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Frequently Asked Questions
Answers to frequently asked questions pertaining to the Environment and Natural Resources Trust Fund (Trust Fund) and the Legislative-Citizen Commission on Minnesota Resources (LCCMR).
Minnesota's Environment and Natural Resources Trust Fund (Trust Fund)
- What is the Environment and Natural Resources Trust Fund?
- Why was the Trust Fund Created?
- How long has the Trust Fund been in existence?
- What are the sources of money in the Trust Fund and how does it grow?
- Who invests the Trust Fund's principal balance?
- How much money has been spent so far? How many projects have been funded?
- How has the Trust Fund money been spent?
- How can I find out more about individual projects? Where can I find information on existing and past LCCMR-funded projects?
- What is the Statewide Conservation and Preservation Plan?
Expenditure of Trust Fund Dollars
- What types of projects can be funded from the Trust Fund?
- Are there types of projects that cannot be funded?
- Are there other parameters for how money in the Trust Fund money can be expended?
- Who qualifies for Trust Fund money?
- Who decides where and on what Trust Fund money is spent?
- What is the process for expenditure of Trust Fund dollars?
- My area of the state seems to get less than its "fair share" of the Trust Fund money. Why?
The Legislative-Citizen Commission on Minnesota Resources (LCCMR)
- What is the Legislative-Citizen Commission on Minnesota Resources (LCCMR)?
- Who serves on the LCCMR?
- What is the history of the LCCMR?
- How does the LCCMR decide what to recommend?
- What is the timeline for the LCCMR's proposal and funding process?
- How much money is available this year?
- How do I apply for funding from the Trust Fund?
- Can you offer any guidance on how to write a clear and effective proposal?
- What role does the Minnesota State Lottery play in the LCCMR and the Trust Fund?
- Why don't the Trust Fund expenditures occur in the same places where the lottery money is generated?
- Last year the Minnesota Lottery contributed approximately $30.6 million to the Trust Fund, but only $22.8 million was appropriated. Why?
- Lottery sales last year were over $460 million. Isn't the Trust Fund supposed to receive all of that?
- Besides the money that goes into the Trust Fund, how is the other lottery money that goes back to the state used?
- Wasn't the Minnesota State Lottery established so the state could lower taxes for everyone?
- Is the Environment and Natural Resources Trust Fund the only resource for state funding of environment and natural resource projects?
- What are the "new" constitutionally dedicated "environment" and "natural resource" funds created by the outdoor heritage, clean water, parks and trails, and arts and cultural heritage amendment to the Minnesota Constitution (MN Constitution Art. XI, Sec. 15)?
- Prior to the passage of the amendment in November 2008, didn't Minnesota already have funds that were constitutionally dedicated to the environment and natural resources?
- How do the funding sources for the Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails Fund differ from the funding sources of the Environment and Natural Resources Trust Fund?
- Are there differences in how money from the Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails versus the Environment and Natural Resources Trust Fund can be used?
MINNESOTA'S ENVIRONMENT AND NATURAL RESOURCES TRUST FUND
1. What is the Environment and Natural Resources Trust Fund?
The Environment and Natural Resources Trust Fund is a permanent fund in the state treasury that was established in the Minnesota Constitution (Art. XI, Sec.14) through voter approval. It holds assets that can be appropriated by law, "for the public purpose of protection, conservation, preservation, and enhancement of the state's air, water, land, fish, wildlife, and other natural resources."
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2. Why was the Trust Fund created?
The Environment and Natural Resources Trust Fund was created to provide a long-term, consistent, and stable source of funding for innovative activities directed at protecting and enhancing Minnesota's environment and natural resources for the benefit of current citizens and future generations.
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3. How long has the Trust Fund been in existence?
The Environment and Natural Resources Trust Fund was established following voter approval of a constitutional amendment creating it in November 1988.
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4. What are the sources of money in the Trust Fund and how does it grow?
The money in the Trust Fund originates from a combination of contributions and investment income. Forty percent of the net proceeds from the Minnesota State Lottery, or approximately seven cents of every dollar spent on playing the lottery, are contributed to the Trust Fund each year; this source of contribution is guaranteed by the Minnesota Constitution through December 31, 2024. The Trust Fund may also receive contributions from other sources, such as private donations. Once deposited into the Trust Fund, contributions become part of the principal balance and are invested in a combination of stocks and bonds. The income generated from these investments is reinvested back into the Trust Fund. Initially, growth of the Trust Fund originated primarily from contributions, but as the principal balance of the Trust Fund has grown so has the income from investing that principal. Eventually annual growth from investment income should equal and then surpass annual growth from contributions.
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5. Who invests the Trust Fund's principal balance?
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.
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PROJECTS FUNDED
6. How much money has been spent so far? How many projects have been funded?
Between 1991 and 2010, the legislature appropriated nearly $310 million from the Trust Fund to 746 projects.
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7. How has the Trust Fund money been spent?
Projects that have been funded fall into the following broad categories:
- Agriculture and Forestry: $11,444,000
- Children's Environmental Health: $1,263,000
- Critical Lands and Fish/Wildlife Habitat Protection: $89,968,000
- Environmental Education/Outreach: $10,255,000
- Natural Resource Information and Planning: $26,824,000
- Parks, Trails, and Natural Areas: $80,743,000
- Renewable Energy: $4,202,000
- Water Resources: $26,146,000
- LCCMR and Contract Administration*: $5,901,000
*Up to 4% of the dollars available for appropriation are available to be used for LCCMR and contract administration. To date, only 2.3% has been used for administration, thereby allowing more money to be used for projects.
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8. How can I find out more about individual projects? Where can I find information on existing and past LCCMR-funded projects?
The LCCMR's web site includes information on all projects by year, including project abstracts and contact information for organizations receiving funds. Select the "Project Information" tab near the top of the page and choose an option from the drop-down menu. Another resource is the Minnesota State Lottery web site, which contains a list and brief descriptions of some featured projects funded through the Environment and Natural Resources Trust Fund.
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9. What is the Statewide Conservation and Preservation Plan?
Funded by the Trust Fund, the Statewide Conservation and Preservation Plan (SCPP) is the product of a collaborative public/private effort between more than 125 experts to provide recommendations for long-term strategies to address critical issues and trends impacting Minnesota's environment and natural resources. The effort was led by the University of Minnesota's Institute on the Environment and done on behalf of the LCCMR, which had been directed to develop the plan by the legislature and the governor. As a whole, the SCPP provides a comprehensive inventory and assessment of Minnesota's environment and natural resources, it identifies and prioritizes key issues and trends affecting Minnesota's environment and natural resources, and it offers prioritized recommendations for long-term strategies to best address these issues and trends. The SCPP is an important resource for helping to guide public and private decision-makers with planning, policy, and funding investment. The SCPP is available for download from the LCCMR website.
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EXPENDITURE OF TRUST FUND DOLLARS
10. What types of projects can be funded from the Trust Fund?
By law (MS 116P.08, Sub. 1), money in the Trust Fund may be spent only for:
- The reinvest in Minnesota program as provided in section 84.95, subdivision 2;
- Research that contributes to increasing the effectiveness of protecting or managing the state's environment or natural resources;
- Collection and analysis of information that assists in developing the state's environmental and natural resources policies;
- 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;
- Capital projects for the preservation and protection of unique natural resources;
- 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;
- Administrative and investment expenses incurred by the state board of investment in investing deposits to the trust fund; and
- Administrative expenses subject to the limits in section 116P.09.
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11. Are there types of projects that cannot be funded?
By law (MS 116P.08, Sub. 1), money from the Trust Fund may not be spent for:
- Purposes of environmental compensation and liability under chapter 115B and response actions under chapter 115C;
- Purposes of municipal water pollution control under the authority of chapters 115 and 116;
- Costs associated with the decommissioning of nuclear power plants;
- Hazardous waste disposal facilities;
- Solid waste disposal facilities; or
- Projects or purposes inconsistent with the strategic plan.
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12. Are there other parameters for how money in the Trust Fund money can be expended?
The Trust Fund is a permanent fund that works similar to an endowment, and the Minnesota Constitution provides that up to 5.5% of the market value of the fund can be utilized for projects each year. The Trust Fund 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 environment or natural resource funding; it must supplement, not supplant, the traditional sources of money.
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13. Who qualifies for Trust Fund 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 government units, academic institutions, non-profit organizations, and private corporations.
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14. Who decides where and on what Trust Fund money is spent?
Proposals for funding are submitted to the Legislative-Citizen Commission on Minnesota Resources (LCCMR) in response to an annually issued Request for Proposals (RFP). LCCMR members review, evaluate, and rank all submitted proposals and the Commission as a whole then decides upon a selection of proposals to recommend for funding. The recommendations are submitted to the state legislature in the form of a bill, where they are considered and acted upon by both the Minnesota House and Senate. Upon passage, the bill is forwarded to the governor for signature.
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15. What is the process for expenditure of Trust Fund dollars?
Proposed uses of Trust Fund money undergo the same level of oversight and scrutiny as any item within the state budget. Like all state dollar expenditures, Trust Fund money is appropriated by the legislature and must be signed off on by the governor to be authorized. Appropriations specify dollar amounts, the organization(s) to receive funds, and the purposes for which the funds can be spent. Once money is authorized to a project, the project manager must provide a detailed work program that specifies the process and outcomes of the project and accounts for how all dollars are to be spent. Money from a Trust Fund appropriation is typically provided to projects on a reimbursement basis.
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16. My area of the state seems to get less than its "fair share" of the Trust Fund money. Why?
There are several reasons why it may seem that some portions of the state receive less Trust Fund money than would be "expected" given either population or lottery sales. First, many of the Trust Fund projects are of statewide applicability or benefit and cannot actually be easily matched to a particular locality only. An example of such a project is research into the control of problematic invasive species such as Eurasian water milfoil and purple loosestrife. Another example includes funds going toward state parks, which, although they can be matched to a locality, are statutorily intended (MS 85.011) to provide benefit and use to all Minnesotans. Second, by law, the LCCMR reviews proposals based on their individual merit and consistency with its strategic plan, not with regard to geographic quota. Third, there simply may be few or no proposals submitted from a particular area. Finally, the legislature may have decided to fund projects in a particular area through other sources rather than the Trust Fund.
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THE LEGISLATIVE-CITIZEN COMMISSION ON MINNESOTA RESOURCES (LCCMR)
17. What is the Legislative-Citizen Commission on Minnesota Resources (LCCMR)?
The LCCMR is a committee of legislators and citizens whose primary function is to make funding recommendations to the Minnesota Legislature for special environment and natural resource projects, primarily from the Environment and Natural Resources Trust Fund. Additionally, the LCCMR has oversight over all projects funded through its proposal process.
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18. Who serves on the LCCMR?
The LCCMR is composed of 17 members: five senators, five representatives, five citizens appointed by the governor, one citizen appointed by the senate, and one citizen appointed by the house. Legislative members are appointed by legislative leadership and must include representation from both majority and minority parties. The citizen members appointed must have experience or expertise in the science, policy, or practice of the protection, conservation, preservation, and enhancement of the state's environment and natural resources.
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19. What is the history of the LCCMR?
The LCCMR developed from a program initiated in 1963, and was then called the Legislative Commission on Minnesota Resources (LCMR). In 2006, the commission was re-organized into the LCCMR in order to include citizen membership and input more directly in the decision-making process.
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FUNDING AND PROPOSAL PROCESS
20. How does the LCCMR decide what to recommend?
The LCCMR has a competitive, multi-step proposal and selection process. Each year a Request for Proposals (RFP) is issued for selected funding priorities based upon an adopted 6-year strategic plan and ongoing information gathering activities, including expert-led issue seminars and visits to natural resource sites around the state. All proposals received in response to the RFP are reviewed, evaluated, and ranked by LCCMR members. A selection of high ranking proposals are chosen for further consideration and invited to present before the Commission. Ultimately, a subset of proposals is chosen to recommend to the legislature for funding based on consistency with funding priorities and total dollars available.
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21. What is the timeline for the LCCMR's proposal and funding process?
Currently the LCCMR proposal and funding process follows an annual schedule that begins in January/February of each year (Year A) for project funding to begin July 1 of the next year (Year B). For example, the process for project funding to begin July 1, 2010 began with the adoption and issuance of a Request for Proposal (RFP) in January/February 2009. Specific dates for the proposal and funding process timeline vary from year to year, but a typical process adheres approximately to the following schedule:
- January/February of Year A: Request for Proposal (RFP) adopted and issued.
- April/May of Year A: Deadline for proposals responding to RFP.
- Sometime between June-October of Year A: LCCMR members review, evaluate, and rank all proposals submitted; a selection of the high ranking proposals are chosen for further consideration and invited in to present before the Commission; and finally a subset of proposals is chosen to recommend to the legislature based on consistency with funding priorities and total dollars available.
- November/December of Year A: Funding recommendations are adopted by the LCCMR in legislative bill format, as they will be presented to the legislature; projects recommended for funding begin submitting work programs for LCCMR staff review; and research projects recommended for funding undergo peer review.
- January-May of Year B: LCCMR recommendations presented to the legislature for consideration via introduction as an appropriations bill; the bill is considered and acted upon by the Minnesota House and Senate; and upon passage, the bill goes to the governor to be signed into law.
- June of Year B: LCCMR approves work programs for projects funded.
- July 1 of Year B: Money from the Environment and Natural Resources Trust Fund becomes available for expenditure and projects can begin.
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22. How much money is available this year?
The Minnesota Constitution provides that up to 5.5% of the market value of the fund can be utilized for projects each year. This 5.5% value is determined for both years of each fiscal biennium based on the market value of the Trust Fund on June 30 one year prior to the start of the next biennium. On June 30, 2008 the market value of the Trust Fund was $465,855,266. Thus, for the next biennium (July 1, 2009 - June 30, 2011), the legislature has approximately $25.6 million available each year to appropriate for fiscal years 2010 (beginning July 1, 2009) and 2011 (beginning July 1, 2010).
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23. How do I apply for funding from the Trust Fund?
The LCCMR issues an annual Request for Proposal (RFP). Those interested in applying for funding should review the RFP to determine if a proposed project matches the funding priorities outlined in the RFP. If a proposed project does match, a proposal can be submitted according to the procedures outlined in the RFP. All proposals received by the due date indicated in the RFP are considered by the LCCMR in a competitive, multi-step process. Additional information and updates regarding the proposal and funding process are posted on the LCCMR website and there is an email listserv available for sign-up to receive email notifications of meetings, announcements, and publications, including the RFP. LCCMR staff are always available to answer any questions.
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24. Can you offer any guidance on how to write a clear and effective proposal?
LCCMR staff are available to assist proposers, answer questions, or review and provide feedback on drafts of proposals. Proposers are actually encouraged to submit proposal drafts to help ensure proposals are focused, clear, and contain all necessary information. Directions for submitting a draft proposal are published in all Requests for Proposals, or LCCMR staff can be contacted directly.
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THE MINNESOTA STATE LOTTERY
25. What role does the Minnesota State Lottery play in the LCCMR and the Trust Fund?
The Minnesota State Lottery does not have a role in either the LCCMR's proposal and funding process or the distribution of Trust Fund dollars. The Minnesota State Lottery generates money that is contributed toward the growth of the Trust Fund, thereby continuing to increase the state's ability to provide support for Minnesota's environment and natural resources.
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26. Why don't the Trust Fund expenditures occur in the same places where the lottery money is generated?
Many people ask this question with an assumption that money spent on the lottery represents some form of investment by the players who then have a direct standing in determining how and where the investment is handled and revenues distributed. However, the lottery is not an investment enterprise, but a recreational, revenue generating entity operated by state government. The winning players, as a group, receive back approximately 60 cents on all of the dollars played. The Trust Fund is intended as a device to accumulate capital, invest capital, and spend earnings on projects of highest priority - as determined by a competitive, multi-step process - to protect and enhance Minnesota's environment and natural resources, not a mechanism to pay people back in projects for dollars spent on the lottery.
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27. Last year the Minnesota Lottery contributed approximately $30.6 million to the Trust Fund, but only $22.8 million was appropriated. Why?
The Trust Fund is a permanent fund that works similar to an endowment. The Minnesota Constitution provides that up to 5.5%* of the market value of the fund can be utilized for projects each year. Proceeds from the Minnesota Lottery are contributed to the Trust Fund's principal balance and are then invested in a combination of stocks and bonds to further grow the market value of the fund. As the market value increases over time, the dollar amount made available for projects through the 5.5% designation also increases. While the Lottery contribution is currently greater than the amount annually available for expenditure, eventually the amount available for expenditure will be greater than the annual Lottery contribution.
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*The 5.5% value is determined for both years of each fiscal biennium based on the market value of the Trust Fund on June 30 one year prior to the start of the next biennium.
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28. Lottery sales last year were over $460 million. Isn't the Trust Fund supposed to receive all of that?
The lottery's sales figures represent the total dollars generated before expenses are deducted. Expenses include prizes and administration. While higher sales figures for the lottery generally mean greater contributions to the Trust Fund, the contributions are not based on lottery sales but on the lottery's net proceeds - the amount left over after all expenses are deducted. The Trust Fund is constitutionally designated to receive forty percent of net proceeds from lottery sales. This is the equivalent of approximately 7 cents of every dollar of lottery sales. For every dollar spent on playing the lottery:
- Approximately 60 cents is paid out in player prizes;
- Approximately 14 cents goes toward administration expenses, vendor costs, and retailer commissions;
- Approximately 5 cents goes back to the state in-lieu-of-sales tax and is split between the Game and Fish Fund and the Natural Resources Fund;
- Approximately 21 cents accounts for the net proceeds, of which 60 percent (~14 cents) is contributed to the state's General Fund and 40 percent (~7 cents) is contributed to the Environment and Natural Resources Trust Fund.
For more information on where lottery revenue goes, visit the Minnesota State Lottery's website.
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29. Besides the money that goes into the Trust Fund, how is the other lottery money that goes back to the state used?
There are three state funds other than the Trust Fund that receive lottery dollars: the Game and Fish Fund, the Natural Resources Fund, and the General Fund. The money from each of these funds is used for different purposes:
- Game and Fish Fund: Used to fund the state's programs to manage and enhance hunting and fishing.
- Natural Resources Fund: Used to fund state, regional, and local parks, trails, and zoos.
- General Fund: Used to fund the majority of state programs, including, K-12 education, health care, aid to local governments, and public safety. A portion of the money that goes into the general fund is set aside to help combat problem gambling.
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30. Wasn't the Minnesota State Lottery established so the state could lower taxes for everyone?
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 a contributing source of money for the Trust Fund through the year 2024. The lottery also currently provides more than $60 million per year into the state's general fund.
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OTHER FUNDS
31. Is the Environment and Natural Resources Trust Fund the only resource for state funding of environment and natural resource projects?
No. Trust Fund appropriations are only a small part of total state spending relating to the environment and natural resources. So far Trust Fund appropriations have equaled less than one percent of the total state spending on environment and natural resources biennially. The general fund, bonding, and user fees have accounted for the bulk of spending in these areas. However, the newly-adopted outdoor heritage, clean water, parks and trails, and arts and cultural heritage amendment to the Minnesota Constitution (MN Constitution Art. XI, Sec. 15), passed in November 2008, dedicates portions of three-eighths of one percent of state sales tax to specific types of environment and natural resources projects through June 30, 2034 and this will provide a significant boost to state spending in these areas.
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32. What are the "new" constitutionally dedicated "environment" and "natural resource" funds created by the outdoor heritage, clean water, parks and trails, and arts and cultural heritage amendment to the Minnesota Constitution (Art. XI, Sec.15)?
In November 2008, voters approved an amendment to the Minnesota Constitution that increased the state sales tax by three-eighths of one percent and dedicated different portions of the revenue toward four newly-created funds to be used only for four purposes: 1) outdoor heritage (33%), 2) clean water (33%), 3) parks and trails (14.25%), and 4) arts and cultural heritage (19.75%). Three of these four funds have purposes directly related to Minnesota's environment and natural resources: the Outdoor Heritage Fund, the Clean Water Fund, and the Parks and Trails Fund.
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33. Prior to the passage of the amendment in November 2008, didn't Minnesota already have funds that were constitutionally dedicated to the environment and natural resources?
Yes, since its creation in November 1988, funds from the Environment and Natural Resources Trust Fund have been constitutionally dedicated to be used only for "the public purpose of protection, conservation, preservation, and enhancement of the state's air, water, land, fish, wildlife, and other natural resources." (Art. XI, Sec.14)
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34. How do the funding sources for the Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails Fund differ from the funding sources of the Environment and Natural Resources Trust Fund?
The revenue streams that contribute to the Outdoor Heritage Fund, Clean Water Fund, and the Parks and Trails Fund versus the Trust Fund differ in terms of the types of public money each represents and the permanency of these revenue streams as money sources. Money in the Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails Fund all comes from public tax dollars generated through a state sales tax of three-eighths of one percent. The structure of the three funds makes all of the money directly available for expenditure on projects as it becomes available. However, since the sales tax is only in effect until June 30, 2034, the revenue stream is not permanent. The sources of money for the Trust Fund are not tax generated dollars but a combination of forty percent of net proceeds from the Minnesota State Lottery and income to the state generated from investing those proceeds. In order to provide a permanent source of funds and help these dollars have the greatest impact over time, the Trust Fund is structured like an endowment: money is accumulated, it is invested for continued growth, and 5.5% of the compounding principal balance is available for projects each year. Lottery proceeds are only dedicated to the Trust Fund through December 31, 2024. However, at that point the cumulative balance of the Trust Fund is projected to be large enough to ensure self-sustaining growth through investment income while still providing more than $100 million per year, which continue to increase over time, for projects.
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35. Are there differences in how money from the Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails versus the Environment and Natural Resources Trust Fund can be used?
Expenditures of money from each of the different funds follow different guidelines. The Outdoor Heritage Fund, Clean Water Fund, and Parks and Trails are limited to very targeted types of environment and natural resources projects. The Trust Fund has a broader mandate with greater flexibility in the types of environment and natural resources projects it can fund. The specific language defining the usage of the Trust Fund and each of the three new funds is as follows:
- Environment and Natural Resources Trust Fund: "for the public purpose of protection, conservation, preservation, and enhancement of the state's air, water, land, fish, wildlife, and other natural resources" (Art. XI, Sec.14).
- Outdoor Heritage Fund: "may be spent only to restore, protect, and enhance wetlands, prairies, forests, and habitat for fish, game, and wildlife" (Art. XI, Sec.15).
- Clean Water Fund: "may be spent only to protect, enhance, and restore water quality in lakes, rivers, and streams and to protect groundwater from degradation, and at least five percent of the clean water fund must be spent to protect public drinking water sources" (Art. XI, Sec.15).
- Parks and Trails Fund: "may be spent only to support parks and trails of regional or statewide significance" (Art. XI, Sec.15).