> 00:35:33,500
taking questions that you on.

1209
00:35:33,500 --> 00:35:33,920
Thank you.

1210
00:35:33,920 --> 00:35:36,120
>> Thank you all for this.

1211
00:35:36,120 --> 00:35:38,120
Extremely interesting and

1212
00:35:38,680 --> 00:35:41,680
informative review of the task

1213
00:35:42,260 --> 00:35:44,260
force and members.

1214
00:35:46,410 --> 00:35:48,280
I know it's a lot to take in

1215
00:35:48,280 --> 00:35:49,440
some going to give you a second

1216
00:35:49,440 --> 00:35:51,170
to think about it. But I just

1217
00:35:51,170 --> 00:35:53,900
want to welcome some of the

1218
00:35:53,900 --> 00:35:55,310
folks in the audience. I know

1219
00:35:55,310 --> 00:35:56,860
that today is full service

1220
00:35:56,860 --> 00:35:58,600
community school day. So thank

1221
00:35:58,600 --> 00:35:59,960
you for all of you who are

1222
00:35:59,960 --> 00:36:01,600
coming here to the Capitol to

1223
00:36:01,600 --> 00:36:04,120
talk about your programs and

1224
00:36:04,120 --> 00:36:06,400
help us understand your needs

1225
00:36:06,400 --> 00:36:07,490
and your success is a little

1226
00:36:07,490 --> 00:36:10,480
bit better. And also it is

1227
00:36:10,480 --> 00:36:11,980
Minnesota's administrator for

1228
00:36:11,980 --> 00:36:14,980
Special Education Day. So we

1229
00:36:15,350 --> 00:36:16,790
really want to acknowledge the

1230
00:36:16,790 --> 00:36:18,500
hard work that our special ed

1231
00:36:18,500 --> 00:36:20,900
folks too, and administrating

1232
00:36:21,170 --> 00:36:23,400
anything is is not an easy job.

1233
00:36:23,400 --> 00:36:24,640
So thank you for being here.

1234
00:36:24,640 --> 00:36:26,300
And I think Senator Clark had

1235
00:36:26,300 --> 00:36:27,400
something to say.

1236
00:36:27,400 --> 00:36:28,400
>> Thank you, chair. And as

1237
00:36:28,400 --> 00:36:29,370
long as we're acknowledging

1238
00:36:29,370 --> 00:36:30,380
people, I want to be in this

1239
00:36:30,380 --> 00:36:32,380
litany of acknowledgements.

1240
00:36:33,900 --> 00:36:35,700
Yeah. Plus public schools, the

1241
00:36:35,700 --> 00:36:36,360
citywide student leadership

1242
00:36:36,360 --> 00:36:37,910
group is in the house. So

1243
00:36:37,910 --> 00:36:40,720
welcome. Glad you're here and

1244
00:36:40,720 --> 00:36:41,740
keep doing the good work and

1245
00:36:41,740 --> 00:36:43,260
represent the students. Why

1246
00:36:43,260 --> 00:36:45,260
you're here.

1247
00:36:45,670 --> 00:36:46,970
>> All right. We will move on

1248
00:36:46,970 --> 00:36:48,870
to member questions or comments

1249
00:36:48,870 --> 00:36:51,270
and Senator, find sort.

1250
00:36:52,180 --> 00:36:54,580
Thank you. Madam Chair,

1251
00:36:55,120 --> 00:36:56,250
Mr. Van One knows where I'm

1252
00:36:56,250 --> 00:36:57,720
going with this because I love

1253
00:36:57,720 --> 00:36:58,910
talking about mining. Every

1254
00:36:58,910 --> 00:37:00,120
time that permanent school

1255
00:37:00,120 --> 00:37:02,520
trust fund comes up.

1256
00:37:02,790 --> 00:37:03,710
This is one of the things I'm

1257
00:37:03,710 --> 00:37:05,160
most proud of. 90 1% of the

1258
00:37:05,160 --> 00:37:07,160
funds in the permanent School

1259
00:37:07,160 --> 00:37:08,310
Trust fund came from my

1260
00:37:08,310 --> 00:37:10,190
district from the man tapped

1261
00:37:10,190 --> 00:37:11,900
mine, which is the largest mine

1262
00:37:11,900 --> 00:37:13,900
in North America,

1263
00:37:14,330 --> 00:37:16,600
which which means that with the

1264
00:37:16,600 --> 00:37:18,220
distribution of about 72 and a

1265
00:37:18,220 --> 00:37:20,510
half dollars per student,

1266
00:37:20,510 --> 00:37:21,530
the people of mountain Iron

1267
00:37:21,530 --> 00:37:22,930
Fuel, which is about 2000,

1268
00:37:22,930 --> 00:37:25,330
people have contributed $65 per

1269
00:37:25,540 --> 00:37:27,800
student to every student in the

1270
00:37:27,800 --> 00:37:29,800
state of Minnesota.

1271
00:37:29,490 --> 00:37:30,640
And so I love to talk about

1272
00:37:30,640 --> 00:37:31,660
that. I you know, I'm the son

1273
00:37:31,660 --> 00:37:32,790
of a minor

1274
00:37:32,790 --> 00:37:35,190
and I but Mr. Van, what I am

1275
00:37:35,190 --> 00:37:37,590
wondering, we're talking about

1276
00:37:37,780 --> 00:37:39,400
trying to get more money to our

1277
00:37:39,400 --> 00:37:41,190
students and this is one

1278
00:37:41,190 --> 00:37:42,960
mechanism and I'm a coauthor of

1279
00:37:42,960 --> 00:37:44,330
the bill. Thank you. Chair

1280
00:37:44,330 --> 00:37:45,820
commissioner allowing me to

1281
00:37:45,820 --> 00:37:47,690
sign on

1282
00:37:47,690 --> 00:37:49,120
but other ways to possibly girl

1283
00:37:49,120 --> 00:37:50,930
the fund that could get more

1284
00:37:50,930 --> 00:37:54,130
money to our schools. And so my

1285
00:37:54,130 --> 00:37:56,150
question is on school, trust

1286
00:37:56,150 --> 00:37:57,490
land, are there other minerals

1287
00:37:57,490 --> 00:37:59,890
that could be used?

1288
00:38:00,540 --> 00:38:02,600
That would grow the school

1289
00:38:02,600 --> 00:38:04,170
trust fund? And what's the

1290
00:38:04,170 --> 00:38:07,340
estimate on how much that could

1291
00:38:07,340 --> 00:38:10,340
increase the school trust fund,

1292
00:38:10,490 --> 00:38:12,370
Mr. Van Dillen.

1293
00:38:12,370 --> 00:38:13,160
>> Madam Chair, Senator

1294
00:38:13,160 --> 00:38:15,160
Farnsworth members. Yes,

1295
00:38:15,650 --> 00:38:17,280
there are Minnesota has

1296
00:38:17,280 --> 00:38:19,680
considerable mineral wealth and

1297
00:38:20,170 --> 00:38:22,470
not just from our our hard-rock

1298
00:38:22,470 --> 00:38:23,430
minerals, like iron ore.

1299
00:38:23,430 --> 00:38:25,350
But we do have

1300
00:38:25,350 --> 00:38:26,860
deposits of non ferrous

1301
00:38:26,860 --> 00:38:28,700
minerals,

1302
00:38:28,700 --> 00:38:30,330
copper nickel, gold, platinum,

1303
00:38:30,330 --> 00:38:31,590
palladium.

1304
00:38:31,590 --> 00:38:33,970
And as you know, senator and

1305
00:38:33,970 --> 00:38:36,650
other senators, we also have a

1306
00:38:36,650 --> 00:38:38,800
helium deposit in Minnesota.

1307
00:38:38,800 --> 00:38:40,230
Now that has the potential to

1308
00:38:40,230 --> 00:38:41,970
produce a significant amount of

1309
00:38:41,970 --> 00:38:44,600
revenue for not only tax

1310
00:38:44,600 --> 00:38:45,600
working at Land's but school

1311
00:38:45,600 --> 00:38:47,600
cross as well.

1312
00:38:48,240 --> 00:38:51,550
I can't speak to the value of

1313
00:38:51,550 --> 00:38:53,460
oil and gas

1314
00:38:53,460 --> 00:38:55,180
reserves, if you will. I don't

1315
00:38:55,180 --> 00:38:56,550
know what our interests are.

1316
00:38:56,550 --> 00:38:57,850
I

1317
00:38:57,850 --> 00:38:59,530
from a non ferrous standpoint,

1318
00:38:59,530 --> 00:39:01,190
the known deposits have the

1319
00:39:01,190 --> 00:39:02,790
potential of

1320
00:39:02,790 --> 00:39:04,200
increasing the school trust by

1321
00:39:04,200 --> 00:39:07,200
3 billion dollars if we could

1322
00:39:08,230 --> 00:39:10,230
mind those bundles.

1323
00:39:12,140 --> 00:39:13,260
Yes, thank you, Madam Chair.

1324
00:39:13,260 --> 00:39:15,130
So

1325
00:39:15,130 --> 00:39:16,280
>> it would more than double

1326
00:39:16,280 --> 00:39:18,280
the size of the permanent

1327
00:39:18,280 --> 00:39:19,780
school fund. And even with this

1328
00:39:19,780 --> 00:39:21,380
increased distribution coming

1329
00:39:21,380 --> 00:39:22,200
from the fund, that would

1330
00:39:22,200 --> 00:39:23,820
pretty much guarantee

1331
00:39:23,820 --> 00:39:25,320
that the fund would never fall

1332
00:39:25,320 --> 00:39:28,590
back. And so I think that's

1333
00:39:28,590 --> 00:39:29,820
another good way that we should

1334
00:39:29,820 --> 00:39:31,420
look at

1335
00:39:31,420 --> 00:39:34,350
growing this pond. We have the

1336
00:39:34,350 --> 00:39:35,710
minerals. We can. We can do it

1337
00:39:35,710 --> 00:39:37,360
cleanly so we should we should

1338
00:39:37,360 --> 00:39:38,470
do it to help all of the

1339
00:39:38,470 --> 00:39:40,240
students in Minnesota. Thank

1340
00:39:40,240 --> 00:39:41,590
you, Madam Chair.

1341
00:39:41,590 --> 00:39:42,990
>> Thank you. And we do have to

1342
00:39:42,990 --> 00:39:44,990
acknowledge the

1343
00:39:45,680 --> 00:39:47,700
the legacy of mining in

1344
00:39:47,700 --> 00:39:49,470
Minnesota and the investment

1345
00:39:49,640 --> 00:39:51,460
that that has created for our

1346
00:39:51,460 --> 00:39:52,800
students

1347
00:39:52,800 --> 00:39:55,950
into perpetuity. And so I think

1348
00:39:55,950 --> 00:39:58,340
it was a good mention to

1349
00:39:58,340 --> 00:39:59,850
acknowledge that that

1350
00:39:59,850 --> 00:40:01,520
investment continues to this

1351
00:40:01,520 --> 00:40:04,420
day. It's interesting to note

1352
00:40:04,420 --> 00:40:06,950
that we have never amended this

1353
00:40:06,950 --> 00:40:09,310
part of the Constitution around

1354
00:40:09,310 --> 00:40:11,860
school, trust lands. And so I'm

1355
00:40:11,860 --> 00:40:13,200
really excited that we took the

1356
00:40:13,200 --> 00:40:15,320
time to do that and use the

1357
00:40:15,320 --> 00:40:17,190
brains out there. And the the

1358
00:40:17,190 --> 00:40:19,590
experience to, you know,

1359
00:40:20,270 --> 00:40:22,410
begin to look at how we can

1360
00:40:22,410 --> 00:40:24,750
best use those those dollars in

1361
00:40:24,750 --> 00:40:27,800
this time and in the near

1362
00:40:27,800 --> 00:40:29,820
future. So I think what it will

1363
00:40:29,820 --> 00:40:31,420
do is also open up with the

1364
00:40:31,420 --> 00:40:34,270
idea of how we can perhaps look

1365
00:40:34,270 --> 00:40:36,250
to the future and and use these

1366
00:40:36,250 --> 00:40:37,410
dollars in the best way

1367
00:40:37,410 --> 00:40:39,290
possible. And so I would

1368
00:40:39,290 --> 00:40:40,480
imagine that down the road

1369
00:40:40,480 --> 00:40:41,850
there would be some other

1370
00:40:41,850 --> 00:40:43,590
conversations are adjustments

1371
00:40:43,590 --> 00:40:45,450
to this. This school trust

1372
00:40:45,450 --> 00:40:46,810
land, whether it's a

1373
00:40:46,810 --> 00:40:47,990
constitutional amendment or

1374
00:40:47,990 --> 00:40:49,300
not.

1375
00:40:49,300 --> 00:40:51,110
So thank you, Senator Le Cerro.

1376
00:40:51,110 --> 00:40:52,930
You had something to say.

1377
00:40:52,930 --> 00:40:54,220
>> Thank you, Madam Chair.

1378
00:40:54,220 --> 00:40:55,540
I do have a comment but a

1379
00:40:55,540 --> 00:40:57,430
question first and I appreciate

1380
00:40:57,430 --> 00:40:58,790
the test fires and this this

1381
00:40:58,790 --> 00:41:00,790
very thorough presentation

1382
00:41:00,970 --> 00:41:02,460
in the presentation there will

1383
00:41:02,460 --> 00:41:04,700
serve. There was several

1384
00:41:04,700 --> 00:41:07,600
references to the SBI. Some

1385
00:41:07,600 --> 00:41:08,700
wonder if you could briefly

1386
00:41:08,700 --> 00:41:09,760
describe the relationship

1387
00:41:09,760 --> 00:41:11,280
between the trust fund and the

1388
00:41:11,280 --> 00:41:13,120
SBI.

1389
00:41:13,120 --> 00:41:14,980
Yes, Madam Chair, Senator

1390
00:41:14,980 --> 00:41:16,980
Cerro.

1391
00:41:17,200 --> 00:41:19,450
If you buy me, refer back

1392
00:41:19,450 --> 00:41:23,500
to our slide for hopefully this

1393
00:41:23,460 --> 00:41:26,460
helps illustrative. The SBI is

1394
00:41:26,830 --> 00:41:28,830
responsible for investment

1395
00:41:28,940 --> 00:41:30,940
management decisions

1396
00:41:31,470 --> 00:41:32,760
regarding the assets of the

1397
00:41:32,760 --> 00:41:34,610
permanent school fund. Once

1398
00:41:34,610 --> 00:41:36,210
dollars have been deposited in

1399
00:41:36,210 --> 00:41:37,830
the fund

1400
00:41:37,830 --> 00:41:39,000
from land management

1401
00:41:39,000 --> 00:41:40,960
activities. So the FBI has no

1402
00:41:40,960 --> 00:41:43,450
involvement with really any of

1403
00:41:43,450 --> 00:41:44,320
the things that aren't just

1404
00:41:44,320 --> 00:41:45,870
describing our decisions having

1405
00:41:45,870 --> 00:41:46,900
to do with how the lands are

1406
00:41:46,900 --> 00:41:47,980
managed, how revenues are

1407
00:41:47,980 --> 00:41:50,320
generated asset sales, mining

1408
00:41:50,320 --> 00:41:52,250
leases, that all lives within

1409
00:41:52,250 --> 00:41:53,300
the school trust lands and

1410
00:41:53,300 --> 00:41:54,770
within the DNR, those

1411
00:41:54,770 --> 00:41:56,770
activities generate revenues.

1412
00:41:57,110 --> 00:41:58,300
And so those revenues net of

1413
00:41:58,300 --> 00:41:59,560
the expenses of administering

1414
00:41:59,560 --> 00:42:00,920
and managing the land or

1415
00:42:00,920 --> 00:42:02,630
transferred to the permanent

1416
00:42:02,630 --> 00:42:05,120
school fund where we invest it

1417
00:42:05,120 --> 00:42:07,130
according to asset allocation,

1418
00:42:07,130 --> 00:42:09,430
that is determined by the SBI

1419
00:42:09,430 --> 00:42:11,340
be in it in a way to be

1420
00:42:11,340 --> 00:42:12,570
consistent with the objectives

1421
00:42:12,570 --> 00:42:13,670
of the fund. And so we manage

1422
00:42:13,670 --> 00:42:14,730
the fund the same way that we

1423
00:42:14,730 --> 00:42:16,330
would manage basically any

1424
00:42:16,330 --> 00:42:17,530
other trust fund that's under

1425
00:42:17,530 --> 00:42:19,610
our administration, most of the

1426
00:42:19,610 --> 00:42:21,590
assets that the SBI manages

1427
00:42:21,590 --> 00:42:22,500
have to do with the fairies

1428
00:42:22,500 --> 00:42:23,900
pension systems. But we also

1429
00:42:23,900 --> 00:42:25,560
manage many non retirement

1430
00:42:25,560 --> 00:42:27,190
assets, including other state

1431
00:42:27,190 --> 00:42:28,770
trust funds and the permanent

1432
00:42:28,770 --> 00:42:30,120
school fund that we take a

1433
00:42:30,120 --> 00:42:31,860
similar investment approach to

1434
00:42:31,860 --> 00:42:33,100
the permanent school fund as we

1435
00:42:33,100 --> 00:42:34,500
went to other state trust

1436
00:42:34,500 --> 00:42:35,950
funds. So the FBI is

1437
00:42:35,950 --> 00:42:37,490
responsible for

1438
00:42:37,490 --> 00:42:38,970
overseeing managing the

1439
00:42:38,970 --> 00:42:40,780
investments of the fund in

1440
00:42:40,780 --> 00:42:42,290
financial instruments during

1441
00:42:42,290 --> 00:42:43,870
the period of time that the

1442
00:42:43,870 --> 00:42:45,300
those dollars live within the

1443
00:42:45,300 --> 00:42:47,300
fund,

1444
00:42:47,190 --> 00:42:48,700
according to the current legal

1445
00:42:48,700 --> 00:42:50,700
framework meeting

1446
00:42:50,890 --> 00:42:52,170
calculating net interest and

1447
00:42:52,170 --> 00:42:53,280
dividends, the SBI is

1448
00:42:53,280 --> 00:42:54,830
responsible for determining

1449
00:42:54,830 --> 00:42:56,500
which dollars need to be

1450
00:42:56,500 --> 00:42:58,100
distributed from the fund to be

1451
00:42:58,100 --> 00:42:59,480
in accordance with the current

1452
00:42:59,480 --> 00:43:00,900
legal framework.

1453
00:43:00,900 --> 00:43:01,890
And then we then have those

1454
00:43:01,890 --> 00:43:04,200
dollars off and ultimately they

1455
00:43:04,200 --> 00:43:04,930
end up with the Department of

1456
00:43:04,930 --> 00:43:06,200
Education

1457
00:43:06,200 --> 00:43:07,420
who's responsible for making

1458
00:43:07,420 --> 00:43:08,710
sure those dollars and up with

1459
00:43:08,710 --> 00:43:09,690
school districts around the

1460
00:43:09,690 --> 00:43:11,690
state.

1461
00:43:11,710 --> 00:43:14,710
Does that answer your question?

1462
00:43:15,930 --> 00:43:17,220
Go ahead. Give it the question.

1463
00:43:17,220 --> 00:43:18,230
Thank you, Madam Chair, and

1464
00:43:18,230 --> 00:43:20,630
thank you for that.

1465
00:43:21,280 --> 00:43:23,220
The concern I have with the SBI

1466
00:43:23,220 --> 00:43:24,700
is one that I've had for many

1467
00:43:24,700 --> 00:43:25,950
years and for those who may not

1468
00:43:25,950 --> 00:43:27,910
be familiar just and over there

1469
00:43:27,910 --> 00:43:29,760
and I couldn't hear FBI's

1470
00:43:29,760 --> 00:43:30,590
answer State Board of

1471
00:43:30,590 --> 00:43:32,810
Investments, the and the 4

1472
00:43:32,810 --> 00:43:34,260
people the for individuals that

1473
00:43:34,260 --> 00:43:36,120
make up the SBI are the 4

1474
00:43:36,120 --> 00:43:37,880
constitutional officers here in

1475
00:43:37,880 --> 00:43:38,840
the state of Minnesota, the

1476
00:43:38,840 --> 00:43:40,490
governor, attorney general,

1477
00:43:40,490 --> 00:43:41,810
secretary of state and state

1478
00:43:41,810 --> 00:43:44,420
auditor. And over the years,

1479
00:43:44,420 --> 00:43:45,970
there have been multiple

1480
00:43:45,970 --> 00:43:47,910
attempts to to leverage the

1481
00:43:47,910 --> 00:43:50,870
state assets in the SBI for

1482
00:43:50,870 --> 00:43:51,900
purposes that I think many will

1483
00:43:51,900 --> 00:43:53,340
find alarming. So just this

1484
00:43:53,340 --> 00:43:54,370
morning, I want to confirm it

1485
00:43:54,370 --> 00:43:55,360
was still there express

1486
00:43:55,360 --> 00:43:56,980
purpose. And for those

1487
00:43:56,980 --> 00:43:58,200
listening to this conversation,

1488
00:43:58,200 --> 00:43:59,380
this is right from the Web site

1489
00:43:59,380 --> 00:44:01,230
this morning, SBI investment

1490
00:44:01,230 --> 00:44:03,520
staff with the external

1491
00:44:03,520 --> 00:44:05,600
investment managers work with

1492
00:44:05,600 --> 00:44:06,200
external and doesn't managers

1493
00:44:06,200 --> 00:44:07,140
to addressed.

1494
00:44:07,140 --> 00:44:09,300
>> Esg related risks within the

1495
00:44:09,300 --> 00:44:11,300
managers, investment portfolios

1496
00:44:11,410 --> 00:44:12,680
and within the managers

1497
00:44:12,680 --> 00:44:14,100
organizations themselves.

1498
00:44:14,100 --> 00:44:15,460
Most managers have documented

1499
00:44:15,460 --> 00:44:17,480
esg integration approach with

1500
00:44:17,480 --> 00:44:20,220
dei policy and then go on to

1501
00:44:20,220 --> 00:44:21,540
and I can recall back multiple

1502
00:44:21,540 --> 00:44:23,140
times. One of those actors is

1503
00:44:23,140 --> 00:44:24,600
the state auditor, as I

1504
00:44:24,600 --> 00:44:26,880
mentioned, and she is expressly

1505
00:44:26,880 --> 00:44:29,840
stated that she uses her

1506
00:44:29,840 --> 00:44:32,140
position on the SBI to further

1507
00:44:32,140 --> 00:44:33,830
advance these causes here.

1508
00:44:33,830 --> 00:44:35,510
She says through actions like

1509
00:44:35,510 --> 00:44:37,450
proxy vote at these companies,

1510
00:44:37,450 --> 00:44:38,750
more meetings importing with

1511
00:44:38,750 --> 00:44:40,220
other institutional investors,

1512
00:44:40,220 --> 00:44:41,420
weekend influence corporate

1513
00:44:41,420 --> 00:44:42,620
decisions.

1514
00:44:42,620 --> 00:44:44,620
I'm very concerned.

1515
00:44:45,480 --> 00:44:49,800
Esg clearly has an anti mine

1516
00:44:49,150 --> 00:44:51,740
philosophy in many aspects and

1517
00:44:51,740 --> 00:44:53,390
with assets that are in the

1518
00:44:53,390 --> 00:44:54,980
control or decisions made by

1519
00:44:54,980 --> 00:44:57,340
the SBI. They may be working

1520
00:44:57,340 --> 00:44:58,590
against some of the very things

1521
00:44:58,590 --> 00:44:59,790
that we're trying to do in

1522
00:44:59,790 --> 00:45:01,570
terms of maximizing revenue are

1523
00:45:01,570 --> 00:45:03,150
why, which which returns to our

1524
00:45:03,150 --> 00:45:04,760
students just throwing that out

1525
00:45:04,760 --> 00:45:05,750
there as part of the

1526
00:45:05,750 --> 00:45:07,510
consideration? Not necessarily

1527
00:45:07,510 --> 00:45:08,950
for this group at all, but the

1528
00:45:08,950 --> 00:45:11,210
reality that any influence or

1529
00:45:11,210 --> 00:45:13,520
involvement by SBI can have a

1530
00:45:13,520 --> 00:45:15,520
counterproductive outcome with

1531
00:45:15,970 --> 00:45:16,930
what's trying to be chief of

1532
00:45:16,930 --> 00:45:18,810
Maxim Mising the dollars from

1533
00:45:18,810 --> 00:45:20,590
the resources in some of the

1534
00:45:20,590 --> 00:45:22,220
great parts of our state.

1535
00:45:22,220 --> 00:45:24,620
So thank you, Madam Chair.

1536
00:45:24,620 --> 00:45:27,390
>> And I see that the director

1537
00:45:27,390 --> 00:45:30,510
of SBI has joined us miss

1538
00:45:30,510 --> 00:45:33,260
shirts. If you'd like to

1539
00:45:33,260 --> 00:45:34,550
state your name for the record

1540
00:45:34,550 --> 00:45:36,930
and if you'd like to respond.

1541
00:45:36,930 --> 00:45:37,770
>> Thank you, Madam Chair.

1542
00:45:37,770 --> 00:45:39,500
My name is Joe Shirts. It's my

1543
00:45:39,500 --> 00:45:40,830
honor and privilege to serve as

1544
00:45:40,830 --> 00:45:42,950
the executive director and the

1545
00:45:42,950 --> 00:45:44,100
chief investment officer of the

1546
00:45:44,100 --> 00:45:45,120
Minnesota State Board of

1547
00:45:45,120 --> 00:45:47,190
Investment. Sarah, Sarah, I I

1548
00:45:47,190 --> 00:45:48,150
appreciate your question.

1549
00:45:48,150 --> 00:45:51,600
It's an important one. And

1550
00:45:51,600 --> 00:45:52,970
frankly, we don't have many

1551
00:45:52,970 --> 00:45:54,580
opportunities to address your

1552
00:45:54,580 --> 00:45:57,580
question head-on. So thank you.

1553
00:45:57,730 --> 00:45:59,330
First of all, I appreciate all

1554
00:45:59,330 --> 00:46:01,000
of you. Your service public

1555
00:46:01,000 --> 00:46:02,500
service is an incredibly

1556
00:46:02,500 --> 00:46:03,680
important thing. Personally.

1557
00:46:03,680 --> 00:46:05,530
I've been very lucky to observe

1558
00:46:05,530 --> 00:46:06,770
public service through most of

1559
00:46:06,770 --> 00:46:07,750
my professional career,

1560
00:46:07,750 --> 00:46:10,350
starting with the military and

1561
00:46:10,350 --> 00:46:12,790
now over the last 14 years in

1562
00:46:12,790 --> 00:46:14,350
service, both in a local level.

1563
00:46:14,350 --> 00:46:16,550
And now at a state level.

1564
00:46:16,550 --> 00:46:17,980
I want to assure you that

1565
00:46:17,980 --> 00:46:19,330
although our governance

1566
00:46:19,330 --> 00:46:20,200
structure certainly

1567
00:46:20,200 --> 00:46:21,960
interesting, as you look across

1568
00:46:21,960 --> 00:46:23,290
the country, there are not that

1569
00:46:23,290 --> 00:46:25,210
many that have a

1570
00:46:25,210 --> 00:46:27,210
constitutionally mandated

1571
00:46:27,260 --> 00:46:29,510
approach for elected official

1572
00:46:29,510 --> 00:46:30,970
serving as the port

1573
00:46:30,970 --> 00:46:31,880
that's been enshrined in the

1574
00:46:31,880 --> 00:46:33,880
Constitution since 18. 85

1575
00:46:34,460 --> 00:46:36,520
also want to assure you that as

1576
00:46:36,520 --> 00:46:37,670
I thought about taking this

1577
00:46:37,670 --> 00:46:39,260
role, I thought about that

1578
00:46:39,260 --> 00:46:41,430
governance structure. I can

1579
00:46:41,430 --> 00:46:42,760
tell you. And I think there is

1580
00:46:42,760 --> 00:46:45,110
a fair body of evidence to

1581
00:46:45,110 --> 00:46:47,100
support crew about to say

1582
00:46:47,100 --> 00:46:48,400
that throughout many

1583
00:46:48,400 --> 00:46:50,400
administrations, the for

1584
00:46:50,430 --> 00:46:51,650
members of the State Board of

1585
00:46:51,650 --> 00:46:53,930
Investment have been unified in

1586
00:46:53,930 --> 00:46:56,200
placing their fiduciary duty

1587
00:46:56,200 --> 00:46:57,350
front and center

1588
00:46:57,350 --> 00:46:58,770
notwithstanding any political

1589
00:46:58,770 --> 00:46:59,920
believes they may or may not

1590
00:46:59,920 --> 00:47:01,900
have. And that includes the

1591
00:47:01,900 --> 00:47:03,900
issues you've identified.

1592
00:47:04,370 --> 00:47:07,370
Our fiduciary duty is our first

1593
00:47:07,370 --> 00:47:09,340
and foremost responsibility,

1594
00:47:09,340 --> 00:47:11,700
followed closely with respect

1595
00:47:11,700 --> 00:47:12,870
to particularly the combined

1596
00:47:12,870 --> 00:47:14,540
funds, the public pension plans

1597
00:47:14,540 --> 00:47:16,220
that we make sure that our only

1598
00:47:16,220 --> 00:47:18,000
focus

1599
00:47:18,000 --> 00:47:19,520
Britt generating a sufficient

1600
00:47:19,520 --> 00:47:20,380
return to support the

1601
00:47:20,380 --> 00:47:21,580
retirement. And I would say the

1602
00:47:21,580 --> 00:47:23,720
same is absolutely true with

1603
00:47:23,720 --> 00:47:25,500
respect to the permanent school

1604
00:47:25,500 --> 00:47:26,310
fund.

1605
00:47:26,310 --> 00:47:27,840
The issue you've identified has

1606
00:47:27,840 --> 00:47:30,200
been in our national ones for

1607
00:47:30,200 --> 00:47:31,840
quite a while. It's the object

1608
00:47:31,840 --> 00:47:34,240
of significant political focus

1609
00:47:34,880 --> 00:47:35,680
at the state Board of

1610
00:47:35,680 --> 00:47:36,730
Investment. We spent an

1611
00:47:36,730 --> 00:47:38,840
enormous amount of time making

1612
00:47:38,840 --> 00:47:40,390
sure that we communicate anyone

1613
00:47:40,390 --> 00:47:42,350
who wishes to hear us that we

1614
00:47:42,350 --> 00:47:44,570
are distinctly a political and

1615
00:47:44,570 --> 00:47:46,910
that profoundly impacts how we

1616
00:47:46,910 --> 00:47:48,910
think about every portfolio we

1617
00:47:48,910 --> 00:47:49,990
manage

1618
00:47:49,990 --> 00:47:51,320
and we're very fortunate.

1619
00:47:51,320 --> 00:47:53,310
Sarah Board has exhibited that

1620
00:47:53,310 --> 00:47:54,910
exact approach.

1621
00:47:54,910 --> 00:47:57,400
To that end. They were actually

1622
00:47:57,400 --> 00:48:00,330
willing to enshrine that in

1623
00:48:00,330 --> 00:48:02,330
policy. Recently

1624
00:48:02,590 --> 00:48:04,900
at the October board meeting,

1625
00:48:04,900 --> 00:48:05,470
we made a presentation, I would

1626
00:48:05,470 --> 00:48:06,960
say as detailed as the one you

1627
00:48:06,960 --> 00:48:09,510
see now about best practices

1628
00:48:09,510 --> 00:48:10,920
across the country when it

1629
00:48:10,920 --> 00:48:12,770
comes to large institutional

1630
00:48:12,770 --> 00:48:14,440
investors such as ourselves.

1631
00:48:14,440 --> 00:48:15,570
And again, we manage around

1632
00:48:15,570 --> 00:48:17,460
160 billion dollars of assets

1633
00:48:17,460 --> 00:48:19,860
across many pools capital.

1634
00:48:19,990 --> 00:48:22,550
In that presentation, we poured

1635
00:48:22,550 --> 00:48:23,870
put forth the premise that

1636
00:48:23,870 --> 00:48:25,800
delegated authority,

1637
00:48:25,800 --> 00:48:26,840
in other words, placing

1638
00:48:26,840 --> 00:48:27,980
investment authority in the

1639
00:48:27,980 --> 00:48:29,790
hands of the staff of the state

1640
00:48:29,790 --> 00:48:31,190
board. And I'm very lucky to

1641
00:48:31,190 --> 00:48:33,410
have a deep pool of incredibly

1642
00:48:33,410 --> 00:48:35,510
dedicated and talented people

1643
00:48:35,510 --> 00:48:37,600
that investment decision should

1644
00:48:37,600 --> 00:48:39,600
reside with us.

1645
00:48:39,110 --> 00:48:40,100
That doesn't mean that they're

1646
00:48:40,100 --> 00:48:42,270
trying to in my seat only we

1647
00:48:42,270 --> 00:48:43,770
have extensive internal

1648
00:48:43,770 --> 00:48:46,170
policies practices. I'm very

1649
00:48:46,680 --> 00:48:49,800
senior internal policy group

1650
00:48:49,750 --> 00:48:51,820
to make sure that we are always

1651
00:48:51,820 --> 00:48:53,750
balancing our approach.

1652
00:48:53,750 --> 00:48:55,180
We do not place any one

1653
00:48:55,180 --> 00:48:56,630
particular approach above any

1654
00:48:56,630 --> 00:48:57,630
other.

1655
00:48:57,630 --> 00:49:00,490
What we have said and I I think

1656
00:49:00,490 --> 00:49:02,400
given his on this body would

1657
00:49:02,400 --> 00:49:04,390
resonate, I would help

1658
00:49:04,390 --> 00:49:05,670
is that we maintain the

1659
00:49:05,670 --> 00:49:07,290
absolute importance of

1660
00:49:07,290 --> 00:49:09,690
considering all material risks

1661
00:49:10,390 --> 00:49:12,270
and opportunities when make

1662
00:49:12,270 --> 00:49:14,270
investment decisions.

1663
00:49:15,130 --> 00:49:17,700
We have been very proactive and

1664
00:49:17,700 --> 00:49:19,180
stated publicly on a number of

1665
00:49:19,180 --> 00:49:21,440
occasions, for example, we do

1666
00:49:21,440 --> 00:49:22,700
not support divestment

1667
00:49:22,700 --> 00:49:24,460
initiatives. We don't think

1668
00:49:24,460 --> 00:49:25,580
that's in the best interest of

1669
00:49:25,580 --> 00:49:27,260
our portfolio. We've been vocal

1670
00:49:27,260 --> 00:49:28,620
about that.

1671
00:49:28,620 --> 00:49:30,100
If you look at our portfolio,

1672
00:49:30,100 --> 00:49:31,360
it's representative of the

1673
00:49:31,360 --> 00:49:32,780
broader market.

1674
00:49:32,780 --> 00:49:34,470
So I do understand and

1675
00:49:34,470 --> 00:49:36,470
appreciate your concern.

1676
00:49:36,840 --> 00:49:38,500
But I want to assure you that

1677
00:49:38,500 --> 00:49:40,810
our focus is very clear when we

1678
00:49:40,810 --> 00:49:42,810
are fiduciaries first

1679
00:49:43,800 --> 00:49:45,800
middle and last.

1680
00:49:46,740 --> 00:49:48,560
>> Thank you so much. Any other

1681
00:49:48,560 --> 00:49:50,370
questions where we would really

1682
00:49:50,370 --> 00:49:51,770
like to narrow our focus here

1683
00:49:51,770 --> 00:49:53,170
on the school trust lands and

1684
00:49:53,170 --> 00:49:55,220
if you have broader questions

1685
00:49:55,220 --> 00:49:58,700
for the the department, maybe

1686
00:49:58,700 --> 00:50:01,700
you could take that offline.

1687
00:50:05,220 --> 00:50:07,760
I recognize we. Yes, thank you.

1688
00:50:07,760 --> 00:50:09,970
>> I I appreciate those those

1689
00:50:09,970 --> 00:50:11,590
words and I have the upmost

1690
00:50:11,590 --> 00:50:14,510
respect for or the staff.

1691
00:50:14,510 --> 00:50:16,300
My concern is the 4th, the top

1692
00:50:16,300 --> 00:50:17,250
and obviously the staff are

1693
00:50:17,250 --> 00:50:19,200
following the directives of

1694
00:50:19,200 --> 00:50:21,100
those that are the 4

1695
00:50:21,100 --> 00:50:22,430
constitutional officers.

1696
00:50:22,430 --> 00:50:24,480
But again, I appreciate your

1697
00:50:24,480 --> 00:50:25,810
words and I appreciate your

1698
00:50:25,810 --> 00:50:28,210
professionalism. What I am

1699
00:50:28,650 --> 00:50:29,810
concerned about against those

1700
00:50:29,810 --> 00:50:31,410
directors at the top. I'm

1701
00:50:31,410 --> 00:50:33,760
looking at the website here.

1702
00:50:33,760 --> 00:50:35,720
There's 6 press desire and

1703
00:50:35,720 --> 00:50:37,800
purpose from resolutions that

1704
00:50:37,800 --> 00:50:38,390
have been passed by the 4

1705
00:50:38,390 --> 00:50:39,860
members

1706
00:50:39,860 --> 00:50:41,690
with the intent of a directive.

1707
00:50:41,690 --> 00:50:43,800
How those are being carried out

1708
00:50:43,800 --> 00:50:46,600
by the staff will be determined

1709
00:50:46,600 --> 00:50:47,800
opportunity by day basis.

1710
00:50:47,800 --> 00:50:49,710
But it's very clear the

1711
00:50:49,710 --> 00:50:51,870
direction that the for members

1712
00:50:51,870 --> 00:50:54,400
are attempting to to leverage

1713
00:50:54,400 --> 00:50:55,620
the incredible assets. But

1714
00:50:55,620 --> 00:50:56,910
again, I appreciate that.

1715
00:50:56,910 --> 00:50:58,720
Thank you, Madam Chair.

1716
00:50:58,720 --> 00:51:00,360
>> Thank you. And thank you

1717
00:51:00,360 --> 00:51:01,630
executive director for stepping

1718
00:51:01,630 --> 00:51:02,670
up.

1719
00:51:02,670 --> 00:51:04,240
Senator, make I think that

1720
00:51:04,240 --> 00:51:06,250
chair I the first I want to say

1721
00:51:06,250 --> 00:51:07,390
that anyone of this is like the

1722
00:51:07,390 --> 00:51:08,370
largest audience they've had

1723
00:51:08,370 --> 00:51:09,750
all year. And committee

1724
00:51:09,750 --> 00:51:10,640
hearings are usually not this

1725
00:51:10,640 --> 00:51:12,640
dense.

1726
00:51:13,220 --> 00:51:14,540
But my question is really

1727
00:51:14,540 --> 00:51:16,620
specific on slide 9. You just

1728
00:51:16,620 --> 00:51:17,790
identified things that were

1729
00:51:17,790 --> 00:51:19,500
outside of the scope of the

1730
00:51:19,500 --> 00:51:21,500
legislative mandate. And one of

1731
00:51:21,500 --> 00:51:22,500
them is defining what is and is

1732
00:51:22,500 --> 00:51:24,900
not a school district

1733
00:51:25,390 --> 00:51:26,530
can use a little bit more.

1734
00:51:26,530 --> 00:51:27,390
I might have missed it, but

1735
00:51:27,390 --> 00:51:28,140
it's a little bit more about

1736
00:51:28,140 --> 00:51:29,220
that. And do does the

1737
00:51:29,220 --> 00:51:30,260
legislature have some work to

1738
00:51:30,260 --> 00:51:32,660
do to define that?

1739
00:51:32,660 --> 00:51:33,740
Madam Chair? Yes.

1740
00:51:33,740 --> 00:51:34,870
>> Senator, make weight.

1741
00:51:34,870 --> 00:51:36,860
I respond to that may be asked

1742
00:51:36,860 --> 00:51:38,940
John to chime in as well.

1743
00:51:38,940 --> 00:51:41,940
So we identified that in

1744
00:51:43,110 --> 00:51:44,610
in the scope of the legislative

1745
00:51:44,610 --> 00:51:46,450
framework, constitutional and

1746
00:51:46,450 --> 00:51:47,790
statutory that directly

1747
00:51:47,790 --> 00:51:49,500
addresses the permanent school

1748
00:51:49,500 --> 00:51:50,700
fund.

1749
00:51:50,700 --> 00:51:51,720
The word district is is used a

1750
00:51:51,720 --> 00:51:53,650
few times and it's not clearly

1751
00:51:53,650 --> 00:51:55,620
defined in that specific set

1752
00:51:55,620 --> 00:51:57,770
legal framework. I think is we

1753
00:51:57,770 --> 00:51:59,440
engaged with John in our legal

1754
00:51:59,440 --> 00:52:01,630
counsel to say what what what

1755
00:52:01,630 --> 00:52:02,750
does that what does that word

1756
00:52:02,750 --> 00:52:03,830
intended to mean? As we look

1757
00:52:03,830 --> 00:52:05,820
across a broader legal

1758
00:52:05,820 --> 00:52:07,720
framework in across statutes in

1759
00:52:07,720 --> 00:52:09,380
the state, what we observed is

1760
00:52:09,380 --> 00:52:10,950
that it it's it's perhaps

1761
00:52:10,950 --> 00:52:12,890
somewhat ambiguous where and

1762
00:52:12,890 --> 00:52:14,430
how and exactly what that were

1763
00:52:14,430 --> 00:52:16,360
district means. And we

1764
00:52:16,360 --> 00:52:18,350
determined that the the best

1765
00:52:18,350 --> 00:52:20,680
folks to us to really clearly

1766
00:52:20,680 --> 00:52:22,480
defined that term, probably not

1767
00:52:22,480 --> 00:52:23,570
the 9 members of the Permanent

1768
00:52:23,570 --> 00:52:25,900
School Fund task force. So

1769
00:52:25,900 --> 00:52:25,860
that's why we reached the

1770
00:52:25,860 --> 00:52:27,100
conclusion that it's outside of

1771
00:52:27,100 --> 00:52:28,600
our scope trying to do if you

1772
00:52:28,600 --> 00:52:30,460
have any additional come.

1773
00:52:30,540 --> 00:52:31,550
>> Thank thank you for that

1774
00:52:31,550 --> 00:52:33,400
explanation. And I think there

1775
00:52:33,400 --> 00:52:34,930
was a reason for that

1776
00:52:34,930 --> 00:52:36,220
conversation. And I'm just

1777
00:52:36,220 --> 00:52:38,620
going to ask our

1778
00:52:41,100 --> 00:52:44,610
non-partisan to be on to talk

1779
00:52:44,900 --> 00:52:47,300
about that, Mr. Innocent.

1780
00:52:49,220 --> 00:52:51,220
>> Madam Chair,

1781
00:52:51,600 --> 00:52:53,510
prior to

1782
00:52:53,510 --> 00:52:55,170
change made by the Legislature

1783
00:52:55,170 --> 00:52:58,170
in in the 2011 session, the

1784
00:52:58,490 --> 00:53:00,490
permanent school fund

1785
00:53:01,210 --> 00:53:02,460
distribution was apportioned

1786
00:53:02,460 --> 00:53:04,310
among

1787
00:53:04,310 --> 00:53:05,710
school districts, only

1788
00:53:05,710 --> 00:53:07,530
independent and special school

1789
00:53:07,530 --> 00:53:08,780
districts

1790
00:53:08,780 --> 00:53:11,310
in the last 2011. And that

1791
00:53:11,310 --> 00:53:12,360
previous apartment was on the

1792
00:53:12,360 --> 00:53:15,320
basis of resident ATM or

1793
00:53:15,320 --> 00:53:16,250
average daily membership.

1794
00:53:16,250 --> 00:53:19,700
Select a count of the number of

1795
00:53:19,700 --> 00:53:21,270
students living in that school

1796
00:53:21,270 --> 00:53:22,420
district

1797
00:53:22,420 --> 00:53:24,240
under laws. 2011, the

1798
00:53:24,240 --> 00:53:26,700
Legislature

1799
00:53:26,700 --> 00:53:27,500
made to charter schools

1800
00:53:27,500 --> 00:53:28,990
eligible also for the

1801
00:53:28,990 --> 00:53:30,120
apportionment

1802
00:53:30,120 --> 00:53:33,720
and in that act switch the

1803
00:53:34,320 --> 00:53:36,190
apportionment basis from

1804
00:53:36,190 --> 00:53:39,190
resident ATM to adjust adiam

1805
00:53:39,720 --> 00:53:41,720
court or pupils actually

1806
00:53:41,720 --> 00:53:43,950
enrolled in in those schools.

1807
00:53:43,950 --> 00:53:45,140
And those consider because

1808
00:53:45,140 --> 00:53:46,220
because definition of the

1809
00:53:46,220 --> 00:53:47,880
charter schools don't have

1810
00:53:47,880 --> 00:53:49,880
residents students.

1811
00:53:50,570 --> 00:53:51,980
More recently, there have been

1812
00:53:51,980 --> 00:53:53,470
conversations about whether to

1813
00:53:53,470 --> 00:53:55,470
include

1814
00:53:55,540 --> 00:53:57,630
students enrolled at trouble,

1815
00:53:57,630 --> 00:53:58,690
contract schools and the

1816
00:53:58,690 --> 00:54:01,200
apportionment from the fund.

1817
00:54:01,200 --> 00:54:03,110
But under current law, the and

1818
00:54:03,110 --> 00:54:06,140
it is eligible for receipt of a

1819
00:54:06,140 --> 00:54:07,350
portion dating include school

1820
00:54:07,350 --> 00:54:09,750
districts and charter schools.

1821
00:54:10,620 --> 00:54:12,620
Any follow-up?

1822
00:54:12,900 --> 00:54:14,290
>> Senator helped post you had

1823
00:54:14,290 --> 00:54:16,560
a question or comment for.

1824
00:54:16,560 --> 00:54:18,340
Thank you, Madam Chair.

1825
00:54:18,340 --> 00:54:20,600
>> So on slide number 17, you

1826
00:54:20,600 --> 00:54:21,910
guys have these really helpful

1827
00:54:21,910 --> 00:54:24,630
a graph showing what your

1828
00:54:24,630 --> 00:54:25,950
projected that the projected

1829
00:54:25,950 --> 00:54:27,690
growth of the fund would be

1830
00:54:27,690 --> 00:54:28,900
if we took the 4 and a half

1831
00:54:28,900 --> 00:54:30,170
percent, if we kept that the 2

1832
00:54:30,170 --> 00:54:31,580
and a half of work, if we fail

1833
00:54:31,580 --> 00:54:33,550
to changes at all, what is a

1834
00:54:33,550 --> 00:54:35,250
fun look like stretching out

1835
00:54:35,250 --> 00:54:36,210
over 10 years? What is the

1836
00:54:36,210 --> 00:54:38,210
growth like?

1837
00:54:38,920 --> 00:54:40,470
>> Yes, Madam Chair, Senator

1838
00:54:40,470 --> 00:54:42,470
Dole's from

1839
00:54:42,660 --> 00:54:45,220
if you imagine that chart and

1840
00:54:45,220 --> 00:54:46,920
distributions remains limited

1841
00:54:46,920 --> 00:54:49,270
to net interest and dividend

1842
00:54:49,270 --> 00:54:50,850
income, which over the last,

1843
00:54:50,850 --> 00:54:52,100
you know, 10 or so years has

1844
00:54:52,100 --> 00:54:53,730
been about 2 and a half percent

1845
00:54:53,730 --> 00:54:55,650
of fund assets. I would point

1846
00:54:55,650 --> 00:54:57,650
out it's

1847
00:54:58,120 --> 00:54:59,350
there's no particular reason to

1848
00:54:59,350 --> 00:54:59,930
believe that it would be

1849
00:54:59,930 --> 00:55:01,410
exactly that percentage of fund

1850
00:55:01,410 --> 00:55:02,500
assets going forward. It could

1851
00:55:02,500 --> 00:55:04,850
change, according to all kinds

1852
00:55:04,850 --> 00:55:06,400
of things, including prevailing

1853
00:55:06,400 --> 00:55:07,840
interest rate environment,

1854
00:55:07,840 --> 00:55:08,840
corporate decisions that

1855
00:55:08,840 --> 00:55:10,570
corporations make about how

1856
00:55:10,570 --> 00:55:11,300
much of their earnings to

1857
00:55:11,300 --> 00:55:13,200
distribute and dividends, so

1858
00:55:13,200 --> 00:55:14,490
that so that I want to be clear

1859
00:55:14,490 --> 00:55:16,690
that we don't we don't assume

1860
00:55:16,690 --> 00:55:18,680
that the state is the status

1861
00:55:18,680 --> 00:55:20,200
quo remaining in place would

1862
00:55:20,200 --> 00:55:21,350
somehow guarantee a 2 and a

1863
00:55:21,350 --> 00:55:22,750
half percent distribution about

1864
00:55:22,750 --> 00:55:25,440
that could be variable. But for

1865
00:55:25,440 --> 00:55:26,740
the sake of argument, if it did

1866
00:55:26,740 --> 00:55:28,180
remain the same, but you'd

1867
00:55:28,180 --> 00:55:30,690
likely see is that the growth

1868
00:55:30,690 --> 00:55:33,190
of the left side of that chart,

1869
00:55:33,190 --> 00:55:35,200
the value of the fund would

1870
00:55:35,200 --> 00:55:35,970
increase at a rate that's

1871
00:55:35,970 --> 00:55:37,620
higher. That's that's a steeper

1872
00:55:37,620 --> 00:55:38,640
than the highest wind that you

1873
00:55:38,640 --> 00:55:41,000
see on that chart today

1874
00:55:41,000 --> 00:55:42,430
and that you would likely see

1875
00:55:42,430 --> 00:55:43,920
on the right side of that chart

1876
00:55:43,920 --> 00:55:45,570
that the distribution profile,

1877
00:55:45,570 --> 00:55:47,900
those bars would be much more

1878
00:55:47,900 --> 00:55:48,560
similar to what you see for the

1879
00:55:48,560 --> 00:55:50,560
years 2024 2025 which reflect

1880
00:55:50,920 --> 00:55:51,930
the reality of the current

1881
00:55:51,930 --> 00:55:53,930
legal framework.

1882
00:55:56,680 --> 00:55:57,610
>> Any other questions or

1883
00:55:57,610 --> 00:55:59,370
comments? Senator Clark,

1884
00:55:59,370 --> 00:56:01,570
thank you, chair condition and

1885
00:56:01,570 --> 00:56:03,660
thank you all as someone who

1886
00:56:03,660 --> 00:56:05,180
manages a much, much smaller

1887
00:56:05,180 --> 00:56:06,900
endowment. I'm

1888
00:56:06,900 --> 00:56:08,990
really impressed with the

1889
00:56:08,990 --> 00:56:10,920
consistent returns that you you

1890
00:56:10,920 --> 00:56:12,360
have have on the permanent

1891
00:56:12,360 --> 00:56:14,210
school fund. One piece that I

1892
00:56:14,210 --> 00:56:15,500
needed just a little bit more

1893
00:56:15,500 --> 00:56:18,200
information on and I'm glad

1894
00:56:18,200 --> 00:56:19,320
Senator Farnsworth is back

1895
00:56:19,320 --> 00:56:21,180
because not just great folks of

1896
00:56:21,180 --> 00:56:22,590
honor in Buhl of contribute

1897
00:56:22,590 --> 00:56:24,260
this. What else has country?

1898
00:56:24,260 --> 00:56:25,900
I know it's 90% from that.

1899
00:56:25,900 --> 00:56:27,770
I or that

1900
00:56:27,770 --> 00:56:29,630
the the mine in which my great

1901
00:56:29,630 --> 00:56:31,370
uncle Clayton worked in the

1902
00:56:31,370 --> 00:56:33,370
60's.

1903
00:56:34,110 --> 00:56:35,570
What what were the other pieces

1904
00:56:35,570 --> 00:56:36,560
that fall under the land

1905
00:56:36,560 --> 00:56:37,830
management in revenues

1906
00:56:37,830 --> 00:56:39,950
understand enforced and such.

1907
00:56:39,950 --> 00:56:41,210
But if you could just to remind

1908
00:56:41,210 --> 00:56:42,580
me on that.

1909
00:56:42,580 --> 00:56:44,980
>> Okay. We will invite

1910
00:56:45,800 --> 00:56:47,350
director the office of the

1911
00:56:47,350 --> 00:56:49,300
School Trust Lands. Erin Van

1912
00:56:49,300 --> 00:56:50,920
Dillen back and if you'd like

1913
00:56:50,920 --> 00:56:52,920
to respond.

1914
00:56:52,920 --> 00:56:53,990
>> Thank you, Madam Chair

1915
00:56:53,990 --> 00:56:55,990
members, senator clerk,

1916
00:56:57,220 --> 00:56:59,600
the breakdown. And

1917
00:56:59,600 --> 00:57:00,230
so just want to back up a

1918
00:57:00,230 --> 00:57:01,210
little bit. We we've talked

1919
00:57:01,210 --> 00:57:03,100
about the fund its value right

1920
00:57:03,100 --> 00:57:05,230
now is 2.3 billion dollars.

1921
00:57:05,230 --> 00:57:06,720
When I talk about land

1922
00:57:06,720 --> 00:57:08,720
management revenue,

1923
00:57:09,370 --> 00:57:11,520
the cash basis that that's

1924
00:57:11,520 --> 00:57:13,450
generated is 1.1 billion

1925
00:57:13,450 --> 00:57:15,230
dollars. So the value of the

1926
00:57:15,230 --> 00:57:17,230
fund it 2.3,

1927
00:57:18,410 --> 00:57:20,700
half investment about that.

1928
00:57:20,700 --> 00:57:23,700
But that 1.1 cash basis to 80%

1929
00:57:24,290 --> 00:57:25,610
minerals,

1930
00:57:25,610 --> 00:57:27,610
7% real estate, 9%. Amber,

1931
00:57:29,500 --> 00:57:31,900
4% investment returns on the

1932
00:57:32,370 --> 00:57:34,370
land management. So

1933
00:57:35,670 --> 00:57:37,200
investment on land management.

1934
00:57:37,200 --> 00:57:38,530
So we sold the land under

1935
00:57:38,530 --> 00:57:40,110
contract for deed.

1936
00:57:40,110 --> 00:57:41,940
Got interest payments on that

1937
00:57:41,940 --> 00:57:44,680
things of that nature. So

1938
00:57:44,680 --> 00:57:46,800
it's the foreperson investment

1939
00:57:46,800 --> 00:57:47,270
that I talk about has nothing

1940
00:57:47,270 --> 00:57:50,150
to do with SBA. They they do

1941
00:57:50,150 --> 00:57:51,830
entirely sure credibly better

1942
00:57:51,830 --> 00:57:53,800
than that.

1943
00:57:53,800 --> 00:57:55,800
Any follow-up question.

1944
00:57:55,960 --> 00:57:56,870
>> Thank You, Chair Commission

1945
00:57:56,870 --> 00:57:58,710
and thank you for that to the

1946
00:57:58,710 --> 00:58:00,150
obviously you want to grow both

1947
00:58:00,150 --> 00:58:01,590
the base and so the so the

1948
00:58:01,590 --> 00:58:03,700
income as well as the return.

1949
00:58:03,700 --> 00:58:05,940
So thank you on that. My

1950
00:58:05,940 --> 00:58:07,790
general comment is I know what

1951
00:58:07,790 --> 00:58:09,340
they said on

1952
00:58:09,340 --> 00:58:10,770
on Page 12 following the best

1953
00:58:10,770 --> 00:58:12,770
practices

1954
00:58:12,990 --> 00:58:14,130
that that matches my

1955
00:58:14,130 --> 00:58:16,130
understanding that Page 18,

1956
00:58:16,840 --> 00:58:18,670
sorry, the 8, 4, and a half

1957
00:58:18,670 --> 00:58:19,400
distribution rate and

1958
00:58:19,400 --> 00:58:21,210
three-year-old rolling average

1959
00:58:21,210 --> 00:58:22,610
that matches what what I do.

1960
00:58:22,610 --> 00:58:23,550
So

1961
00:58:23,550 --> 00:58:25,560
you must be wonderful.

1962
00:58:25,560 --> 00:58:27,800
Thank you.

1963
00:58:27,800 --> 00:58:28,820
>> I think we've had we've had

1964
00:58:28,820 --> 00:58:31,000
good people looking out for.

1965
00:58:31,000 --> 00:58:33,560
Well, it has to say, but I

1966
00:58:33,560 --> 00:58:35,200
think I think the the school

1967
00:58:35,200 --> 00:58:36,320
chess signs have been in good

1968
00:58:36,320 --> 00:58:37,770
hands and they've done their

1969
00:58:37,770 --> 00:58:40,180
due diligence. And now we just

1970
00:58:40,180 --> 00:58:41,970
need to let them do a little

1971
00:58:41,970 --> 00:58:43,840
bit better. Any other questions

1972
00:58:43,840 --> 00:58:45,840
or comments?

1973
00:58:47,220 --> 00:58:48,550
Well, we're gonna move along

1974
00:58:48,550 --> 00:58:49,690
because we have a couple of

1975
00:58:49,690 --> 00:58:51,320
bills to be heard in the next

1976
00:58:51,320 --> 00:58:54,700
one is going to be my bill on

1977
00:58:54,700 --> 00:58:55,360
making the changes of the

1978
00:58:55,360 --> 00:58:57,220
Reccomendation. So thank you,

1979
00:58:57,220 --> 00:58:58,740
gentlemen, for joining us

1980
00:58:58,740 --> 00:59:00,220
today. And thank you, executive

1981
00:59:00,220 --> 00:59:03,220
director for stepping in and

1982
00:59:03,400 --> 00:59:04,620
maybe just stick around in case

1983
00:59:04,620 --> 00:59:05,930
there's a question or 2.

1984
00:59:05,930 --> 00:59:07,930
Thank you.

1985
00:59:54,550 --> 00:59:55,700
>> All right, Senator C****,

1986
00:59:55,700 --> 00:59:56,650
when you're ready, you can make

1987
00:59:56,650 --> 00:59:59,120
a motion to move SF 3, 6, 2, 5,

1988
00:59:59,120 --> 01:00:01,120
be recommended to

1989
01:00:01,410 --> 01:00:03,310
certainly the wrong tree.

1990
01:00:03,310 --> 01:00:05,310
Stand by.

1991
01:00:09,930 --> 01:00:11,430
Let's try that again. Senator,

1992
01:00:11,430 --> 01:00:14,340
could this will hear a SF 3,

1993
01:00:14,340 --> 01:00:16,740
5, 9, threes when you're ready.

1994
01:00:16,870 --> 01:00:18,140
>> Thank you so much, Madam

1995
01:00:18,140 --> 01:00:21,100
chair and members. This next

1996
01:00:21,100 --> 01:00:24,180
part is is the proposal for a

1997
01:00:24,180 --> 01:00:25,860
constitutional amendment to

1998
01:00:25,860 --> 01:00:28,240
make the recommended changes

1999
01:00:28,240 --> 01:00:31,100
that we just discussed in order

2000
01:00:31,100 --> 01:00:32,480
to make those chains. We do

2001
01:00:32,480 --> 01:00:33,540
have to go through the

2002
01:00:33,540 --> 01:00:35,190
Constitution,

2003
01:00:35,190 --> 01:00:37,150
a constitutional amendment

2004
01:00:37,150 --> 01:00:38,790
process, which means that we

2005
01:00:38,790 --> 01:00:40,340
would take those

2006
01:00:40,340 --> 01:00:42,740
recommendations to the voters.

2007
01:00:43,640 --> 01:00:45,510
And I'm just going to read what

2008
01:00:45,510 --> 01:00:48,400
that might sound like on on the

2009
01:00:48,400 --> 01:00:50,440
ballot in November. The

2010
01:00:50,450 --> 01:00:52,150
submission to of the voters and

2011
01:00:52,150 --> 01:00:53,500
you'll see this on Page 2 of

2012
01:00:53,500 --> 01:00:55,900
the bill. Section 2. The

2013
01:00:56,240 --> 01:00:57,800
proposed amendment must be

2014
01:00:57,800 --> 01:00:59,260
submitted to the people at the

2015
01:00:59,260 --> 01:01:01,260
2026 state general election.

2016
01:01:02,800 --> 01:01:03,300
And the questions submitted

2017
01:01:03,300 --> 01:01:05,290
must be shell. The Minnesota

2018
01:01:05,290 --> 01:01:07,200
Constitution be amended to

2019
01:01:07,200 --> 01:01:08,720
modify the permanent school

2020
01:01:08,720 --> 01:01:10,470
fund to calculate the

2021
01:01:10,470 --> 01:01:12,370
distributable amount and to

2022
01:01:12,370 --> 01:01:13,810
maintain the fund has a

2023
01:01:13,810 --> 01:01:15,810
perpetual financial resource

2024
01:01:16,240 --> 01:01:18,320
for Minnesota schools and that

2025
01:01:18,320 --> 01:01:20,890
would go into effect July Force

2026
01:01:20,890 --> 01:01:23,290
first excuse me of 2027.

2027
01:01:25,800 --> 01:01:28,140
I think at this time I will ask

2028
01:01:28,140 --> 01:01:31,140
our legislative analysis of the

2029
01:01:31,840 --> 01:01:33,820
are innocent to maybe walk

2030
01:01:33,820 --> 01:01:34,880
through the bill. It's not a

2031
01:01:34,880 --> 01:01:37,230
big bill, but I think it would

2032
01:01:37,230 --> 01:01:38,880
be helpful for him to just go

2033
01:01:38,880 --> 01:01:39,900
through. And if you have any

2034
01:01:39,900 --> 01:01:41,220
questions, happy to answer

2035
01:01:41,220 --> 01:01:42,780
those Senator, Chris, to want

2036
01:01:42,780 --> 01:01:43,970
to move your a one amendment

2037
01:01:43,970 --> 01:01:45,970
for your side.

2038
01:01:53,620 --> 01:01:54,550
>> All those in favor of

2039
01:01:54,550 --> 01:01:56,100
adopting a one amendment say

2040
01:01:56,100 --> 01:01:57,300
aye.

2041
01:01:57,300 --> 01:01:59,300
Any opposed

2042
01:02:03,550 --> 01:02:04,520
amendment adopted. You can

2043
01:02:04,520 --> 01:02:06,640
begin. Thank you, Mr. Innocent

2044
01:02:06,640 --> 01:02:09,640
if you are ready to.

2045
01:02:11,200 --> 01:02:12,460
>> Madam Chair members, all all

2046
01:02:12,460 --> 01:02:14,410
walk through the one delete

2047
01:02:14,410 --> 01:02:16,410
everything amendment

2048
01:02:17,320 --> 01:02:18,870
as

2049
01:02:18,870 --> 01:02:20,600
Sir Commission to to the the

2050
01:02:20,600 --> 01:02:22,600
amendment is

2051
01:02:24,200 --> 01:02:26,200
implements the recommendations

2052
01:02:27,470 --> 01:02:29,960
from the task force itself

2053
01:02:29,960 --> 01:02:31,680
because this is the the first

2054
01:02:31,680 --> 01:02:32,930
bill proposing a constitutional

2055
01:02:32,930 --> 01:02:33,560
amendment. Some of the

2056
01:02:33,560 --> 01:02:35,200
committee this year just note

2057
01:02:35,200 --> 01:02:37,520
that under the joint rules cost

2058
01:02:37,520 --> 01:02:38,610
Bill proposing Constitution

2059
01:02:38,610 --> 01:02:40,400
amendment must include the

2060
01:02:40,400 --> 01:02:42,800
amendment language itself and

2061
01:02:43,400 --> 01:02:44,800
anything

2062
01:02:44,800 --> 01:02:46,660
relevant. Statutory changes

2063
01:02:46,660 --> 01:02:47,880
required by the amendment.

2064
01:02:47,880 --> 01:02:50,130
So the Constitution Amendment

2065
01:02:50,130 --> 01:02:51,420
is an article.

2066
01:02:51,420 --> 01:02:53,420
One of the

2067
01:02:54,240 --> 01:02:56,650
of the bill and the structural

2068
01:02:56,650 --> 01:02:58,900
changes are contained in

2069
01:02:58,900 --> 01:03:00,490
Article 2 of the bill.

2070
01:03:04,160 --> 01:03:05,350
The previous presentation

2071
01:03:05,350 --> 01:03:07,230
described it to some degree the

2072
01:03:07,230 --> 01:03:08,830
proposed constitutional

2073
01:03:08,830 --> 01:03:10,550
language change the new

2074
01:03:10,550 --> 01:03:13,110
language. This list of the 1.1,

2075
01:03:13,110 --> 01:03:15,510
9 through 1.0, 2, 5, of the a

2076
01:03:16,240 --> 01:03:18,240
one Amendment.

2077
01:03:19,220 --> 01:03:21,220
It includes

2078
01:03:23,620 --> 01:03:25,390
describing the principles

2079
01:03:25,390 --> 01:03:27,440
overarching principles for the

2080
01:03:27,440 --> 01:03:29,180
permanent school fund. It

2081
01:03:29,180 --> 01:03:31,220
strikes language that Mr.

2082
01:03:31,220 --> 01:03:32,670
Kirk and others describe

2083
01:03:32,670 --> 01:03:34,470
limited in limiting the amounts

2084
01:03:34,470 --> 01:03:36,110
available for apportionment

2085
01:03:36,110 --> 01:03:37,560
from the fund.

2086
01:03:37,560 --> 01:03:39,970
It requires that the fund

2087
01:03:39,970 --> 01:03:41,300
it designs to provide annual

2088
01:03:41,300 --> 01:03:42,550
distributions and preserve the

2089
01:03:42,550 --> 01:03:44,280
purchasing power and further

2090
01:03:44,280 --> 01:03:45,970
bet balance needs of current

2091
01:03:45,970 --> 01:03:47,150
and future

2092
01:03:47,150 --> 01:03:48,780
and the fish areas.

2093
01:03:48,780 --> 01:03:50,530
It requires that administrative

2094
01:03:50,530 --> 01:03:52,260
spending from the fund,

2095
01:03:52,260 --> 01:03:53,760
the item in the manner

2096
01:03:53,760 --> 01:03:55,760
prescribed by law

2097
01:03:56,170 --> 01:03:58,570
and continues the current

2098
01:03:59,660 --> 01:04:01,480
practice. The distributions

2099
01:04:01,480 --> 01:04:03,300
must be a portion in the in the

2100
01:04:03,300 --> 01:04:04,950
manner described prescribed by

2101
01:04:04,950 --> 01:04:06,100
law,

2102
01:04:06,100 --> 01:04:08,520
sir, could just describe the

2103
01:04:08,520 --> 01:04:09,630
the way that the question would

2104
01:04:09,630 --> 01:04:11,460
be submitted to the voters.

2105
01:04:11,460 --> 01:04:12,780
The task force itself to make

2106
01:04:12,780 --> 01:04:14,460
recommendations about this belt

2107
01:04:14,460 --> 01:04:15,500
language. But it's presented

2108
01:04:15,500 --> 01:04:16,640
here for

2109
01:04:16,640 --> 01:04:18,410
further consideration by the

2110
01:04:18,410 --> 01:04:20,410
Legislature

2111
01:04:20,700 --> 01:04:23,900
beginning at 2.0, 6 would begin

2112
01:04:23,900 --> 01:04:26,900
article 2 of the bill which

2113
01:04:26,810 --> 01:04:29,210
features the statutory changes.

2114
01:04:30,320 --> 01:04:33,200
Section one is the section

2115
01:04:33,200 --> 01:04:35,530
requiring that 4.5% of the

2116
01:04:35,530 --> 01:04:37,230
Rolling 3 year average.

2117
01:04:37,230 --> 01:04:38,570
That's the value of the fund to

2118
01:04:38,570 --> 01:04:39,590
be the available for

2119
01:04:39,590 --> 01:04:41,490
distribution.

2120
01:04:41,490 --> 01:04:44,370
And the stricken language in

2121
01:04:44,370 --> 01:04:45,980
Section one

2122
01:04:45,980 --> 01:04:47,700
is stricken because it would be

2123
01:04:47,700 --> 01:04:50,360
obsolete of this under this new

2124
01:04:50,360 --> 01:04:52,360
distribution method

2125
01:04:53,360 --> 01:04:54,670
paragraph. The beginning of

2126
01:04:54,670 --> 01:04:56,660
2.0, 2, 3, requires the

2127
01:04:56,660 --> 01:04:59,800
director of SPI to any other

2128
01:04:59,800 --> 01:05:01,100
report. This to strip it along

2129
01:05:01,100 --> 01:05:02,650
to the Legislator Permanent

2130
01:05:02,650 --> 01:05:03,990
School Fund Commission and to

2131
01:05:03,990 --> 01:05:06,390
the Commissioner of Education.

2132
01:05:06,940 --> 01:05:08,940
Section 2

2133
01:05:10,200 --> 01:05:12,140
is modified to such a conform

2134
01:05:12,140 --> 01:05:13,260
with the requirements of

2135
01:05:13,260 --> 01:05:14,850
section one. There's some

2136
01:05:14,850 --> 01:05:16,800
language their stricken that

2137
01:05:16,800 --> 01:05:18,240
would be again made obsolete by

2138
01:05:18,240 --> 01:05:19,950
this alternative

2139
01:05:19,950 --> 01:05:20,920
calculation of the

2140
01:05:20,920 --> 01:05:22,640
distributable amount and

2141
01:05:22,640 --> 01:05:24,410
clarifies that it's the

2142
01:05:24,410 --> 01:05:25,330
commissioner management and

2143
01:05:25,330 --> 01:05:26,950
budget transfers. This district

2144
01:05:26,950 --> 01:05:28,250
will mount

2145
01:05:28,250 --> 01:05:29,880
2 from the permit school fund

2146
01:05:29,880 --> 01:05:30,990
to the school Endowment fund

2147
01:05:30,990 --> 01:05:32,810
has needed to make the payments

2148
01:05:32,810 --> 01:05:36,900
from the school in a month and

2149
01:05:36,900 --> 01:05:39,790
Section 3 upped its a term

2150
01:05:39,790 --> 01:05:41,800
to conform with the changes

2151
01:05:41,800 --> 01:05:43,480
under Section one, section 4

2152
01:05:44,100 --> 01:05:45,270
status as the effective date

2153
01:05:45,270 --> 01:05:47,600
for all of Article 2

2154
01:05:47,600 --> 01:05:49,490
to align with the effective

2155
01:05:49,490 --> 01:05:51,820
date indicated in the in the

2156
01:05:51,820 --> 01:05:53,640
Constitutional question.

2157
01:05:53,640 --> 01:05:56,800
And so if the if the question

2158
01:05:56,800 --> 01:05:59,900
were adopted by the people

2159
01:05:59,900 --> 01:06:02,900
at the 2026 election, the the

2160
01:06:03,880 --> 01:06:05,880
first impacted apportionment

2161
01:06:06,360 --> 01:06:08,290
would be the apportionment in

2162
01:06:08,290 --> 01:06:10,290
September of

2163
01:06:10,420 --> 01:06:12,420
20 20th.

2164
01:06:14,340 --> 01:06:15,440
I think as mentioned earlier,

2165
01:06:15,440 --> 01:06:17,320
the apportionment among school

2166
01:06:17,320 --> 01:06:18,640
districts happens twice a year

2167
01:06:18,640 --> 01:06:20,500
in September and March Beach,

2168
01:06:20,500 --> 01:06:21,190
fiscal year.

2169
01:06:21,190 --> 01:06:22,480
And so the whole the whole

2170
01:06:22,480 --> 01:06:23,840
proposal would be effective,

2171
01:06:23,840 --> 01:06:25,840
beginning July 1st, 20.0, 7

2172
01:06:26,530 --> 01:06:28,410
for fiscal year, 2028 and

2173
01:06:28,410 --> 01:06:29,710
therefore the first impact of

2174
01:06:29,710 --> 01:06:30,620
the portion that would be the

2175
01:06:30,620 --> 01:06:32,100
September

2176
01:06:32,100 --> 01:06:34,100
2027 portion,

2177
01:06:34,460 --> 01:06:36,140
Madam Chair. That's

2178
01:06:36,140 --> 01:06:39,140
pretty quick overview of them.

2179
01:06:42,470 --> 01:06:42,980
>> All right. Senator

2180
01:06:42,980 --> 01:06:43,820
commissioners, any of the

2181
01:06:43,820 --> 01:06:45,820
testifier?

2182
01:06:46,300 --> 01:06:48,700
Yes, we have Kirk.

2183
01:06:49,540 --> 01:06:50,930
She when the wing, the

2184
01:06:50,930 --> 01:06:52,200
executive director of the men

2185
01:06:52,200 --> 01:06:53,900
in both Minnesota School Boards

2186
01:06:53,900 --> 01:06:55,900
Association.

2187
01:06:56,660 --> 01:06:57,710
>> Welcome to the committee.

2188
01:06:57,710 --> 01:06:58,590
If you could say your name for

2189
01:06:58,590 --> 01:06:59,560
the record of the begin when

2190
01:06:59,560 --> 01:07:00,780
you're ready. Yes, Madam Chair,

2191
01:07:00,780 --> 01:07:01,750
my name is Kirk Snyder when

2192
01:07:01,750 --> 01:07:02,760
executive director for the

2193
01:07:02,760 --> 01:07:03,580
Minnesota School Boards

2194
01:07:03,580 --> 01:07:05,510
Association first.

2195
01:07:05,510 --> 01:07:07,660
>> I want to thank you. And the

2196
01:07:07,660 --> 01:07:09,300
chair coup niche on the and the

2197
01:07:09,300 --> 01:07:10,440
permanent task force for their

2198
01:07:10,440 --> 01:07:12,960
serious bipartisan work on this

2199
01:07:12,960 --> 01:07:14,100
proposal.

2200
01:07:14,100 --> 01:07:15,600
The recommendations are

2201
01:07:15,600 --> 01:07:16,930
thoughtful, data-driven,

2202
01:07:16,930 --> 01:07:18,320
and grounded in long-term

2203
01:07:18,320 --> 01:07:20,320
fiduciary responsibility.

2204
01:07:20,990 --> 01:07:22,410
As I shared my name, I

2205
01:07:22,410 --> 01:07:23,310
represent the school Boards

2206
01:07:23,310 --> 01:07:24,480
Association, but I'm also

2207
01:07:24,480 --> 01:07:26,490
speaking on behalf of the MSD

2208
01:07:26,490 --> 01:07:28,200
school districts, the Minnesota

2209
01:07:28,200 --> 01:07:30,180
Rural Education Association and

2210
01:07:30,180 --> 01:07:32,240
that secondary and Alamo

2211
01:07:32,240 --> 01:07:33,550
Elementary principals as well

2212
01:07:33,550 --> 01:07:34,850
as the Superintendents

2213
01:07:34,850 --> 01:07:36,360
Association.

2214
01:07:36,360 --> 01:07:37,460
The Permanent School Fund is

2215
01:07:37,460 --> 01:07:39,820
Minnesota Students Trust Fund.

2216
01:07:39,820 --> 01:07:41,410
It was created to support

2217
01:07:41,410 --> 01:07:43,810
public education in perpetuity,

2218
01:07:44,300 --> 01:07:45,260
but the constitutional

2219
01:07:45,260 --> 01:07:46,330
framework governing

2220
01:07:46,330 --> 01:07:48,580
distribution limits our ability

2221
01:07:48,580 --> 01:07:50,160
to modernize how earnings are

2222
01:07:50,160 --> 01:07:52,560
calculated and distribute it.

2223
01:07:53,230 --> 01:07:54,840
Today. The fun distributes only

2224
01:07:54,840 --> 01:07:56,190
what it earns an annual

2225
01:07:56,190 --> 01:07:58,600
interest and dividends in most

2226
01:07:58,600 --> 01:08:00,380
years. The rich, that results

2227
01:08:00,380 --> 01:08:01,840
in distributions below what a

2228
01:08:01,840 --> 01:08:03,120
professionally managed

2229
01:08:03,120 --> 01:08:04,950
endowment of this size could

2230
01:08:04,950 --> 01:08:06,950
sustainably provide

2231
01:08:07,490 --> 01:08:08,830
in practical terms? We are

2232
01:08:08,830 --> 01:08:10,430
managing a modern investment

2233
01:08:10,430 --> 01:08:12,130
portfolio under an outdated

2234
01:08:12,130 --> 01:08:13,330
formula.

2235
01:08:13,330 --> 01:08:15,100
After extensive study, the task

2236
01:08:15,100 --> 01:08:16,570
force recommends moving to a

2237
01:08:16,570 --> 01:08:18,920
percentage of market value or P

2238
01:08:18,920 --> 01:08:20,630
O and B

2239
01:08:20,630 --> 01:08:22,200
model. Under that approach, the

2240
01:08:22,200 --> 01:08:23,760
state would distribute a fixed

2241
01:08:23,760 --> 01:08:25,760
percentage typically between 4

2242
01:08:25,870 --> 01:08:27,940
and 5% based on a multi year

2243
01:08:27,940 --> 01:08:29,340
average of the fund's market

2244
01:08:29,340 --> 01:08:30,420
value.

2245
01:08:30,420 --> 01:08:32,100
That rings reflects best

2246
01:08:32,100 --> 01:08:33,980
practice for large endowment

2247
01:08:33,980 --> 01:08:35,390
funds.

2248
01:08:35,390 --> 01:08:36,920
It is designed to balance 2

2249
01:08:36,920 --> 01:08:38,870
responsibilities as shared by

2250
01:08:38,870 --> 01:08:40,530
the Testifiers earler meeting.

2251
01:08:40,530 --> 01:08:42,910
Current needs while preserving

2252
01:08:42,910 --> 01:08:45,310
long term purchasing power

2253
01:08:45,710 --> 01:08:46,970
at 4 and a half percent

2254
01:08:46,970 --> 01:08:48,160
calculated on a three-year

2255
01:08:48,160 --> 01:08:49,970
rolling average as outlined in

2256
01:08:49,970 --> 01:08:51,110
the bill.

2257
01:08:51,110 --> 01:08:53,190
It strikes the right balance.

2258
01:08:53,190 --> 01:08:54,790
It would provide more stable

2259
01:08:54,790 --> 01:08:56,300
and predictable funding for

2260
01:08:56,300 --> 01:08:58,200
schools while predicting law

2261
01:08:58,200 --> 01:08:59,720
protecting the integrity of the

2262
01:08:59,720 --> 01:09:02,120
fund for future generations.

2263
01:09:03,140 --> 01:09:04,420
Predictability matters to our

2264
01:09:04,420 --> 01:09:05,810
school district. Right now.

2265
01:09:05,810 --> 01:09:06,790
School districts across

2266
01:09:06,790 --> 01:09:08,110
Minnesota are making difficult

2267
01:09:08,110 --> 01:09:10,400
budget adjustments, boards

2268
01:09:10,400 --> 01:09:11,760
right-sizing programs,

2269
01:09:11,760 --> 01:09:13,360
adjusting staff and delaying

2270
01:09:13,360 --> 01:09:15,520
investment in that environment,

2271
01:09:15,520 --> 01:09:17,890
stable and reliable revenue is

2272
01:09:17,890 --> 01:09:19,200
critical.

2273
01:09:19,200 --> 01:09:20,430
School boards adopt annual

2274
01:09:20,430 --> 01:09:21,720
budget and with an eye on the

2275
01:09:21,720 --> 01:09:24,120
future negotiate contract to

2276
01:09:24,250 --> 01:09:26,150
make long-term commitments.

2277
01:09:26,150 --> 01:09:27,670
Volatility makes that work

2278
01:09:27,670 --> 01:09:29,670
harder. Stability strengthens

2279
01:09:30,100 --> 01:09:32,310
our governance, moving from the

2280
01:09:32,310 --> 01:09:34,100
interest and dividends only

2281
01:09:34,100 --> 01:09:36,410
model to a modern peel and the

2282
01:09:36,410 --> 01:09:37,940
framework is responsible

2283
01:09:37,940 --> 01:09:40,400
endowment management. It aligns

2284
01:09:40,400 --> 01:09:42,700
Minnesota with the net, the

2285
01:09:42,700 --> 01:09:44,190
national best practice and

2286
01:09:44,190 --> 01:09:46,200
improves distribution

2287
01:09:46,200 --> 01:09:48,200
reliability without raising

2288
01:09:48,350 --> 01:09:50,880
taxes or creating new ongoing

2289
01:09:50,880 --> 01:09:51,880
spending

2290
01:09:51,880 --> 01:09:53,570
on behalf of the school boards

2291
01:09:53,570 --> 01:09:55,650
in our urban suburban in

2292
01:09:55,650 --> 01:09:57,420
greater Minnesota. We strongly

2293
01:09:57,420 --> 01:09:59,550
support House and we strongly

2294
01:09:59,550 --> 01:10:00,520
support the center found

2295
01:10:00,520 --> 01:10:01,820
respectfully, ask for your

2296
01:10:01,820 --> 01:10:03,620
support.

2297
01:10:03,620 --> 01:10:06,200
Thank you, Madam Chair

2298
01:10:06,560 --> 01:10:08,560
members, any questions.

2299
01:10:09,550 --> 01:10:11,550
>> Senator Le Cerro.

2300
01:10:12,790 --> 01:10:14,580
Yes, thank you, Madam Chair and

2301
01:10:14,580 --> 01:10:15,740
a question. But I'd like to

2302
01:10:15,740 --> 01:10:19,200
offer the a 2 amendment to the

2303
01:10:19,200 --> 01:10:21,200
a one Amendment.

2304
01:10:26,400 --> 01:10:28,800
Those are being distributed.

2305
01:10:30,200 --> 01:10:30,740
>> If you want to speak a

2306
01:10:30,740 --> 01:10:32,500
little bit about your amendment

2307
01:10:32,500 --> 01:10:33,190
center Lou, Sarah, before,

2308
01:10:33,190 --> 01:10:35,590
well, world getting copies.

2309
01:10:36,230 --> 01:10:37,640
>> So the thank you, Madam

2310
01:10:37,640 --> 01:10:39,780
Chair. So the this amendment

2311
01:10:39,780 --> 01:10:41,600
would modify if you look at the

2312
01:10:41,600 --> 01:10:42,990
amendment on the one that was

2313
01:10:42,990 --> 01:10:43,920
already offered, if you look on

2314
01:10:43,920 --> 01:10:45,920
my 1.2 6,

2315
01:10:46,150 --> 01:10:48,880
it says that the funds, if the

2316
01:10:48,880 --> 01:10:50,890
const, the propose constitute a

2317
01:10:50,890 --> 01:10:52,280
constitutional amendment were

2318
01:10:52,280 --> 01:10:53,760
to be adopted,

2319
01:10:53,760 --> 01:10:56,210
the funds would be distributed

2320
01:10:56,210 --> 01:10:58,350
in a manner prescribed by law.

2321
01:10:58,350 --> 01:11:01,930
I am seeking to modify that the

2322
01:11:01,930 --> 01:11:04,800
funds will be distributed in an

2323
01:11:04,800 --> 01:11:06,480
equal amount per pupil.

2324
01:11:08,120 --> 01:11:10,460
And the reason I am seeking to

2325
01:11:10,460 --> 01:11:12,520
do that as we know, we've been

2326
01:11:12,520 --> 01:11:14,700
having a conversation in this

2327
01:11:14,700 --> 01:11:16,280
committee on equity, in

2328
01:11:16,280 --> 01:11:17,860
education funding.

2329
01:11:17,860 --> 01:11:19,420
And there is a an incredible

2330
01:11:19,420 --> 01:11:20,700
inequity right now with the

2331
01:11:20,700 --> 01:11:21,820
current

2332
01:11:21,820 --> 01:11:24,160
funding formula seeks to

2333
01:11:24,160 --> 01:11:25,450
provide some fairness and

2334
01:11:25,450 --> 01:11:27,300
certainty

2335
01:11:27,300 --> 01:11:29,300
in the Constitution

2336
01:11:30,700 --> 01:11:32,700
that our students

2337
01:11:32,160 --> 01:11:33,530
don't have different

2338
01:11:33,530 --> 01:11:34,750
opportunities based on their

2339
01:11:34,750 --> 01:11:36,640
zip code but instead makes it

2340
01:11:36,640 --> 01:11:38,450
equal across the board. So I

2341
01:11:38,450 --> 01:11:39,780
would encourage support for

2342
01:11:39,780 --> 01:11:41,390
those with a yes vote. Thank

2343
01:11:41,390 --> 01:11:43,390
you.

2344
01:11:43,800 --> 01:11:45,410
>> Madam Chair, Start will

2345
01:11:45,410 --> 01:11:47,110
Madam Chair and Senator Kurdish

2346
01:11:47,110 --> 01:11:48,250
any response the a one

2347
01:11:48,250 --> 01:11:49,490
Amendment.

2348
01:11:49,490 --> 01:11:50,490
>> Thank you so much. You know,

2349
01:11:50,490 --> 01:11:53,700
I I first want to just say that

2350
01:11:53,700 --> 01:11:56,100
this amendment are this

2351
01:11:56,230 --> 01:11:57,700
legislation was very

2352
01:11:57,700 --> 01:11:59,700
painstakingly looked at.

2353
01:12:00,500 --> 01:12:02,790
I mean, literally every word

2354
01:12:02,790 --> 01:12:06,190
and every reference in this in

2355
01:12:06,190 --> 01:12:08,480
this legislation to ensure that

2356
01:12:08,480 --> 01:12:10,880
there aren't any real

2357
01:12:11,300 --> 01:12:13,300
complications. But I'm

2358
01:12:13,200 --> 01:12:15,200
wondering if perhaps

2359
01:12:18,700 --> 01:12:21,390
or a square foot would be able

2360
01:12:21,390 --> 01:12:23,370
to

2361
01:12:23,370 --> 01:12:25,450
help us better understand how

2362
01:12:25,450 --> 01:12:27,450
this language

2363
01:12:27,460 --> 01:12:30,460
might make a difference or

2364
01:12:30,540 --> 01:12:32,630
might change the bill in a way

2365
01:12:32,630 --> 01:12:33,650
that

2366
01:12:33,650 --> 01:12:36,650
I'm not quite sure up

2367
01:12:40,230 --> 01:12:43,660
because if I'm not mistaken, we

2368
01:12:43,660 --> 01:12:46,660
we do distribute that amount

2369
01:12:46,690 --> 01:12:48,410
per pupil

2370
01:12:48,410 --> 01:12:50,170
at this time. And is that what

2371
01:12:50,170 --> 01:12:53,170
the law actually is stating?

2372
01:12:56,540 --> 01:12:58,600
>> Madam Chair, the a 2

2373
01:12:58,600 --> 01:13:00,600
amendment would

2374
01:13:00,930 --> 01:13:02,930
require constitutionally, but

2375
01:13:03,240 --> 01:13:04,370
the

2376
01:13:04,370 --> 01:13:06,460
the apportionment be in an

2377
01:13:06,460 --> 01:13:08,750
equal per pupil amount under

2378
01:13:08,750 --> 01:13:10,420
current statutory law. The

2379
01:13:10,420 --> 01:13:12,820
apportionment is unequal per

2380
01:13:13,220 --> 01:13:15,100
pupil amount. And as I

2381
01:13:15,100 --> 01:13:16,290
indicated earlier, that that

2382
01:13:16,290 --> 01:13:18,640
that per pupil measure is the

2383
01:13:18,640 --> 01:13:19,620
adjusted average daily

2384
01:13:19,620 --> 01:13:20,760
membership. So so the

2385
01:13:20,760 --> 01:13:22,200
constitutional that the

2386
01:13:22,200 --> 01:13:24,410
amendment would would not

2387
01:13:24,410 --> 01:13:27,100
wouldn't change in practice how

2388
01:13:27,100 --> 01:13:27,970
the

2389
01:13:27,970 --> 01:13:29,460
amount is a portion now, it

2390
01:13:29,460 --> 01:13:31,460
would it would

2391
01:13:32,960 --> 01:13:34,290
in trying to the Constitution

2392
01:13:34,290 --> 01:13:36,590
that that portion of method or

2393
01:13:36,590 --> 01:13:38,990
the the apportionment amount.

2394
01:13:41,200 --> 01:13:43,150
>> Senator Commission.

2395
01:13:43,150 --> 01:13:45,540
So based on the fact that we

2396
01:13:45,540 --> 01:13:47,580
did go through this and looked

2397
01:13:47,580 --> 01:13:48,710
at all of the different

2398
01:13:48,710 --> 01:13:51,110
elements and I'm very

2399
01:13:51,740 --> 01:13:53,220
comfortable that our present

2400
01:13:53,220 --> 01:13:54,970
constitution and the present

2401
01:13:54,970 --> 01:13:56,280
language that we have will

2402
01:13:56,280 --> 01:13:58,320
ensure that those students

2403
01:13:58,320 --> 01:14:01,320
continue to receive equal per

2404
01:14:01,890 --> 01:14:05,490
pupil amount. I am going to

2405
01:14:06,510 --> 01:14:08,600
respectfully not accept this

2406
01:14:08,600 --> 01:14:10,600
amendment.

2407
01:14:12,390 --> 01:14:14,970
>> All those in favor of the so

2408
01:14:14,970 --> 01:14:16,180
sorry. Senator Mike Lee,

2409
01:14:16,180 --> 01:14:17,530
thank you after and I would

2410
01:14:17,530 --> 01:14:19,860
also respectfully ask for a no

2411
01:14:19,860 --> 01:14:22,570
vote for for 2 reasons. One,

2412
01:14:22,570 --> 01:14:23,470
even though we currently

2413
01:14:23,470 --> 01:14:25,400
distributed on equal per people

2414
01:14:25,400 --> 01:14:26,780
out, there might be a time and

2415
01:14:26,780 --> 01:14:27,460
this is the diversity

2416
01:14:27,460 --> 01:14:28,630
inequality inequity, right

2417
01:14:28,630 --> 01:14:29,640
qualities. Everyone gets the

2418
01:14:29,640 --> 01:14:30,620
same thing equity is that

2419
01:14:30,620 --> 01:14:32,100
everybody gets what they need,

2420
01:14:32,100 --> 01:14:33,130
even if it's different amounts.

2421
01:14:33,130 --> 01:14:34,340
And so I could see it maybe in

2422
01:14:34,340 --> 01:14:35,940
a time in the future where we

2423
01:14:35,940 --> 01:14:37,100
want to send more money to

2424
01:14:37,100 --> 01:14:38,510
schools because the CA fixed

2425
01:14:38,510 --> 01:14:39,400
costs of running a school

2426
01:14:39,400 --> 01:14:40,710
doesn't go down regardless of

2427
01:14:40,710 --> 01:14:41,660
how many students you have in

2428
01:14:41,660 --> 01:14:42,910
that. And so if we wanted to

2429
01:14:42,910 --> 01:14:45,510
say we want to keep this small

2430
01:14:45,510 --> 01:14:46,740
district from losing an

2431
01:14:46,740 --> 01:14:47,730
elementary school were going

2432
01:14:47,730 --> 01:14:48,730
up, the amount we're going to

2433
01:14:48,730 --> 01:14:50,160
give to the school or these

2434
01:14:50,160 --> 01:14:51,470
types of school districts

2435
01:14:51,470 --> 01:14:53,130
instead of having it be a, you

2436
01:14:53,130 --> 01:14:54,980
know, people amount we wouldn't

2437
01:14:54,980 --> 01:14:55,710
be able to do that without

2438
01:14:55,710 --> 01:14:57,370
changing the Constitution

2439
01:14:57,370 --> 01:14:58,640
instead. Right now, what we can

2440
01:14:58,640 --> 01:14:59,850
do is we can change in line.

2441
01:14:59,850 --> 01:15:00,870
So I think reserving the

2442
01:15:00,870 --> 01:15:03,340
ability to make those decisions

2443
01:15:03,340 --> 01:15:04,780
in law for the legislature to

2444
01:15:04,780 --> 01:15:06,510
debate instead of having to put

2445
01:15:06,510 --> 01:15:07,750
it in the constitution and then

2446
01:15:07,750 --> 01:15:09,990
being bound by not being able

2447
01:15:09,990 --> 01:15:11,460
to change it based on our

2448
01:15:11,460 --> 01:15:12,800
changing state in our student

2449
01:15:12,800 --> 01:15:14,530
needs. That is why I think we'd

2450
01:15:14,530 --> 01:15:16,000
be better off just leaving it

2451
01:15:16,000 --> 01:15:17,100
and law and not in the

2452
01:15:17,100 --> 01:15:18,920
constitution.

2453
01:15:18,920 --> 01:15:20,870
Senator Eric, thank you, Madam

2454
01:15:20,870 --> 01:15:22,000
Chair.

2455
01:15:22,000 --> 01:15:23,210
>> I'm gonna speak in favor of

2456
01:15:23,210 --> 01:15:24,990
the amendment. I think.

2457
01:15:24,990 --> 01:15:27,400
>> As was just talked about the

2458
01:15:27,400 --> 01:15:29,100
needs that would come a rise or

2459
01:15:29,100 --> 01:15:31,470
come up. We have that ability

2460
01:15:31,470 --> 01:15:33,200
through the general fund and

2461
01:15:33,200 --> 01:15:34,260
what we deal with in this

2462
01:15:34,260 --> 01:15:35,700
committee all the time. But

2463
01:15:35,700 --> 01:15:37,230
this is the permanent

2464
01:15:37,230 --> 01:15:39,440
trust fund for all of

2465
01:15:39,440 --> 01:15:41,440
Minnesota.

2466
01:15:41,600 --> 01:15:44,380
And so this piece is a small

2467
01:15:44,380 --> 01:15:47,300
piece should be equal to every

2468
01:15:47,300 --> 01:15:49,160
student throughout the state

2469
01:15:49,160 --> 01:15:50,560
for this particular fund.

2470
01:15:50,560 --> 01:15:51,940
And that's what this amendment

2471
01:15:51,940 --> 01:15:54,350
is getting at for this fund,

2472
01:15:54,350 --> 01:15:56,350
which comes from

2473
01:15:56,880 --> 01:15:58,730
around the state. Although most

2474
01:15:58,730 --> 01:16:00,100
of it comes from one particular

2475
01:16:00,100 --> 01:16:02,560
area of the state, this should

2476
01:16:02,560 --> 01:16:05,330
be distributed equally to every

2477
01:16:05,330 --> 01:16:07,320
student in the state. Again, we

2478
01:16:07,320 --> 01:16:08,880
have that ability for special

2479
01:16:08,880 --> 01:16:11,260
needs that arise. We have that

2480
01:16:11,260 --> 01:16:13,460
through the funding formulas to

2481
01:16:13,460 --> 01:16:14,620
address those other needs.

2482
01:16:14,620 --> 01:16:16,730
But for this particular fund,

2483
01:16:16,730 --> 01:16:18,710
we should absolutely be

2484
01:16:18,710 --> 01:16:20,240
treating every student around

2485
01:16:20,240 --> 01:16:22,100
the state the same and keep

2486
01:16:22,100 --> 01:16:25,400
this and not allow for a future

2487
01:16:25,400 --> 01:16:26,990
legislature to change that and

2488
01:16:26,990 --> 01:16:28,510
put this money into a funding

2489
01:16:28,510 --> 01:16:30,380
formula. We should put this

2490
01:16:30,380 --> 01:16:32,690
language in this. This money

2491
01:16:32,690 --> 01:16:34,690
will always go

2492
01:16:34,990 --> 01:16:36,650
per pupil. Exactly the same

2493
01:16:36,650 --> 01:16:37,910
around the state. So I would

2494
01:16:37,910 --> 01:16:40,780
ask people to vote. Yes.

2495
01:16:40,780 --> 01:16:42,780
>> Senator home certain.

2496
01:16:43,900 --> 01:16:43,850
>> Thank you. Madam Chair.

2497
01:16:43,850 --> 01:16:45,400
I would speak in favor of this

2498
01:16:45,400 --> 01:16:46,560
amendment as well. The people

2499
01:16:46,560 --> 01:16:48,280
of Minnesota have supported

2500
01:16:48,280 --> 01:16:49,810
this this constitutionally

2501
01:16:49,810 --> 01:16:52,210
required fund for 150 plus

2502
01:16:52,810 --> 01:16:54,720
years specifically because we

2503
01:16:54,720 --> 01:16:57,120
believe that that that

2504
01:16:57,380 --> 01:16:58,610
investing in education is

2505
01:16:58,610 --> 01:17:01,100
important for all students.

2506
01:17:01,200 --> 01:17:04,200
The idea that we may choose to

2507
01:17:04,200 --> 01:17:05,740
insert politics into that and

2508
01:17:05,740 --> 01:17:07,450
favor some students over of or

2509
01:17:07,450 --> 01:17:09,460
others on this particular

2510
01:17:09,460 --> 01:17:11,470
program makes no sense to me.

2511
01:17:11,470 --> 01:17:12,880
I think that we need to be true

2512
01:17:12,880 --> 01:17:13,690
and honest with the people of

2513
01:17:13,690 --> 01:17:14,810
Minnesota, but what our plans

2514
01:17:14,810 --> 01:17:16,810
are and this does that it makes

2515
01:17:16,810 --> 01:17:18,400
clear what our intentions are

2516
01:17:18,400 --> 01:17:21,400
with this fund. Thank you.

2517
01:17:21,430 --> 01:17:23,300
>> Thank you. Anyone else,

2518
01:17:23,300 --> 01:17:24,870
Senator West London.

2519
01:17:24,870 --> 01:17:27,120
I have a quick question either

2520
01:17:27,120 --> 01:17:29,900
for Senator Le Cerro or perhaps

2521
01:17:29,900 --> 01:17:30,560
the task force members. And I'm

2522
01:17:30,560 --> 01:17:32,640
wondering if if this particular

2523
01:17:32,640 --> 01:17:34,160
issue

2524
01:17:34,160 --> 01:17:35,540
was brought up with the task

2525
01:17:35,540 --> 01:17:37,900
force

2526
01:17:37,900 --> 01:17:39,490
members in their consideration

2527
01:17:39,490 --> 01:17:41,500
of recommendations made because

2528
01:17:41,500 --> 01:17:44,500
I would prefer to have

2529
01:17:44,900 --> 01:17:47,300
a little more vetting

2530
01:17:47,490 --> 01:17:49,100
before putting something into

2531
01:17:49,100 --> 01:17:50,500
the Constitution that I think

2532
01:17:50,500 --> 01:17:52,500
has not been fully vetted

2533
01:17:52,500 --> 01:17:53,620
and the challenge with putting

2534
01:17:53,620 --> 01:17:54,740
things into the Constitution

2535
01:17:54,740 --> 01:17:55,900
and Senate,

2536
01:17:55,900 --> 01:17:56,920
if there is a problem with its

2537
01:17:56,920 --> 01:17:58,000
going to be much, much harder

2538
01:17:58,000 --> 01:18:00,210
to change. So I guess maybe my

2539
01:18:00,210 --> 01:18:02,780
question is to Senator Cerro

2540
01:18:02,780 --> 01:18:05,230
Hat. Did you run your amendment

2541
01:18:05,230 --> 01:18:06,570
passed

2542
01:18:06,570 --> 01:18:09,570
the Working Group Task Force.

2543
01:18:09,830 --> 01:18:11,600
>> Senator the Sarah, thank

2544
01:18:11,600 --> 01:18:13,200
you. Madam Chair. I was not

2545
01:18:13,200 --> 01:18:14,610
part of the task force. I was

2546
01:18:14,610 --> 01:18:16,460
involved in it at all.

2547
01:18:16,460 --> 01:18:18,820
This amendment is the result of

2548
01:18:18,820 --> 01:18:20,260
a conversation I had yesterday

2549
01:18:20,260 --> 01:18:22,620
in preparing for this bill that

2550
01:18:22,620 --> 01:18:23,970
would be in committee today.

2551
01:18:23,970 --> 01:18:25,420
So we're as a task force of

2552
01:18:25,420 --> 01:18:27,900
Glee provides recommendations

2553
01:18:27,900 --> 01:18:28,510
to the legislature. It's this

2554
01:18:28,510 --> 01:18:29,680
committee that starts the

2555
01:18:29,680 --> 01:18:32,200
vetting process for the policy

2556
01:18:32,200 --> 01:18:33,210
for the education of our

2557
01:18:33,210 --> 01:18:35,450
students. So that's why I think

2558
01:18:35,450 --> 01:18:37,360
it is most appropriate now for

2559
01:18:37,360 --> 01:18:38,520
us to have this conversation

2560
01:18:38,520 --> 01:18:40,130
and make a decision. Thank you.

2561
01:18:40,130 --> 01:18:41,420
>> Senator was a Madam Chairman

2562
01:18:41,420 --> 01:18:43,980
Sen. I don't think this is the

2563
01:18:43,980 --> 01:18:45,650
last stop for this bill, but

2564
01:18:45,650 --> 01:18:47,320
I'm wondering if you are

2565
01:18:47,320 --> 01:18:48,250
willing to have that

2566
01:18:48,250 --> 01:18:50,320
conversation with the members

2567
01:18:50,320 --> 01:18:52,720
of the task force,

2568
01:18:53,400 --> 01:18:55,210
I maybe we don't have a sight

2569
01:18:55,210 --> 01:18:57,700
line into where an issue might

2570
01:18:57,700 --> 01:18:58,530
arise here. I certainly don't

2571
01:18:58,530 --> 01:19:00,200
necessarily. And I

2572
01:19:00,200 --> 01:19:01,600
I don't feel comfortable

2573
01:19:01,600 --> 01:19:02,820
accepting this kind of on the

2574
01:19:02,820 --> 01:19:04,440
fly. Know you said you just

2575
01:19:04,440 --> 01:19:05,520
kind of came up yesterday and

2576
01:19:05,520 --> 01:19:06,540
that's fine. That's how things

2577
01:19:06,540 --> 01:19:08,530
work or is sometimes things

2578
01:19:08,530 --> 01:19:10,200
come up the last minute.

2579
01:19:10,200 --> 01:19:11,400
But my question to you is, are

2580
01:19:11,400 --> 01:19:13,400
you willing to

2581
01:19:14,550 --> 01:19:15,930
actually have conversations

2582
01:19:15,930 --> 01:19:17,750
with the task force

2583
01:19:17,750 --> 01:19:19,630
to walk through this or even

2584
01:19:19,630 --> 01:19:20,850
with

2585
01:19:20,850 --> 01:19:22,740
nonpartisan staff? But I'm not

2586
01:19:22,740 --> 01:19:23,980
comfortable voting for this

2587
01:19:23,980 --> 01:19:26,110
today. And I do understand that

2588
01:19:26,110 --> 01:19:28,240
this will have other stops.

2589
01:19:28,240 --> 01:19:29,830
So I'm a no vote. But again,

2590
01:19:29,830 --> 01:19:30,960
I'm just curious to know if

2591
01:19:30,960 --> 01:19:32,810
you'd be willing to has some

2592
01:19:32,810 --> 01:19:34,810
additional conversations.

2593
01:19:35,820 --> 01:19:36,730
>> Thank you, Senator. Wasn't.

2594
01:19:36,730 --> 01:19:38,700
We do have another question

2595
01:19:38,700 --> 01:19:39,620
from a member, but we are

2596
01:19:39,620 --> 01:19:40,490
deciding that it might be

2597
01:19:40,490 --> 01:19:41,650
helpful to bring up the task

2598
01:19:41,650 --> 01:19:43,160
force. Whether members choose

2599
01:19:43,160 --> 01:19:44,420
to ask them questions or not.

2600
01:19:44,420 --> 01:19:45,460
It might be helpful to come to

2601
01:19:45,460 --> 01:19:47,460
the table,

2602
01:19:47,990 --> 01:19:49,110
Mr. Craig should help him

2603
01:19:49,110 --> 01:19:51,110
saying it correctly

2604
01:19:52,200 --> 01:19:54,420
and Mr. Mule and yes, all of

2605
01:19:54,420 --> 01:19:56,820
you and Senator Eric.

2606
01:19:58,300 --> 01:19:59,120
>> Thank you, Madam Chair.

2607
01:19:59,120 --> 01:20:00,400
And I think in response to

2608
01:20:00,400 --> 01:20:02,380
Senator West Linn is question.

2609
01:20:02,380 --> 01:20:03,720
You know, I believe that

2610
01:20:03,720 --> 01:20:04,840
happened. They me answer this

2611
01:20:04,840 --> 01:20:06,380
better. The task force was put

2612
01:20:06,380 --> 01:20:07,620
in place, talk about how we're

2613
01:20:07,620 --> 01:20:09,510
going to distribute the moneys

2614
01:20:09,510 --> 01:20:11,510
based on

2615
01:20:11,980 --> 01:20:13,920
the investments themselves.

2616
01:20:13,920 --> 01:20:15,830
This is talking about in

2617
01:20:15,830 --> 01:20:17,170
particular how it will go out.

2618
01:20:17,170 --> 01:20:18,610
That was not what the task

2619
01:20:18,610 --> 01:20:21,300
force was looking into. That is

2620
01:20:21,300 --> 01:20:23,490
something for this committee to

2621
01:20:23,490 --> 01:20:26,170
talk about. And, yes, it just

2622
01:20:26,170 --> 01:20:27,340
kind of came up yesterday

2623
01:20:27,340 --> 01:20:29,440
because in our discussion we

2624
01:20:29,440 --> 01:20:31,630
were saying, hey, this is this

2625
01:20:31,630 --> 01:20:33,910
is a fund that small, but it's

2626
01:20:33,910 --> 01:20:35,310
not something that should be

2627
01:20:35,310 --> 01:20:38,310
limited are open to formulas.

2628
01:20:38,720 --> 01:20:39,930
This is something that should

2629
01:20:39,930 --> 01:20:41,890
be equally distributed to all

2630
01:20:41,890 --> 01:20:43,600
schools. But I think the task

2631
01:20:43,600 --> 01:20:44,590
force can probably answer, but

2632
01:20:44,590 --> 01:20:46,300
that was not part of what they

2633
01:20:46,300 --> 01:20:47,680
were asked to look at. That

2634
01:20:47,680 --> 01:20:49,550
would be a conversation for the

2635
01:20:49,550 --> 01:20:50,680
legislature.

2636
01:20:50,680 --> 01:20:52,930
>> Senator Wilson, Madam Chair,

2637
01:20:52,930 --> 01:20:54,340
I have to pull my papers back

2638
01:20:54,340 --> 01:20:55,600
out again. But I thought that

2639
01:20:55,600 --> 01:20:57,600
the recommendations included

2640
01:20:58,940 --> 01:21:00,600
recommended changes to the

2641
01:21:00,600 --> 01:21:01,700
Constitution, recommended

2642
01:21:01,700 --> 01:21:04,500
statutory changes. And so

2643
01:21:04,500 --> 01:21:06,200
I just curious to know of they

2644
01:21:06,200 --> 01:21:07,900
have any opinion about this and

2645
01:21:07,900 --> 01:21:10,900
any potential implications and

2646
01:21:10,900 --> 01:21:12,490
maybe they don't. But I'd at

2647
01:21:12,490 --> 01:21:13,800
least like to get some input

2648
01:21:13,800 --> 01:21:15,800
from them.

2649
01:21:19,500 --> 01:21:20,480
>> Ok, don't know if we have

2650
01:21:20,480 --> 01:21:21,540
any other members who want to

2651
01:21:21,540 --> 01:21:23,240
talk if the task force enter

2652
01:21:23,240 --> 01:21:24,460
commish. If you want to invite

2653
01:21:24,460 --> 01:21:26,150
that has forced to answer bres

2654
01:21:26,150 --> 01:21:27,700
any of those before we go to

2655
01:21:27,700 --> 01:21:28,970
Senator Le Cerro to close out

2656
01:21:28,970 --> 01:21:30,970
the amendment.

2657
01:21:31,760 --> 01:21:33,620
>> And do you have a is there a

2658
01:21:33,620 --> 01:21:34,540
response that you'd like to

2659
01:21:34,540 --> 01:21:36,570
share? Okay. Yes, we have

2660
01:21:36,570 --> 01:21:38,550
executive director here.

2661
01:21:38,550 --> 01:21:39,470
>> Thank you. Madam Chair,

2662
01:21:39,470 --> 01:21:41,450
executive directors say Joe

2663
01:21:41,450 --> 01:21:42,860
Shirts. Thank you for the

2664
01:21:42,860 --> 01:21:44,620
question. I appreciated the

2665
01:21:44,620 --> 01:21:45,640
task force actually did

2666
01:21:45,640 --> 01:21:48,400
consider questions very similar

2667
01:21:48,200 --> 01:21:50,380
to this. I would answer this

2668
01:21:50,380 --> 01:21:51,550
into parts of the night as my

2669
01:21:51,550 --> 01:21:53,550
colleagues to provide

2670
01:21:54,500 --> 01:21:55,790
additional information.

2671
01:21:55,790 --> 01:21:57,100
First and foremost, we thought

2672
01:21:57,100 --> 01:21:57,920
one of the most important

2673
01:21:57,920 --> 01:21:59,450
things consistent as we discuss

2674
01:21:59,450 --> 01:22:00,800
our fiduciary duty was to

2675
01:22:00,800 --> 01:22:02,640
really dig into the scope of

2676
01:22:02,640 --> 01:22:04,180
the task force mission.

2677
01:22:04,180 --> 01:22:05,780
And to be very clear about

2678
01:22:05,780 --> 01:22:07,700
those questions that are within

2679
01:22:07,700 --> 01:22:09,150
the scope of the task force and

2680
01:22:09,150 --> 01:22:10,310
those that are better left to

2681
01:22:10,310 --> 01:22:12,310
the legislator Legislature,

2682
01:22:12,580 --> 01:22:13,930
these particular policy

2683
01:22:13,930 --> 01:22:17,240
questions I we believe the task

2684
01:22:17,240 --> 01:22:18,100
force, but a lot of time

2685
01:22:18,100 --> 01:22:19,410
talking about this in voting on

2686
01:22:19,410 --> 01:22:20,900
it

2687
01:22:20,900 --> 01:22:21,110
was that these particular

2688
01:22:21,110 --> 01:22:22,600
questions were more appropriate

2689
01:22:22,600 --> 01:22:25,530
for statute as their policy

2690
01:22:25,530 --> 01:22:26,750
driven decisions for the

2691
01:22:26,750 --> 01:22:28,100
legislature

2692
01:22:28,100 --> 01:22:29,390
and that they were specifically

2693
01:22:29,390 --> 01:22:30,470
outside of the scope of the

2694
01:22:30,470 --> 01:22:32,850
statute. The second part of the

2695
01:22:32,850 --> 01:22:33,950
answer that question an

2696
01:22:33,950 --> 01:22:35,100
enormous amount of time and

2697
01:22:35,100 --> 01:22:36,820
energy, one into the research.

2698
01:22:36,820 --> 01:22:38,220
What do other similarly

2699
01:22:38,220 --> 01:22:39,860
situated institutional

2700
01:22:39,860 --> 01:22:42,120
educational focused funds do?

2701
01:22:42,120 --> 01:22:43,210
And that research was very

2702
01:22:43,210 --> 01:22:44,800
clear that these types of

2703
01:22:44,800 --> 01:22:46,670
issues are answered in statute,

2704
01:22:46,670 --> 01:22:48,370
not in the constitution.

2705
01:22:48,370 --> 01:22:49,980
And that also guided the

2706
01:22:49,980 --> 01:22:51,850
approach of the task force.

2707
01:22:51,850 --> 01:22:54,190
I would stop and defer to my

2708
01:22:54,190 --> 01:22:56,190
colleagues percent.

2709
01:23:01,800 --> 01:23:03,220
>> Thank you. Madam Chair, Erin

2710
01:23:03,220 --> 01:23:04,140
Ban on School trust lands

2711
01:23:04,140 --> 01:23:05,600
director getting Senator Le

2712
01:23:05,600 --> 01:23:07,700
Cerro. If you do bring up the

2713
01:23:07,700 --> 01:23:09,830
next one point, the history of

2714
01:23:09,830 --> 01:23:10,850
school trust lands and I've

2715
01:23:10,850 --> 01:23:12,950
gone back and read the debates.

2716
01:23:12,950 --> 01:23:14,250
Its statement when we were

2717
01:23:14,250 --> 01:23:16,520
becoming a state on these

2718
01:23:16,520 --> 01:23:18,470
lands,

2719
01:23:18,470 --> 01:23:20,870
the debates were were

2720
01:23:21,240 --> 01:23:23,300
link me to say the least and a

2721
01:23:23,300 --> 01:23:25,690
hard to read. But

2722
01:23:25,690 --> 01:23:27,420
what they be,

2723
01:23:27,420 --> 01:23:28,480
what they determined at the

2724
01:23:28,480 --> 01:23:30,630
time was that these lands as

2725
01:23:30,630 --> 01:23:32,500
they are across the state

2726
01:23:32,500 --> 01:23:33,680
aren't going to be held for a

2727
01:23:33,680 --> 01:23:35,410
specific community. They're

2728
01:23:35,410 --> 01:23:36,950
going to be held for the entire

2729
01:23:36,950 --> 01:23:37,820
state.

2730
01:23:37,820 --> 01:23:39,620
That was the decision in 18,

2731
01:23:39,620 --> 01:23:42,200
58. We have maintained that

2732
01:23:42,100 --> 01:23:43,140
throughout

2733
01:23:43,140 --> 01:23:46,140
to your point about equal

2734
01:23:46,720 --> 01:23:48,980
receipts or payments to the

2735
01:23:48,980 --> 01:23:50,980
pupils, that's

2736
01:23:51,860 --> 01:23:53,630
the task force is the executive

2737
01:23:53,630 --> 01:23:54,910
director said we felt that

2738
01:23:54,910 --> 01:23:57,310
those decisions were policy

2739
01:23:57,440 --> 01:23:59,810
better situated to be held in

2740
01:23:59,810 --> 01:24:01,820
dealt with in statute.

2741
01:24:01,820 --> 01:24:03,440
And just to give us a specific

2742
01:24:03,440 --> 01:24:05,890
example of why we did that,

2743
01:24:05,890 --> 01:24:08,190
Utah, the state of Utah

2744
01:24:08,190 --> 01:24:09,910
has a permanent school fund.

2745
01:24:09,910 --> 01:24:11,730
It's managed by the U.S.

2746
01:24:11,730 --> 01:24:13,450
institutional investment in

2747
01:24:13,450 --> 01:24:15,310
Utah.

2748
01:24:15,310 --> 01:24:17,700
They passed

2749
01:24:17,700 --> 01:24:18,540
3, 4, years ago and

2750
01:24:18,540 --> 01:24:20,540
constitutional amendment very

2751
01:24:20,770 --> 01:24:23,640
similar to this. They put their

2752
01:24:23,640 --> 01:24:25,410
amounts their distribution

2753
01:24:25,410 --> 01:24:27,810
amounts in the Constitution.

2754
01:24:28,820 --> 01:24:30,140
2 years later, they are going

2755
01:24:30,140 --> 01:24:31,360
back and amending their

2756
01:24:31,360 --> 01:24:33,000
constitution

2757
01:24:33,000 --> 01:24:34,860
because they couldn't

2758
01:24:34,860 --> 01:24:36,620
distribute as much as they

2759
01:24:36,620 --> 01:24:38,600
could because they limited it

2760
01:24:38,600 --> 01:24:39,700
in the Constitution.

2761
01:24:39,700 --> 01:24:40,670
So they limited the

2762
01:24:40,670 --> 01:24:42,200
constitution at 4 and a half

2763
01:24:42,200 --> 01:24:43,830
percent in,

2764
01:24:43,830 --> 01:24:45,850
you know, for 5 years ago,

2765
01:24:45,850 --> 01:24:47,190
they have the ability because

2766
01:24:47,190 --> 01:24:48,790
of the oil and gas revenues to

2767
01:24:48,790 --> 01:24:50,630
distribute over 7 and a half

2768
01:24:50,630 --> 01:24:52,180
percent of their permanent

2769
01:24:52,180 --> 01:24:53,680
fund. And they had to leave

2770
01:24:53,680 --> 01:24:55,540
that 3% in their funded,

2771
01:24:55,540 --> 01:24:57,310
not distributed because it was

2772
01:24:57,310 --> 01:24:58,960
in the Constitution.

2773
01:24:58,960 --> 01:25:01,340
So we took that

2774
01:25:01,340 --> 01:25:02,850
to heart when we were making

2775
01:25:02,850 --> 01:25:04,240
our recommendations of what

2776
01:25:04,240 --> 01:25:05,730
should be in the Constitution

2777
01:25:05,730 --> 01:25:07,980
and what should be in statute.

2778
01:25:07,980 --> 01:25:09,980
And that was

2779
01:25:10,500 --> 01:25:11,790
months of discussion and our

2780
01:25:11,790 --> 01:25:13,790
task force.

2781
01:25:14,900 --> 01:25:16,390
>> Madam Chair members not just

2782
01:25:16,390 --> 01:25:18,340
add in and directly respond to

2783
01:25:18,340 --> 01:25:19,530
the question of was this a

2784
01:25:19,530 --> 01:25:20,800
topic that the task force

2785
01:25:20,800 --> 01:25:22,910
discussed? The answer is yes.

2786
01:25:22,910 --> 01:25:24,680
I think we ultimately reached a

2787
01:25:24,680 --> 01:25:26,410
conclusion that chill

2788
01:25:26,410 --> 01:25:27,570
articulated that this was

2789
01:25:27,570 --> 01:25:29,130
outside the scope of what we

2790
01:25:29,130 --> 01:25:30,540
were tasked with and that our

2791
01:25:30,540 --> 01:25:32,100
focus should be on the

2792
01:25:32,100 --> 01:25:35,100
investment areas of the caught

2793
01:25:35,100 --> 01:25:35,900
the legal framework that

2794
01:25:35,900 --> 01:25:37,220
addresses the investments of

2795
01:25:37,220 --> 01:25:38,290
the permanent school fund to

2796
01:25:38,290 --> 01:25:39,770
not apportionment.

2797
01:25:39,770 --> 01:25:41,870
However, in reaching that

2798
01:25:41,870 --> 01:25:43,590
conclusion, we did discuss

2799
01:25:43,590 --> 01:25:45,590
amongst each other,

2800
01:25:45,590 --> 01:25:46,890
what is the basis for

2801
01:25:46,890 --> 01:25:47,880
apportionment and there?

2802
01:25:47,880 --> 01:25:49,260
And just amongst the 9 of us,

2803
01:25:49,260 --> 01:25:51,200
there were differing opinions.

2804
01:25:51,200 --> 01:25:52,100
There were some folks who felt

2805
01:25:52,100 --> 01:25:54,500
very strongly that people

2806
01:25:54,660 --> 01:25:55,860
apportionment policy was the

2807
01:25:55,860 --> 01:25:57,120
correct policy.

2808
01:25:57,120 --> 01:25:58,430
There are some folks who

2809
01:25:58,430 --> 01:25:59,250
pointed out that I think

2810
01:25:59,250 --> 01:26:01,260
Senator equated that the fixed

2811
01:26:01,260 --> 01:26:02,950
costs of running schools are

2812
01:26:02,950 --> 01:26:04,280
not dependent on the number of

2813
01:26:04,280 --> 01:26:05,370
students in that school.

2814
01:26:05,370 --> 01:26:07,100
And so perhaps apportionment

2815
01:26:07,100 --> 01:26:08,560
should be thought about in that

2816
01:26:08,560 --> 01:26:10,340
context. There are members that

2817
01:26:10,340 --> 01:26:11,450
observed that most of the

2818
01:26:11,450 --> 01:26:12,950
revenues coming into the

2819
01:26:12,950 --> 01:26:14,130
permanent school fund stem from

2820
01:26:14,130 --> 01:26:15,150
certain areas of the state and

2821
01:26:15,150 --> 01:26:17,400
not others. And so I just point

2822
01:26:17,400 --> 01:26:18,500
that out to say just within

2823
01:26:18,500 --> 01:26:19,350
this group of 9 people who

2824
01:26:19,350 --> 01:26:21,600
spent a lot of time discussing

2825
01:26:21,600 --> 01:26:22,530
and thinking about this,

2826
01:26:22,530 --> 01:26:24,560
we did not reach a conclusion.

2827
01:26:24,560 --> 01:26:25,880
We did not all reached the same

2828
01:26:25,880 --> 01:26:27,460
conclusion on this question.

2829
01:26:27,460 --> 01:26:28,580
That's part of what got us to

2830
01:26:28,580 --> 01:26:29,710
think that this is best left

2831
01:26:29,710 --> 01:26:31,710
with the Legislature.

2832
01:26:31,850 --> 01:26:33,360
>> Thank you, Senator Cruz.

2833
01:26:33,360 --> 01:26:35,350
Thank you. Madam Chair, just

2834
01:26:35,350 --> 01:26:36,480
chiming in on a couple of

2835
01:26:36,480 --> 01:26:38,880
comments on this amendment

2836
01:26:38,960 --> 01:26:40,100
isn't

2837
01:26:40,100 --> 01:26:41,360
related to what happened in

2838
01:26:41,360 --> 01:26:43,310
Utah. That totally makes sense

2839
01:26:43,310 --> 01:26:44,670
to not have a distribution

2840
01:26:44,670 --> 01:26:45,980
about in the Constitution.

2841
01:26:45,980 --> 01:26:48,120
But that's not what this is.

2842
01:26:48,120 --> 01:26:49,800
This is and you said it

2843
01:26:49,800 --> 01:26:50,790
yourself. The intent of the

2844
01:26:50,790 --> 01:26:52,230
legislators back to the state's

2845
01:26:52,230 --> 01:26:53,520
founding

2846
01:26:53,520 --> 01:26:55,300
was for this trust to be held

2847
01:26:55,300 --> 01:26:56,920
for the entire state. And

2848
01:26:56,920 --> 01:26:58,740
that's exactly what this

2849
01:26:58,740 --> 01:27:00,970
amendment seeks to do.

2850
01:27:00,970 --> 01:27:02,490
I don't think the founders of

2851
01:27:02,490 --> 01:27:03,980
this state, those legislators

2852
01:27:03,980 --> 01:27:05,750
that were voting on this

2853
01:27:05,750 --> 01:27:07,530
back in the 18 50's could have

2854
01:27:07,530 --> 01:27:09,530
possibly imagine the

2855
01:27:09,580 --> 01:27:11,390
complicated funding formula

2856
01:27:11,390 --> 01:27:12,590
that the state would end up

2857
01:27:12,590 --> 01:27:14,110
with

2858
01:27:14,110 --> 01:27:15,280
for its general fund, but of

2859
01:27:15,280 --> 01:27:16,710
when even be within their

2860
01:27:16,710 --> 01:27:18,230
comprehension

2861
01:27:18,230 --> 01:27:20,850
and so or or the legislature's

2862
01:27:20,850 --> 01:27:22,850
willingness

2863
01:27:23,100 --> 01:27:24,880
to come up with all of these

2864
01:27:24,880 --> 01:27:26,480
different compensatory funds

2865
01:27:26,480 --> 01:27:27,800
and all of these different ways

2866
01:27:27,800 --> 01:27:29,430
that we fund our schools.

2867
01:27:29,430 --> 01:27:31,100
This fund is different.

2868
01:27:31,100 --> 01:27:31,900
This fund is in the

2869
01:27:31,900 --> 01:27:33,540
Constitution and should benefit

2870
01:27:33,540 --> 01:27:35,000
the entire state. Senator, the

2871
01:27:35,000 --> 01:27:36,590
Sarah's Amendment does exactly

2872
01:27:36,590 --> 01:27:37,610
that.

2873
01:27:37,610 --> 01:27:39,100
I personally don't trust future

2874
01:27:39,100 --> 01:27:40,510
legislatures to not take her

2875
01:27:40,510 --> 01:27:41,760
with this.

2876
01:27:41,760 --> 01:27:43,730
Once they they have this pot of

2877
01:27:43,730 --> 01:27:45,240
money. It's just prescribed by

2878
01:27:45,240 --> 01:27:46,800
law. It's not in the

2879
01:27:46,800 --> 01:27:47,850
constitution. Then it just

2880
01:27:47,850 --> 01:27:49,650
becomes another fun that they

2881
01:27:49,650 --> 01:27:50,780
can

2882
01:27:50,780 --> 01:27:52,700
take and make a complicated

2883
01:27:52,700 --> 01:27:54,540
formula out of. I think the

2884
01:27:54,540 --> 01:27:55,860
people of Minnesota deserve

2885
01:27:55,860 --> 01:27:57,440
simplicity

2886
01:27:57,440 --> 01:27:59,100
on this particular farm.

2887
01:27:59,100 --> 01:28:00,360
There are plenty of other funds

2888
01:28:00,360 --> 01:28:01,710
from the general Fund for

2889
01:28:01,710 --> 01:28:04,110
compensatory funding to address

2890
01:28:04,870 --> 01:28:06,120
particular needs about

2891
01:28:06,120 --> 01:28:07,640
declining enrollment for other

2892
01:28:07,640 --> 01:28:09,590
compensatory funding factors.

2893
01:28:09,590 --> 01:28:11,360
But this fund is different.

2894
01:28:11,360 --> 01:28:12,590
This fund should have the

2895
01:28:12,590 --> 01:28:14,510
confidence of the people

2896
01:28:14,510 --> 01:28:15,630
when they're voting on this

2897
01:28:15,630 --> 01:28:17,400
constitutional amendment that

2898
01:28:17,400 --> 01:28:18,660
it is going to be distributed

2899
01:28:18,660 --> 01:28:20,260
on a per pupil basis. Thank

2900
01:28:20,260 --> 01:28:21,540
you.

2901
01:28:21,540 --> 01:28:23,160
>> Senator homes from.

2902
01:28:23,160 --> 01:28:25,380
>> Madam Chair. I will add to

2903
01:28:25,380 --> 01:28:27,170
that that the executive

2904
01:28:27,170 --> 01:28:28,180
director of the Middle School

2905
01:28:28,180 --> 01:28:29,240
Board Association just

2906
01:28:29,240 --> 01:28:31,370
testified to us that the school

2907
01:28:31,370 --> 01:28:33,990
board's need to have stability.

2908
01:28:33,990 --> 01:28:36,380
They need to know long term

2909
01:28:36,380 --> 01:28:38,210
what to expect. This amendment

2910
01:28:38,210 --> 01:28:39,480
does just that. It tells them

2911
01:28:39,480 --> 01:28:40,780
exactly what to expect where

2912
01:28:40,780 --> 01:28:41,540
these dollars are going to be

2913
01:28:41,540 --> 01:28:43,890
spent long into the future.

2914
01:28:43,890 --> 01:28:45,890
Thank you.

2915
01:28:48,140 --> 01:28:49,600
>> Senator commissioning

2916
01:28:49,600 --> 01:28:50,690
closing thoughts will go to

2917
01:28:50,690 --> 01:28:52,200
Senator the Cerro. Okay.

2918
01:28:52,200 --> 01:28:53,770
>> Yeah. I mean, this has been

2919
01:28:53,770 --> 01:28:55,500
a really good discussion.

2920
01:28:55,500 --> 01:28:56,980
And I wish even though you kind

2921
01:28:56,980 --> 01:28:58,780
of came up with this yesterday,

2922
01:28:58,780 --> 01:29:00,530
had to given the a little heads

2923
01:29:00,530 --> 01:29:02,160
up so that I could kind of wrap

2924
01:29:02,160 --> 01:29:03,860
my head around it and ask a lot

2925
01:29:03,860 --> 01:29:05,650
of other questions. I wasn't

2926
01:29:05,650 --> 01:29:08,500
surely have appreciated that.

2927
01:29:08,560 --> 01:29:10,680
But again, at this time because

2928
01:29:10,680 --> 01:29:13,600
I feel like I now need to

2929
01:29:13,600 --> 01:29:15,520
talk about it. Think about it,

2930
01:29:15,520 --> 01:29:17,900
perhaps meet with any of you

2931
01:29:17,900 --> 01:29:20,400
around this before we make a

2932
01:29:20,400 --> 01:29:22,860
decision on this. I think I I

2933
01:29:22,860 --> 01:29:24,940
need to think a little bit more

2934
01:29:24,940 --> 01:29:28,540
as senator said, this has other

2935
01:29:29,460 --> 01:29:32,510
stops and perhaps on one of

2936
01:29:32,510 --> 01:29:34,970
those other stops, having done

2937
01:29:34,970 --> 01:29:36,730
better review and reflection on

2938
01:29:36,730 --> 01:29:37,600
this and having more

2939
01:29:37,600 --> 01:29:39,370
information about what the

2940
01:29:39,370 --> 01:29:40,690
cause and effect of something

2941
01:29:40,690 --> 01:29:42,580
like this might be, how it

2942
01:29:42,580 --> 01:29:43,910
might make the fund more

2943
01:29:43,910 --> 01:29:46,310
vulnerable. And as we're

2944
01:29:46,700 --> 01:29:48,120
talking about future

2945
01:29:48,120 --> 01:29:50,330
legislators being able to tap

2946
01:29:50,330 --> 01:29:52,250
into this, we want to make sure

2947
01:29:52,250 --> 01:29:53,240
that we are being very

2948
01:29:53,240 --> 01:29:56,240
protective and what those kind

2949
01:29:56,240 --> 01:29:57,770
of consequences would be.

2950
01:29:57,770 --> 01:29:59,230
So I'm willing to work with you

2951
01:29:59,230 --> 01:30:01,510
on this. I just need more time

2952
01:30:01,510 --> 01:30:02,300
and I need a better

2953
01:30:02,300 --> 01:30:04,700
understanding before I could

2954
01:30:04,840 --> 01:30:07,300
accept a an amendment such as

2955
01:30:07,300 --> 01:30:08,710
this.

2956
01:30:08,710 --> 01:30:10,700
>> Senator Louis, Errol, thank

2957
01:30:10,700 --> 01:30:12,190
you. Madam Chair members,

2958
01:30:12,190 --> 01:30:14,190
the Minnesota Constitution,

2959
01:30:14,250 --> 01:30:15,720
states

2960
01:30:15,720 --> 01:30:18,800
general and uniform system of

2961
01:30:18,800 --> 01:30:19,510
public schools,

2962
01:30:19,510 --> 01:30:21,910
that is the objective.

2963
01:30:22,560 --> 01:30:24,350
The school trust lands were to

2964
01:30:24,350 --> 01:30:27,440
benefit all students. So in the

2965
01:30:27,440 --> 01:30:29,220
spirit of benefiting all

2966
01:30:29,220 --> 01:30:30,450
students

2967
01:30:30,450 --> 01:30:32,410
and his spirit of having a

2968
01:30:32,410 --> 01:30:34,410
uniform system,

2969
01:30:34,620 --> 01:30:36,640
I encourage members to vote in

2970
01:30:36,640 --> 01:30:38,480
support of this to ensure that

2971
01:30:38,480 --> 01:30:40,880
those funds are distributed

2972
01:30:40,990 --> 01:30:43,500
uniformly for the benefit of

2973
01:30:43,500 --> 01:30:45,450
all students equally. That's

2974
01:30:45,470 --> 01:30:47,100
what our Constitution should

2975
01:30:47,100 --> 01:30:48,240
reflect.

2976
01:30:48,240 --> 01:30:51,270
A green vote is too support

2977
01:30:51,270 --> 01:30:53,500
that philosophy and support all

2978
01:30:53,500 --> 01:30:54,860
students equally.

2979
01:30:54,860 --> 01:30:56,120
If you don't agree with that

2980
01:30:56,120 --> 01:30:57,400
vote. No. Thank you, Madam

2981
01:30:57,400 --> 01:30:59,160
Chair.

2982
01:30:59,160 --> 01:31:00,690
>> Thank you. Senator Le Cerro.

2983
01:31:00,690 --> 01:31:04,220
We will vote on the B 2 on the

2984
01:31:04,220 --> 01:31:06,220
to all those in favor say Aye,

2985
01:31:06,220 --> 01:31:08,150
aye. All those opposed say no,

2986
01:31:08,150 --> 01:31:10,600
no

2987
01:31:10,600 --> 01:31:12,460
to does not pass

2988
01:31:14,000 --> 01:31:16,000
any other discussion.

2989
01:31:16,450 --> 01:31:17,500
>> Closing remarks, Senator

2990
01:31:17,500 --> 01:31:19,160
could inch. Thank you. This has

2991
01:31:19,160 --> 01:31:21,410
been a really good discussion

2992
01:31:21,410 --> 01:31:22,700
and I appreciate everybody

2993
01:31:22,700 --> 01:31:24,160
bringing their perspective to

2994
01:31:24,160 --> 01:31:26,260
this conversation as a

2995
01:31:26,260 --> 01:31:27,890
constitutional amendment.

2996
01:31:27,890 --> 01:31:29,570
It's really vital that we get

2997
01:31:29,570 --> 01:31:33,150
this. You know, right before we

2998
01:31:33,150 --> 01:31:35,950
take it to the voters and at

2999
01:31:35,950 --> 01:31:36,920
the end of the day, it will be

3000
01:31:36,920 --> 01:31:39,220
the voters that are going to

3001
01:31:39,220 --> 01:31:40,510
make that decision for our

3002
01:31:40,510 --> 01:31:42,490
students. And so with that,

3003
01:31:42,490 --> 01:31:45,350
I would ask you all to on vote

3004
01:31:45,350 --> 01:31:47,330
Green to move this bill on its

3005
01:31:47,330 --> 01:31:49,330
way.

3006
01:31:50,590 --> 01:31:53,550
>> All right. As amended will

3007
01:31:53,550 --> 01:31:54,780
vote now to move this to state

3008
01:31:54,780 --> 01:31:55,890
local governor. All those in

3009
01:31:55,890 --> 01:31:58,200
favor say aye on all those

3010
01:31:58,200 --> 01:32:00,200
opposed say no

3011
01:32:01,210 --> 01:32:03,210
motion carries

3012
01:32:08,930 --> 01:32:10,350
next. We'll hear some file.

3013
01:32:10,350 --> 01:32:12,350
1, 2, 0, 1, Senator commish,

3014
01:32:12,750 --> 01:32:14,850
you are up again. I believe

3015
01:32:14,850 --> 01:32:15,860
it's your attention to Saint

3016
01:32:15,860 --> 01:32:17,530
SF. 1, 2, 0, 1, to the

3017
01:32:17,530 --> 01:32:19,740
committee on commerce. Yes,

3018
01:32:19,740 --> 01:32:21,240
it is.

3019
01:32:21,240 --> 01:32:21,940
Would you like to make that

3020
01:32:21,940 --> 01:32:25,000
motion? Yes, I make so moved

3021
01:32:25,000 --> 01:32:26,690
perfect. All right. You've been

3022
01:32:26,690 --> 01:32:28,900
a 3 amendment. Would you like

3023
01:32:28,900 --> 01:32:29,810
to move the a 3 amendment and

3024
01:32:29,810 --> 01:32:30,540
introduce it?

3025
01:32:30,540 --> 01:32:33,830
>> Yes, the a 3 Amendment is is

3026
01:32:33,830 --> 01:32:35,630
an amendment to delete all and

3027
01:32:35,630 --> 01:32:37,650
then add the language that you

3028
01:32:37,650 --> 01:32:39,560
will find on in Bill 12.

3029
01:32:39,560 --> 01:32:41,560
0, 1,

3030
01:32:43,110 --> 01:32:43,830
>> All right. All those in

3031
01:32:43,830 --> 01:32:45,180
favor of adopting the a 3

3032
01:32:45,180 --> 01:32:47,450
amendments. I I all those

3033
01:32:47,450 --> 01:32:49,830
opposed. All right. Seeing it

3034
01:32:49,830 --> 01:32:52,180
here. Bill, thank you so much

3035
01:32:52,180 --> 01:32:53,470
members. This is a.

3036
01:32:53,470 --> 01:32:54,580
>> This is another really

3037
01:32:54,580 --> 01:32:58,780
curious bill. And it is a bill

3038
01:32:58,960 --> 01:33:01,250
that would require school

3039
01:33:01,250 --> 01:33:02,860
health insurance annual

3040
01:33:02,860 --> 01:33:05,740
reports. The goal with this

3041
01:33:05,740 --> 01:33:07,130
report is to give the state a

3042
01:33:07,130 --> 01:33:08,920
clear picture of what districts

3043
01:33:08,920 --> 01:33:10,450
are paying for health insurance

3044
01:33:10,450 --> 01:33:12,160
under the current system and

3045
01:33:12,160 --> 01:33:14,220
how many potential employees

3046
01:33:14,220 --> 01:33:18,420
would be eligible to be an and

3047
01:33:18,690 --> 01:33:20,970
eg IP, which is a statewide

3048
01:33:20,970 --> 01:33:22,630
health insurance pool for

3049
01:33:22,630 --> 01:33:24,200
educators.

3050
01:33:24,200 --> 01:33:27,420
And as we know, one of the

3051
01:33:27,420 --> 01:33:29,820
probably the largest budgetary

3052
01:33:31,740 --> 01:33:34,670
issue is health care for not

3053
01:33:34,670 --> 01:33:35,770
only our teachers but

3054
01:33:35,770 --> 01:33:37,430
administrators and parents and

3055
01:33:37,430 --> 01:33:40,270
those sort of things. And so we

3056
01:33:40,270 --> 01:33:43,870
are this report is tasked with

3057
01:33:44,980 --> 01:33:46,530
getting the did the district's

3058
01:33:46,530 --> 01:33:49,260
to share with us what the

3059
01:33:49,260 --> 01:33:50,730
insurance is so that they have

3060
01:33:50,730 --> 01:33:52,510
a really important. They have a

3061
01:33:52,510 --> 01:33:55,200
very clear picture of how and

3062
01:33:55,200 --> 01:33:56,590
what we are paying for in the

3063
01:33:56,590 --> 01:34:00,190
insurance world. And it also is

3064
01:34:02,460 --> 01:34:05,460
requiring a each student just

3065
01:34:05,550 --> 01:34:07,230
or each district and charter

3066
01:34:07,230 --> 01:34:10,150
school to complete an annual

3067
01:34:10,150 --> 01:34:12,550
survey survey by September 4,

3068
01:34:12,730 --> 01:34:14,880
excuse me, first, using data

3069
01:34:14,880 --> 01:34:16,870
from the most recent fiscal

3070
01:34:16,870 --> 01:34:19,190
year so that we can kind of

3071
01:34:19,190 --> 01:34:21,680
wrap our head around what

3072
01:34:21,680 --> 01:34:24,900
really is the cost of this

3073
01:34:24,900 --> 01:34:25,730
health insurance and how we

3074
01:34:25,730 --> 01:34:27,000
might be able to create a

3075
01:34:27,000 --> 01:34:28,810
better system for that.

3076
01:34:28,810 --> 01:34:31,190
And with that, I have a few a

3077
01:34:31,190 --> 01:34:33,190
few test fires.

3078
01:34:34,630 --> 01:34:35,900
>> Thank you, Senator Kunesh.

3079
01:34:35,900 --> 01:34:36,690
If we could bring the

3080
01:34:36,690 --> 01:34:38,790
testifiers to the table and

3081
01:34:38,790 --> 01:34:40,140
just want to remind you that we

3082
01:34:40,140 --> 01:34:42,180
are sort of limited on time.

3083
01:34:42,180 --> 01:34:44,900
So if both of you

3084
01:34:44,900 --> 01:34:45,600
testifiers who come to the

3085
01:34:45,600 --> 01:34:47,600
table,

3086
01:34:49,350 --> 01:34:50,570
I'm gonna let you all decide

3087
01:34:50,570 --> 01:34:51,950
who goes first and just

3088
01:34:51,950 --> 01:34:53,700
identify yourself for the

3089
01:34:53,700 --> 01:34:54,180
record and you can begin when

3090
01:34:54,180 --> 01:34:56,180
you're ready.

3091
01:34:58,580 --> 01:34:59,860
>> Hello Committee members.

3092
01:34:59,860 --> 01:35:01,300
My name is John Wachter.

3093
01:35:01,300 --> 01:35:02,580
And I'm the president of know,

3094
01:35:02,580 --> 01:35:03,680
kind of an education,

3095
01:35:03,680 --> 01:35:05,130
Minnesota, the union

3096
01:35:05,130 --> 01:35:06,580
representing the teachers and

3097
01:35:06,580 --> 01:35:07,810
license staff and, you know,

3098
01:35:07,810 --> 01:35:09,950
kind of in school district.

3099
01:35:09,950 --> 01:35:11,700
I'm here to to speak in favor

3100
01:35:11,700 --> 01:35:13,700
of Senate file 12. 0, 1,

3101
01:35:13,880 --> 01:35:14,770
a bill that would direct the

3102
01:35:14,770 --> 01:35:15,900
state to study the health

3103
01:35:15,900 --> 01:35:17,900
insurance plans. School

3104
01:35:17,900 --> 01:35:19,490
districts offer to employees.

3105
01:35:20,440 --> 01:35:21,970
2 months ago. We were on the

3106
01:35:21,970 --> 01:35:23,990
precipice of a strike,

3107
01:35:23,990 --> 01:35:25,900
a crisis largely driven by the

3108
01:35:25,900 --> 01:35:28,870
struggle to address a crushing

3109
01:35:28,870 --> 01:35:31,720
increases in health care costs

3110
01:35:31,720 --> 01:35:34,120
for the 2025 26 school year.

3111
01:35:34,340 --> 01:35:35,750
The self insured premiums for

3112
01:35:35,750 --> 01:35:37,390
our health plans increased an

3113
01:35:37,390 --> 01:35:39,390
average of 22%.

3114
01:35:39,990 --> 01:35:42,250
This resulted in 400 to $700

3115
01:35:42,250 --> 01:35:45,100
increases per month in premiums

3116
01:35:45,100 --> 01:35:47,630
for family coverage this year.

3117
01:35:47,630 --> 01:35:50,300
Given that 82% salary increase

3118
01:35:50,230 --> 01:35:52,230
equates to between 1002 $1000

3119
01:35:52,760 --> 01:35:54,140
for educators for the entire

3120
01:35:54,140 --> 01:35:57,200
year, you can see the problem.

3121
01:35:57,200 --> 01:35:58,620
I know get up and is currently

3122
01:35:58,620 --> 01:36:00,100
in the process of setting rates

3123
01:36:00,100 --> 01:36:01,590
for next year. And we have been

3124
01:36:01,590 --> 01:36:02,950
told to, again expect

3125
01:36:02,950 --> 01:36:04,340
double-digit percentage

3126
01:36:04,340 --> 01:36:06,340
increases

3127
01:36:06,670 --> 01:36:08,190
during bargaining educators.

3128
01:36:08,190 --> 01:36:09,360
Find ourselves trying to put

3129
01:36:09,360 --> 01:36:11,340
money, shaped Band-Aid on a

3130
01:36:11,340 --> 01:36:13,280
gaping flesh wound.

3131
01:36:13,280 --> 01:36:14,780
It has been implied publicly

3132
01:36:14,780 --> 01:36:16,440
that we have actively chosen

3133
01:36:16,440 --> 01:36:17,860
our current trade off between

3134
01:36:17,860 --> 01:36:19,630
salary and benefits

3135
01:36:19,630 --> 01:36:21,360
rather than it being the result

3136
01:36:21,360 --> 01:36:23,600
of insurance costs rapidly

3137
01:36:23,600 --> 01:36:25,600
outpacing inflation.

3138
01:36:25,410 --> 01:36:27,150
We have often raised the idea

3139
01:36:27,150 --> 01:36:28,190
of making our district's

3140
01:36:28,190 --> 01:36:29,330
contributions towards our

3141
01:36:29,330 --> 01:36:30,740
health insurance, a percentage

3142
01:36:30,740 --> 01:36:31,980
of premiums and have been

3143
01:36:31,980 --> 01:36:33,980
rebuffed every time

3144
01:36:34,830 --> 01:36:36,610
this continues to put the onus

3145
01:36:36,610 --> 01:36:38,470
of cost increase is largely an

3146
01:36:38,470 --> 01:36:39,970
educators.

3147
01:36:39,970 --> 01:36:41,840
Due to this many question,

3148
01:36:41,840 --> 01:36:43,190
whether a career serving the

3149
01:36:43,190 --> 01:36:44,580
students of an account of bin

3150
01:36:44,580 --> 01:36:45,850
is one that will allow them to

3151
01:36:45,850 --> 01:36:47,410
continue to support their own

3152
01:36:47,410 --> 01:36:49,110
families.

3153
01:36:49,110 --> 01:36:50,880
Already, the cost increases

3154
01:36:50,880 --> 01:36:53,280
this year caused at least 900

3155
01:36:53,280 --> 01:36:55,440
individuals and dependents to

3156
01:36:55,440 --> 01:36:57,210
leave our district health and

3157
01:36:57,210 --> 01:36:58,910
insurance plans and moved to

3158
01:36:58,910 --> 01:37:00,910
other coverage.

3159
01:37:00,960 --> 01:37:02,610
Right now. Hundreds of

3160
01:37:02,610 --> 01:37:04,800
districts across the state are

3161
01:37:04,800 --> 01:37:05,580
replicating the same work

3162
01:37:05,580 --> 01:37:07,250
requesting in analyzing bids

3163
01:37:07,250 --> 01:37:08,990
for health insurance.

3164
01:37:08,990 --> 01:37:11,200
Each one of those districts is

3165
01:37:11,200 --> 01:37:13,580
one bad claims year from their

3166
01:37:13,580 --> 01:37:15,260
carefully constructed plans

3167
01:37:15,260 --> 01:37:17,260
falling apart.

3168
01:37:17,350 --> 01:37:19,200
This bill does not represent a

3169
01:37:19,200 --> 01:37:21,360
burden to districts as 95% of

3170
01:37:21,360 --> 01:37:22,980
the information being requested

3171
01:37:22,980 --> 01:37:24,630
is already being gathered for

3172
01:37:24,630 --> 01:37:26,300
bargaining and insurance

3173
01:37:26,300 --> 01:37:27,920
bidding processes.

3174
01:37:27,920 --> 01:37:29,660
Important aspect of this bill

3175
01:37:29,660 --> 01:37:30,990
is too,

3176
01:37:30,990 --> 01:37:32,180
is the opportunity to gather

3177
01:37:32,180 --> 01:37:34,580
vital information about how

3178
01:37:35,190 --> 01:37:36,280
much districts are spending on

3179
01:37:36,280 --> 01:37:37,450
health insurance across the

3180
01:37:37,450 --> 01:37:39,470
entire state to help inform a

3181
01:37:39,470 --> 01:37:41,160
statewide solution as

3182
01:37:41,160 --> 01:37:43,100
envisioned in Senate file 29.

3183
01:37:43,100 --> 01:37:44,200
0, 9,

3184
01:37:44,200 --> 01:37:45,870
We cannot solve this problem

3185
01:37:45,870 --> 01:37:47,470
until you have a true sense of

3186
01:37:47,470 --> 01:37:49,490
the scope of the issue. I urge

3187
01:37:49,490 --> 01:37:51,270
you to support Senate file 12

3188
01:37:51,270 --> 01:37:53,140
on.

3189
01:37:53,140 --> 01:37:55,540
Thank you, Miss Goff.

3190
01:37:55,800 --> 01:37:57,250
>> Thank you, chair and

3191
01:37:57,250 --> 01:37:58,890
members. My name is Lori Goff

3192
01:37:58,890 --> 01:38:00,190
and I'm a special education

3193
01:38:00,190 --> 01:38:01,280
para for the Saint. Michael,

3194
01:38:01,280 --> 01:38:02,910
a Purple School district.

3195
01:38:02,910 --> 01:38:04,620
I provide academic support in

3196
01:38:04,620 --> 01:38:06,400
general education, classrooms

3197
01:38:06,400 --> 01:38:07,640
and Iran are resource room

3198
01:38:07,640 --> 01:38:08,640
where students can come and get

3199
01:38:08,640 --> 01:38:10,220
extra help.

3200
01:38:10,220 --> 01:38:11,510
There was a time when education

3201
01:38:11,510 --> 01:38:12,920
support professional jobs were

3202
01:38:12,920 --> 01:38:14,670
side after because of the good

3203
01:38:14,670 --> 01:38:16,580
paying great benefits. But

3204
01:38:16,580 --> 01:38:18,390
after 25 years of underfunding

3205
01:38:18,390 --> 01:38:20,200
by the state of Minnesota are

3206
01:38:20,200 --> 01:38:21,490
wages and benefits have not

3207
01:38:21,490 --> 01:38:23,260
kept up and positions like mine

3208
01:38:23,260 --> 01:38:25,110
are hard to fill

3209
01:38:25,110 --> 01:38:26,340
when bargaining the district

3210
01:38:26,340 --> 01:38:28,140
comes to the table says this is

3211
01:38:28,140 --> 01:38:29,290
your budget

3212
01:38:29,290 --> 01:38:30,440
wages, our health health

3213
01:38:30,440 --> 01:38:32,390
insurance, not everyone takes

3214
01:38:32,390 --> 01:38:33,810
the insurance, but everyone

3215
01:38:33,810 --> 01:38:35,340
takes the wages. So the

3216
01:38:35,340 --> 01:38:36,960
insurance gets more expensive.

3217
01:38:36,960 --> 01:38:39,000
And the plans get worse.

3218
01:38:39,000 --> 01:38:40,720
After decades of disinvestment,

3219
01:38:40,720 --> 01:38:43,720
my insurance is well bat.

3220
01:38:44,610 --> 01:38:45,670
I'd like to tell you about my

3221
01:38:45,670 --> 01:38:48,800
son. One day he woke up in can

3222
01:38:48,800 --> 01:38:49,860
see out his right eye

3223
01:38:49,860 --> 01:38:51,800
after many appointments with

3224
01:38:51,800 --> 01:38:52,880
many doctors and specialists

3225
01:38:52,880 --> 01:38:55,230
and patiently also known as a

3226
01:38:55,230 --> 01:38:57,190
gun eyes only waiting for test

3227
01:38:57,190 --> 01:38:59,310
results. And numerous summarize

3228
01:38:59,310 --> 01:39:00,940
we found out he has a rare eye

3229
01:39:00,940 --> 01:39:02,370
disease.

3230
01:39:02,370 --> 01:39:03,650
It took a year, but the doctors

3231
01:39:03,650 --> 01:39:05,660
found a way to stabilize it.

3232
01:39:05,660 --> 01:39:07,160
Unfortunately, our insurance

3233
01:39:07,160 --> 01:39:08,600
will not cover the medication

3234
01:39:08,600 --> 01:39:10,600
the doctor prescribed.

3235
01:39:10,650 --> 01:39:12,220
Instead, we're forced to use

3236
01:39:12,220 --> 01:39:13,390
the medication that is for

3237
01:39:13,390 --> 01:39:15,140
children with cancer who are

3238
01:39:15,140 --> 01:39:16,270
waiting to have a bone marrow

3239
01:39:16,270 --> 01:39:18,270
transplant.

3240
01:39:18,270 --> 01:39:19,990
It suppresses the immune system

3241
01:39:19,990 --> 01:39:21,740
and has possibly devastating

3242
01:39:21,740 --> 01:39:23,100
and irreversible longtime

3243
01:39:23,100 --> 01:39:25,200
certify side effects. Some of

3244
01:39:25,200 --> 01:39:27,170
this part makes me emotional.

3245
01:39:27,170 --> 01:39:28,390
He needs to be on this for at

3246
01:39:28,390 --> 01:39:30,290
least 3 years and possibly

3247
01:39:30,290 --> 01:39:31,580
forever.

3248
01:39:31,580 --> 01:39:32,890
This medication isn't covered

3249
01:39:32,890 --> 01:39:34,850
by insurance either, but it's

3250
01:39:34,850 --> 01:39:37,120
$168 a month out of pocket

3251
01:39:37,120 --> 01:39:39,120
rather than 7,000.

3252
01:39:39,630 --> 01:39:41,150
I worked 3 jobs to pay for

3253
01:39:41,150 --> 01:39:43,110
medical expenses and mice and

3254
01:39:43,110 --> 01:39:45,850
we still lose his sight.

3255
01:39:45,850 --> 01:39:47,810
Imagine telling your child that

3256
01:39:47,810 --> 01:39:49,600
you can't afford to keep them

3257
01:39:49,600 --> 01:39:50,920
healthy.

3258
01:39:50,920 --> 01:39:52,200
I don't want to be just one was

3259
01:39:52,200 --> 01:39:53,500
that story.

3260
01:39:53,500 --> 01:39:54,920
But I do want to put a face to

3261
01:39:54,920 --> 01:39:56,840
a statewide problem.

3262
01:39:56,840 --> 01:39:58,620
Eu's peas and every district in

3263
01:39:58,620 --> 01:40:00,350
our state are struggling to

3264
01:40:00,350 --> 01:40:02,350
care for families.

3265
01:40:02,350 --> 01:40:04,140
This is a statewide problem and

3266
01:40:04,140 --> 01:40:06,600
it needs a statewide solution.

3267
01:40:06,600 --> 01:40:07,610
>> This report will help us

3268
01:40:07,610 --> 01:40:09,240
understand the full scope of

3269
01:40:09,240 --> 01:40:10,410
the problem and what it would

3270
01:40:10,410 --> 01:40:12,500
take to provide us with the

3271
01:40:12,500 --> 01:40:13,320
kind of health insurance that

3272
01:40:13,320 --> 01:40:14,590
would allow us to care for our

3273
01:40:14,590 --> 01:40:16,420
kids at school and their

3274
01:40:16,420 --> 01:40:18,100
families at home.

3275
01:40:18,100 --> 01:40:19,440
I encourage you to support this

3276
01:40:19,440 --> 01:40:21,200
Bill. Thank you so much for

3277
01:40:21,200 --> 01:40:23,200
your time.

3278
01:40:23,680 --> 01:40:24,890
>> Thank you, members. Any

3279
01:40:24,890 --> 01:40:26,890
questions or comments,

3280
01:40:30,670 --> 01:40:31,800
senator condition to closing

3281
01:40:31,800 --> 01:40:33,800
thoughts words?

3282
01:40:33,870 --> 01:40:34,750
>> No, but thank you for

3283
01:40:34,750 --> 01:40:37,500
listening. And I hope that that

3284
01:40:37,500 --> 01:40:38,900
we get some really good

3285
01:40:38,900 --> 01:40:41,000
information out of this report.

3286
01:40:41,000 --> 01:40:42,850
Should it pass into law this

3287
01:40:42,850 --> 01:40:44,680
year so that we do have a

3288
01:40:44,680 --> 01:40:46,900
better and fuller understanding

3289
01:40:46,900 --> 01:40:49,640
of the costs of insurance,

3290
01:40:49,640 --> 01:40:51,300
not only in, you know, the

3291
01:40:51,300 --> 01:40:52,940
individual districts but across

3292
01:40:52,940 --> 01:40:55,910
the state and perhaps provide

3293
01:40:55,910 --> 01:40:57,470
an opportunity for us to really

3294
01:40:57,470 --> 01:40:58,710
address this in a real way.

3295
01:40:58,710 --> 01:41:00,990
So appreciate a green vote on

3296
01:41:00,990 --> 01:41:02,250
this bill.

3297
01:41:02,250 --> 01:41:03,600
>> Thank you, Senator. With

3298
01:41:03,600 --> 01:41:04,440
that. Senator Cruz renews her

3299
01:41:04,440 --> 01:41:06,790
motion that SF 1, 2, 0, 1, as

3300
01:41:06,790 --> 01:41:08,340
amended be recommended to pass

3301
01:41:08,340 --> 01:41:09,300
and referred to the committee

3302
01:41:09,300 --> 01:41:11,200
on Commerce. All those in favor

3303
01:41:11,200 --> 01:41:14,200
say Aye. Aye. Any opposed

3304
01:41:14,130 --> 01:41:15,250
seeing none. This bill as

3305
01:41:15,250 --> 01:41:16,250
amended has moved to the

3306
01:41:16,250 --> 01:41:17,190
committee and state local

3307
01:41:17,190 --> 01:41:18,440
government,

3308
01:41:18,440 --> 01:41:20,840
commerce, commerce. This thing

3309
01:41:23,300 --> 01:41:24,350
members, we will not have

3310
01:41:24,350 --> 01:41:26,500
education finance hearing on

3311
01:41:26,500 --> 01:41:28,800
Thursday this week. It is 10,

3312
01:41:28,800 --> 01:41:31,200
20 and we are adjourned