View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
HJR005.....................................................by STATE AFFAIRS PUBLIC SCHOOL PERMANENT ENDOWMENT FUND - Proposing an amendment to the Constitution of the State of Idaho to change the name of the Public School Fund to the Public School Permanent Endowment Fund; to provide that earnings of that fund shall be deposited into the Public School Earnings Reserve Fund and to provide for distribution; to provide that no part of the Public School Permanent Endowment Fund principle shall be transferred, used or appropriated to any other fund, however, earnings from that fund may be transferred to the Public School Earnings Reserve Fund for use by law for the benefit of current and future endowment beneficiaries; to prohibit legislative appropriations from the funds except to pay for administrative costs; to provide that the state treasurer is the custodian of these funds; to provide that the state shall supply losses incurred by the Public School Permanent Endowment Fund, excepting losses on moneys allocated from the Public School Earnings Reserve Fund; and to provide that Permanent Endowment Funds may be invested, rather than loaned, in investments in which a trustee is authorized to invest pursuant to state law. 02/09 House intro - 1st rdg - to printing 02/10 Rpt prt - to St Aff
HJR005|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE JOINT RESOLUTION NO. 5 BY STATE AFFAIRS COMMITTEE 1 A JOINT RESOLUTION 2 PROPOSING AMENDMENTS TO SECTION 3, ARTICLE IX, AND SECTION 11, ARTICLE IX, OF 3 THE CONSTITUTION OF THE STATE OF IDAHO, RELATING TO THE PUBLIC SCHOOL PER- 4 MANENT ENDOWMENT FUND, TO CHANGE THE NAME OF THE PUBLIC SCHOOL FUND TO THE 5 PUBLIC SCHOOL PERMANENT ENDOWMENT FUND, TO PROVIDE THAT EARNINGS OF THE 6 PUBLIC SCHOOL PERMANENT ENDOWMENT FUND SHALL BE DEPOSITED INTO THE PUBLIC 7 SCHOOL EARNINGS RESERVE FUND AND DISTRIBUTED TO SCHOOLS, COUNTIES AND 8 SCHOOL DISTRICTS, TO PROHIBIT TRANSFERRING ANY PART OF THE PERMANENT 9 ENDOWMENT FUND PRINCIPAL, TO PROVIDE THAT EARNINGS FROM THE INVESTMENT OF 10 THE PUBLIC SCHOOL PERMANENT ENDOWMENT FUND MAY BE TRANSFERRED AND USED AS 11 PROVIDED BY LAW FOR THE BENEFIT OF CURRENT AND FUTURE BENEFICIARIES, TO 12 PROVIDE THAT FUNDS SHALL NOT BE APPROPRIATED BY THE LEGISLATURE FROM THE 13 PUBLIC SCHOOL EARNINGS RESERVE FUND EXCEPT TO PAY ADMINISTRATIVE COSTS 14 INCURRED MANAGING THE ASSETS OF THE PUBLIC SCHOOL ENDOWMENT INCLUDING, BUT 15 NOT LIMITED TO, REAL PROPERTY AND MONETARY ASSETS, TO PROVIDE THAT THE 16 STATE TREASURER IS THE CUSTODIAN OF THE FUNDS, TO PROVIDE THAT AS DEFINED 17 AND PRESCRIBED BY LAW, THE STATE SHALL SUPPLY LOSSES INCURRED BY THE PUB- 18 LIC SCHOOL PERMANENT ENDOWMENT FUND, EXCEPTING MONEYS ALLOCATED FROM THE 19 PUBLIC SCHOOL EARNINGS RESERVE FUND AND TO PROVIDE FOR INVESTING OF PERMA- 20 NENT ENDOWMENT FUNDS; STATING THE QUESTION TO BE SUBMITTED TO THE ELECTOR- 21 ATE; DIRECTING THE LEGISLATIVE COUNCIL TO PREPARE THE STATEMENTS REQUIRED 22 BY LAW; AND DIRECTING THE SECRETARY OF STATE TO PUBLISH THE AMENDMENT AND 23 ARGUMENTS AS REQUIRED BY LAW. 24 Be It Resolved by the Legislature of the State of Idaho: 25 SECTION 1. That Section 3, Article IX, of the Constitution of the State 26 of Idaho be amended to read as follows: 27 SECTION 3. PUBLIC SCHOOL PERMANENT ENDOWMENT FUND 28 TO REMAIN INTACT. The public school permanent endowment 29 fund of the state shall forever remain inviolate and intact; the 30interest thereon onlyearnings of the public 31 school permanent endowment fund shall beexpended32 deposited into the public school earnings reserve fund and dis- 33 tributed in the maintenance of the schools of the state, and 34shall be distributedamong theseveral35 counties and school districts of the state in such manner as may be 36 prescribed by law. No part ofthisthe public 37 school permanent endowment fund,principal38or interestshall ever be transferred to any other fund, or 39 used or appropriated except as herein provided. Earnings from 40 the investment of the public school permanent endowment fund may be 41 transferred to the public school earnings reserve fund for use as 42 provided by law for the benefit of the current and future beneficia- 43 ries of the endowment. Funds shall not be appropriated by the legis- 2 1 lature from the public school earnings reserve fund except as fol- 2 lows: the legislature may appropriate from the public school earnings 3 reserve fund administrative costs incurred in managing the assets of 4 the public school endowment including, but not limited to, real prop- 5 erty and monetary assets. The state treasurer shall be the 6 custodian ofthisthese fund s , 7 and the same shall be securely and profitably invested as may be by 8 law directed. As defined and prescribed by law, tT9he state shall supplyalllossesthereof10that may in any manner occurto the public school perma- 11 nent endowment fund, excepting losses on moneys allocated from the 12 public school earnings reserve fund . 13 SECTION 2. That Section 11, Article IX, of the Constitution of the State 14 of Idaho be amended to read as follows: 15 SECTION 11.LOANINGINVESTING PERMA- 16 NENT ENDOWMENT FUNDS. The permanent endowment funds other than funds 17 arising from the disposition of university lands belonging to the 18 state,shallmay beloaned19 investedonin United States, 20 state, county, city, village, or school district bonds or state war- 21 rants oron suchother investmentsas may be per-22mitted by law under such regulations as the legislature may provide23in which a trustee is authorized to invest pursuant to 24 state law . 25 SECTION 3. The question to be submitted to the electors of the State of 26 Idaho at the next general election shall be as follows: 27 "Shall Section 3, Article IX, and Section 11, Article IX, of the Constitu- 28 tion of the State of Idaho be amended as follows: 29 1. To change the name of the Public School Fund to the Public School Per- 30 manent Endowment Fund; 31 2. To provide that the earnings of that fund shall be deposited into the 32 Public School Earnings Reserve Fund and distributed in the maintenance of the 33 schools and among the counties and school districts of the state; 34 3. To provide that no part of the Public School Permanent Endowment Fund 35 principal shall be transferred, used or appropriated to any other fund, how- 36 ever, earnings from that fund may be transferred to the Public School Earnings 37 Reserve Fund for use by law for the benefit of current and future endowment 38 beneficiaries; 39 4. To prohibit legislative appropriations from the funds except that the 40 legislature may appropriate moneys from the Public School Earnings Reserve 41 Fund to pay for administrative costs incurred managing the assets of the pub- 42 lic school endowment including, but not limited to, real property and monetary 43 assets; 44 5. To provide that the state treasurer is the custodian of these funds; 45 6. To provide that the state shall supply losses incurred by the Public 46 School Permanent Endowment Fund, excepting losses on moneys allocated from the 47 Public School Earnings Reserve Fund; and 48 7. To provide that permanent endowment funds may be invested, rather than 49 loaned, in investments in which a trustee is authorized to invest pursuant to 50 state law?". 3 1 SECTION 4. The Legislative Council is directed to prepare the statements 2 required by Section 67-453, Idaho Code, and file the same. 3 SECTION 5. The Secretary of State is hereby directed to publish this pro- 4 posed constitutional amendment and arguments as required by law.
STATEMENT OF PURPOSE
RS 07947
This legislation is recommended by the Legislative Council Interim Committee on
Endowment Fund Investment Reform. This legislation is a joint resolution proposing
amendments to Sections 3 and 11, Article IX, of the Constitution of the State of Idaho.
The amendments to Section 3 are intended to maintain protections of the principal of what is
known as the Public School Fund while providing more flexibility for the use of earnings. Currently,
Section 3 provides that principal of the fund must remain intact and only the interest can be spent to
support public schools. The amendments change the name of the fund to the Public School Permanent
Endowment Fund. The amendments continue to protect the principal of the fund. Only the treatment of
"interest" or "earnings" is changed. The word "earnings" is used in the amendments because it
encompasses a wider range of proceeds from investments. The amendments require that earnings of the
Public School Permanent Endowment Fund be deposited into a Public School Earnings Reserve Fund.
Moneys in the reserve fund would be available for investment, for distribution to beneficiaries, and to
pay administrative costs incurred managing the real property and monetary assets of the endowment.
Administrative costs may be appropriated by the Legislature out of the reserve fund. Use of earnings to
pay administrative costs has been determined to be a legal use by the Idaho Supreme Court in Moon v.
State Board of Land Commissioners, 111 Idaho 389 (1986). Administrative costs are intended to
include all costs of operating, managing, caring for and improving the endowment assets. The moneys in
the reserve fund will absorb the ups and downs of the investment market and create a stable platform
for distributions to public schools. The amendments provide that the State shall make up losses incurred
on earnings.
The amendments to Section 11 are intended to provide greater investment flexibility for
endowment funds. Section 11 currently provides that permanent endowment funds shall be loaned only
on bonds, warrants or other investments as may be provided by law. The Idaho Supreme Court has
interpreted this section narrowly. In Engelking v. Investment Board, 93 Idaho 217 (1969), the Court
held that the word "loan" means that there must be a guarantee of repayment of money loaned. The
effect has been to limit investments to very conservative "debt" instruments. The proposed amendment
would remove these restrictions.
FISCAL NOTE
The Public School Earnings Reserve Fund would allow the endowments to be
selfsupporting, thereby reducing the General Fund moneys spent to support the endowments.
CONTACTS:
Representative William W. "Bill" Deal Senator Judi Danielson Michael McConnell
House of Representatives Senate Legislative Services
(208) 332-1000 (208) 332-1000 (208) 334-2475
STATEMENT OF PURPOSE/FISCAL NOTE
HJR 5