School Trust Lands - Projects

The Department of Natural Resources is working with the U.S. Forest Service to transfer ownership of school trust lands inside the Boundary Waters

To benefit public education, the Department of Natural Resources (DNR), the Minnesota Office of School Trust Lands (OSTL), and the U.S. Forest Service—Superior National Forest (U.S. Forest Service) are working together to transfer surface ownership of approximately 80,000 acres of school trust lands located within the Boundary Waters Canoe Area Wilderness (BWCAW) from state to federal ownership.

School trust lands were granted by the federal government to provide a constant source of funding for public education. The state’s constitutional mandate for managing school trust lands is to ensure their maximum long-term economic return while adhering to sound natural resource conservation and management principles. Mining and timber harvesting on school trust lands generate the primary financial contributions to the Permanent School Fund. However, the U.S. Forest Service’s wilderness laws and regulations in the BWCAW limit the state’s ability to manage school trust lands located within the BWCAW to maximize revenue for the Permanent School Fund.

The transaction aims to uphold Minnesota’s fiduciary responsibility to generate income for the Permanent School Fund and will help to provide a continual source of funding for Minnesota’s 850,000 K-12 students by distributing revenue to every public school district within the state.

Overview

The DNR had previously proposed to exchange school trust lands within the BWCAW for suitable lands outside of the wilderness. The DNR understands that the U.S. Forest Service received input opposing a land exchange and calling for the state to instead sell school trust lands within the BWCAW to the United States. Under the purchase-only proposal, the DNR initiated the process by removing the school trust land designation from approximately 80,000 acres of state lands within the BWCAW and then will sell those lands to the U.S. Forest Service.

The U.S. Forest Service will use a federal appropriation from the Land and Water Conservation Fund (LWCF) to purchase the surface rights to approximately 80,000 acres of school trust lands in the BWCAW, which spans Cook, Lake, and St. Louis counties. Federal appropriation payments would ensure that the Permanent School Fund is fully compensated for the federal land acquisition.

The funds from the sale would compensate the Permanent School Fund, which supports 850,000 students in K-12 public education by distributing revenue to every public and charter school in the state.

Milestones

There have been several significant stages of this project so far. Select the accordions to learn more about completed work. This webpage will be updated as the project progresses.

Land appraisal: The DNR has completed a land appraisal to determine the market value of approximately 80,000 acres of state school trust lands within the BWCAW, as well as the land's overall valuation, which considers the location, size, and environment. Now that the appraisal and valuation are finished, the DNR is working with OSTL and Minnesota’s Attorney General's Office to remove the school trust land designation from state lands within the BWCAW. To comply with Minnesota law, the DNR will convert approximately 80,000 acres of school trust land into acquired lands through a legal process called condemnation. Once the condemnation is complete, the DNR then has the legal authority to sell the condemned acres to the U.S. Forest Service. The land transaction between the state and the U.S. Forest Service is anticipated to be completed in 2027.
EIS cancellation notice: The U.S. Forest Service canceled the Environmental Impact Statement for the original exchange proposal. The cancellation notice was posted to the Federal Register on Friday, July 12, 2024. The U.S. Forest Service anticipates initiating scoping of the purchase proposal soon.
Land exchange withdrawal: The state and federal partners, along with northern Minnesota Tribes and local governments, have been collaborating on the transaction process. The DNR submitted a land exchange withdrawal letter to proceed with the sale to the U.S. Forest Service.

Frequently asked questions

What are school trust lands?

The public land survey system divided each township into 36 sections, each covering 1 square mile (approximately 640 acres). When Minnesota became a state in 1858, the federal government granted sections 16 and 36, or five percent of the land in every township, for the use of schools. Today, the DNR manages 2.5 million acres of school trust lands and one million acres of mineral rights on behalf of Minnesota’s public schools. The DNR oversees revenue generating activities such as mining, mineral exploration leasing, land sales, utility licenses, and timber harvesting while prioritizing economic return, environmental stewardship, and sustainability.

Who benefits from school trust lands?

The Minnesota constitution is clear: beneficiaries of school trust lands are Minnesota’s 329 public school districts and 181 charter schools, currently educating nearly 850,000 K-12 students.

What is the Permanent School Fund?

The Permanent School Fund was established by the Minnesota Constitution to guarantee a long-term source of funds for public education. It is made up of the revenues generated from school trust lands, as well as the interest and dividends. These funds support K-12 public education and are distributed to every public school district within the state.

Why are state school trust lands within the BWCAW being transferred to federal ownership?

The transfer of school trust lands within the Boundary Waters Canoe Area Wilderness (BWCAW) to federal ownership will benefit Minnesota's public education system. The 1964 Wilderness Act and the 1978 BWCAW Act confined approximately 80,000 acres of school trust lands within the wilderness area, limiting the state’s ability to generate revenue from the lands for the Permanent School Fund.

Why is the project a land purchase rather than a land exchange?

Under the purchase-only proposal, the DNR would initiate the process by removing the school trust land designation from approximately 80,000 acres of state lands within the BWCAW. Then, the federal government will purchase the surface rights to most of those lands from the DNR using a federal Land and Water Conservation Fund appropriation. Following the federal acquisition, the DNR will deposit the sale proceeds in the Permanent School Fund for management by the State Board of Investment.

The purchase-only proposal will:

Consolidate federal ownership of lands within the BWCAW through the acquisition of state-owned school trust parcels and outside of the BWCAW through the purchase of TCF-owned lands.
Maximize long-term economic return of state school trust.
Prevent the fragmentation of former private forestlands by ensuring their long-term conservation.
Respect Tribal government requests to refrain from divestiture of any federal property via land exchange.

How many acres of school trust lands are being transferred from State to Federal ownership?

The state is working with the U.S. Forest Service to transfer ownership of approximately 80,000 acres of school trust lands within the BWCAW, which are located in parts of Minnesota's Cook, Lake, and St. Louis counties. The school trust lands proposed for purchase include approximately 24,000 acres in Cook County, 25,000 acres in Lake County, and 33,000 acres in St. Louis County.

What will be the direct implications of this land ownership transfer on our local governments?

We anticipate that an increase in federally owned acres would lead to an increase in various federal payments to counties, such as Secure Rural Schools (SRS), Payment in Lieu of Taxes (PILT), and Thye-Blatnik.

Detailed information on future SRS/PILT payments can only be provided after the purchases are finalized and final acreages are determined. School Trust lands acquired by the federal government will be considered in the next Thye-Blatnik appraisal beginning in 2028.

What will happen to the remaining lands that The Conservation Fund purchased as part of the original exchange proposal?

Minnesota has a long-standing partnership with TCF to protect the state’s natural resources. This partnership aims to increase access to nature, preserve wildlife habitat, and improve climate resilience. The DNR and the OSTL appreciate TCF's commitment to protecting and preserving the BWCAW through the acquisition of lands for the original exchange proposal.

The state evaluated the remaining TCF lands in consultation with counties, Tribes, TCF, and the U.S. Forest Service to determine which parcels would benefit each agency’s public land portfolio through acquisition. In 2025, the DNR completed one of its largest land conservation efforts since 2011. In one transaction, with funding from the Minnesota Legacy Outdoor Heritage Fund, the DNR collaborated with NWLT and the counties to strategically select 10,675 acres within Aitkin, Becker, Carlton, Cass, Crow Wing, Hubbard, Itasca, Koochiching, and Wadena counties. In another transaction, the DNR acquired 5,120 acres in St. Louis County using Reinvest in Minnesota dollars. St. Louis County acquired an additional 4,900 acres for permanent public management. The DNR-acquired lands will expand and consolidate ownership in existing state forests, creating larger, contiguous blocks of DNR land.

When will the land transfer be complete?

The DNR has completed a land appraisal to determine the market value of approximately 80,000 acres of state school trust lands within the BWCAW, as well as the land's overall valuation, which considers the location, size, and environment. Now that the appraisal and valuation are finished, the DNR is working with OSTL and Minnesota’s Attorney General's Office to remove the school trust land designation from state lands within the BWCAW. To comply with Minnesota law, the DNR will convert approximately 80,000 acres of school trust land into acquired lands through a legal process called condemnation. Once the condemnation is complete, the DNR then has the legal authority to sell the condemned acres to the U.S. Forest Service. The land transaction between the state and the U.S. Forest Service is anticipated to be completed in 2027. This website will be regularly updated with new information about the project timeline.

Will the transferred lands be available for public use and recreation?

The U.S. Forest Service will manage the lands it acquires in accordance with the BWCAW Act and the Forest Plan. The lands will remain open to the public for recreational activities. The public should not expect any change in their access to recreation in the BWCAW after the federal acquisition.

How can the public learn more about the project?

The DNR’s website will be continually updated with more information on the progress of the land transactions between state and federal partners.

How has the State and the federal government engaged with Tribal Nations in northern Minnesota?

The DNR has mutually respectful and beneficial relationships with federally recognized Indian Tribes, as established by the Constitution of the United States, treaties, statutes, case law, and agreements. DNR leaders have partnered with the U.S. Forest Service throughout this process to consult and collaborate with Fond du Lac, Grand Portage, and Bois Forte.

Resources

Contact

DNR Lands and Minerals Division
St. Paul, MN
651-296-6157 or 888-646-6367