Permanent Funds

If you only read one thing A Permanent Fund locks the principal away forever, only the earnings it generates can actually be spent, and only on the purpose the resource was given for.

Why This Matters

These are rare compared to General or Special Revenue Funds, but when a district has one, usually tied to an endowment or a legacy gift, misunderstanding the restriction can mean accidentally spending money that legally can never be touched.

What’s Actually Going On

A Permanent Fund accounts for resources that are legally restricted so that only earnings, not principal, may be used to support the government’s programs. Someone donates $500,000 to a district with the condition that the money itself is never spent, only the interest and investment earnings it produces each year.

Try it yourself: permanent fund or something else

A local family donates $200,000 to a district, restricted so the district can spend both the principal and the earnings on a new library wing over the next three years. Permanent Fund?

No. Permanent Funds specifically restrict principal from ever being spent, only earnings. Since this donation allows principal to be spent, it’s more likely a Special Revenue Fund or a Capital Projects Fund, depending on the exact terms, not a Permanent Fund.

The fund exists to protect the principal, forever, not just for now.

How This Applies

If you inherit oversight of a district endowment or legacy gift, check the actual donor restriction before assuming it’s a Permanent Fund, plenty of restricted gifts allow principal spending eventually, which puts them in a different fund type entirely.