The Environment and Natural Resources Trust Fund is a permanent fund established in the Minnesota Constitution.

The Environment and Natural Resources Trust Fund was established following voter approval of a constitutional amendment in November 1988. The first lottery proceeds were deposited in the fund in May 1990. In November 1990, voters approved dedication of 40 percent of net lottery proceeds to the Trust Fund through December 2000. This dedication was continued through December 2024 after passage of a constitutional amendment in November 1998.

It can only be used to fund projects of long-term benefit to Minnesota’s environment and natural resources. The Trust Fund may not be used as a substitute for traditional sources of environmental or natural resource funding. It must supplement, not supplant the traditional sources of money.

Anyone may apply for an appropriation from the Environment and Natural Resources Trust Fund providing the proposal is consistent with public purposes. However, many more proposals are received than can be funded. Past recipients include state agencies, local governments, colleges and universities, school districts, and non-profit organizations.

This was not the stated purpose of the Trust Fund. Language in the authorizing legislation, M.S. Chp. 116P.03, very clearly indicates the Trust Fund should result in a net increase in spending on environment and natural resource purposes. The state lottery is the source of the money for the Trust Fund through the year 2024. The lottery also provides about $57 million per year into the state's general fund. 

The Trust Fund receives 40 percent of net Minnesota State Lottery proceeds (between 6 cents and 7 cents of each dollar wagered on the lottery.) This source of funding is guaranteed by the Minnesota Constitution through December 31, 2024. The Trust Fund may also receive contributions from other sources, such as private donations.

As of December 2003 the market value of the Trust Fund is approximately $300 million.  

The State Board of Investment, the agency charged with the administration and direction of all state funds, is responsible for the management of the Environment and Natural Resources Trust Fund.

The Trust Fund is a permanent fund, similar to an endowment.  By law, 5 1/2% of the market value of the fund can be utilized for projects each year. Lottery proceeds are added to the fund’s principal. Over time, as the fund grows, earnings will also grow, and more projects can be funded. Eventually, the amount available for expenditure will likely be greater than the annual lottery contribution.  The value of the Trust Fund as of December 2003 is $300 million.

Trust Fund appropriations so far have equaled around one percent of the total state spending on environment and natural resources biennially. It is appropriated by the Legislature, along with the rest of the state budget for environment and natural resources spending. The LCMR issues a Request for Proposal, open to everyone, reviews and makes recommendation on projects to be funded by the Trust Fund. This recommendation is sent to the full Legislature. Once the Legislature has approved or modified the LCMR recommendations, the appropriations are authorized. Next, a detailed workprogram must be approved by the LCMR. In many cases, the appropriation will pass through a state agency to a local government or nonprofit, a contract must also be executed laying out the specific terms of work and schedules and the requirements for receiving reimbursement through the appropriation. 

From 1991-2003, the legislature has appropriated $174,090,000 million to 287 projects.

Funded projects fall into the following broad categories (pie chart):

• Recreation, including parks and trails and history: $69,899,000
• Fish and wildlife habitat and critical lands: $55,914,000
• Water resources:$14,251,000
• Environmental education: $8,311,000
• Agriculture and natural resource-based industries: $7,997,000
• Land use and natural resource information: $13,457,000
• Energy: $346,000
• Administration: $3,352,000
• Children's Environmental Health: $563,000

116P.08 Trust fund expenditures; exceptions; plans.

Subdivision 1. Expenditures. Money in the trust fund may be spent only for:
(1) the reinvest in Minnesota program as provided in section 84.95, subdivision 2;
(2) research that contributes to increasing the effectiveness of protecting or managing the state's environment or natural resources;
(3) collection and analysis of information that assists in developing the state's environmental and natural resources policies;
(4) enhancement of public education, awareness, and understanding necessary for the protection, conservation, restoration, and enhancement of air, land, water, forests, fish, wildlife, and other natural resources;
(5) capital projects for the preservation and protection of unique natural resources;
(6) activities that preserve or enhance fish, wildlife, land, air, water, and other natural resources that otherwise may be substantially impaired or destroyed in any area of the state;
(7) administrative and investment expenses incurred by the state board of investment in investing deposits to the trust fund; and
(8) administrative expenses subject to the limits in section 116P.09.

Are there projects that cannot be funded?

116P.08 Trust fund expenditures; exceptions; plans.

Subd. 2. Exceptions. Money from the trust fund may not be spent for:
(1) purposes of environmental compensation and liability under chapter 115B and response actions under chapter 115C;
(2) purposes of municipal water pollution control under the authority of chapters 115 and 116;
(3) costs associated with the decommissioning of nuclear power plants;
(4) hazardous waste disposal facilities;
(5) solid waste disposal facilities; or
(6) projects or purposes inconsistent with the strategic plan.

The LCMR’s web site (http://www.commissions.leg.state.mn.us/lcmr/projectabs.html) includes all project abstracts from 1991, as well as contacts at organizations receiving the appropriations.

There are several reasons why it may seem that some portions of the state receive less than would be "expected" given either population or lottery sales. First, many of the approved projects are of statewide benefit and cannot easily be identified with any given locality. An example of this type of project is research into the control of pests such as Eurasian water milfoil and purple loosestrife. Second, by law, the LCMR reviews proposals based on their individual merit and consistency with the strategic plan, not with regard to any geographic quota. Third, there simply may be few or no proposals submitted from a particular area.

Many people ask this question with an assumption that the lottery dollars represent some form of investment by the players who then have standing to determine how and where the investment is handled. In fact, the lottery is not an investment. It is a recreational enterprise operated by state government. The winning players, as a group, receive back (62) cents on their dollar played. So, the trust fund is not viewed as a mechanism to pay people back in projects for their dollars spent on the lottery. Rather, it is viewed as a device to accumulate capital, invest the capital and spend the earnings on projects to enhance and protect the environment. 

Applications for funding are made to the Legislative Commission on Minnesota Resources (LCMR). The LCMR makes a recommendation to the full legislature which in turn must pass a bill allocating the funds. Once passed, the bill may be signed or vetoed by the governor

Every biennium the LCMR reviews the major environmental issues facing the state and prepares a strategic plan that identifies priority areas for funding. The commission may ask selected organizations to make presentations prior to final review and recommendations. Final recommendations are based on consistency with the strategic plan and with regard to the limited funding available.

Contact the LCMR at 65 State Office Building, 100 Constitution Avenue, St. Paul, MN 55155, telephone (651) 296-2406, e-mail lcmr@commissions.leg.state.mn.us. For information on the 2005 funding cycle, visit their web page, http://www.lcmr.leg.mn.  There is a link from the main page.  

No. Trust Fund appropriations so far have equaled around one percent of the total state spending on environment and natural resources biennially. It is appropriated by the Legislature, along with the rest of the state budget for environment and natural resources spending.

The legislature up until 2003, through the LCMR, also recommended funding of projects through the Minnesota Future Resources Fund (financed through a portion of the cigarette tax) and the Great Lakes Protection Fund. As does the Trust Fund, these funds also have restrictions on their use.