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Show ARGUMENTS Argument For This amendment was unanimously passed by both houses of the Utah Legislature and is enthusiastically supported by the State Treasurer, the Constitutional Revision Commission, tfie Utah State Board otiEducation, the Utah PTA, the Utah Education Association, the Utah Elementary and Secondary Principals Association, the Utah School Superintendents Association, and the Utah School Boards Association. With the adoption of the Utah Constitution in 1896, the federal government granted certain federal lands to the State of Utah to help support public schools. The proceeds of land sales were required to be deposited Into the permanent State School Ftmd, the principal of which must remain in the fond to provide for growth. The Constitution provided that Interest earned on the State School Fund must be distributed to the public schools for their support In 1994, the State School Fund was entirely invested In interest-bearin- g bonds, the value of which is particularly vulnerable to Inflation. For this reason, protection against the loss of fond value due fo Inflation was considered Important At that time, the Constitution was amended to require retention of sufficient interest from the bonds In the fund to prevent eroeion of the fund due to inflation. A statutory change allowed significant portions of the State School Fund to be Invested in equity securities which provide for better growth of principal and better protection from inflation. This new Investment strategy has been highly successful, but the inflation protection amendment of 1994 has become redundant and now threatens to requite that most or all of the income from the School Fund be added back to principal, leaving little or nothing to be distributed to the schools to support the education of children now in the school system. Also, because some interest earnings In the Stale Schpol FUnd have been replaced over time with dividend earnings as the broader equity investment strategy has been implemented, I is desirable to smend the Constitution to allow dividend income to be treated Ihe same as interest This change will provide that all current Income wi'R be distributed to our schools as W8S originally Intended even as growth occurs to the principal over time to protect the education of our future chkfren. Under current statutes, the income of the fund is directly sent to each Individual school Consequently, It Is important to our schools for the fond to be able to distribute income, as well as to protect the fund against Inflation to serve future school children. Qiven the equity strategy to preserve principal growth, the proposed smendment preserves this balance by providing that all interest and dividend Income from the School Fund directly supports neighborhood schools and by removing the interest retention requirement If this amendment Is not passed, there will be many years during which little or no income will be distributed. Such an outcome would be contrary to the basic purpose of the Permanent School Fund. UfLE Wl HtLUTARD SENATE DISTRICT 25 t EDWARD ALTER STATE TREASURER STEVEN Ol LAI NO SUPERINTENDENT OF PUBLIC INSTRUCTION Argument Against: (No statement submitted.) Rebuttal To Argument Against: (No statement submitted.) Rebuttal To Argument for: (No statement submitted.) |