1.1                          A bill for an act 
  1.2             relating to children; proposing an amendment to the 
  1.3             Minnesota Constitution by adding a new article XV, and 
  1.4             by renumbering certain sections; dedicating the swamp 
  1.5             land fund and proceeds derived from certain swamp 
  1.6             lands to a permanent children's endowment fund; 
  1.7             maximizing the long-term total return to the fund; 
  1.8             requiring an advisory task force to evaluate funding 
  1.9             sources and propose a governance structure for the 
  1.10            endowment; proposing coding for new law as Minnesota 
  1.11            Statutes, chapter 119C. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [CONSTITUTIONAL AMENDMENT.] 
  1.14     An amendment to the Minnesota Constitution is proposed to 
  1.15  the people.  If the amendment is adopted, a new article XV shall 
  1.16  be added to consist of the following renumbered and amended 
  1.17  sections and a new section to read: 
  1.18                             ARTICLE XV
  1.19                          PUBLIC EDUCATION
  1.20     Section 1.  [Article XIII, section 1, renumbered] 
  1.21     Sec. 2.  [Article XIII, section 2, renumbered] 
  1.22     Sec. 3.  [Article XIII, section 3, renumbered] 
  1.23     Sec. 4.  [Article XI, section 8, renumbered and amended] 
  1.24     The permanent school fund of the state consists of (a) the 
  1.25  proceeds of lands granted by the United States for the use of 
  1.26  schools within each township, (b) the proceeds derived from 
  1.27  swamp lands granted to the state, (c) all cash and investments 
  1.28  credited to the permanent school fund and to the swamp land 
  2.1   fund, and (d) all cash and investments credited to the internal 
  2.2   improvement land fund and the lands therein.  No portion of 
  2.3   these lands shall be sold otherwise than at public sale, and in 
  2.4   the manner provided by law.  All funds arising from the sale or 
  2.5   other disposition of the lands, or income accruing in any way 
  2.6   before the sale or disposition thereof, shall be credited to the 
  2.7   permanent school fund.  Within limitations prescribed by law, 
  2.8   the fund shall be invested to secure the maximum return 
  2.9   consistent with the maintenance of the perpetuity of the fund. 
  2.10  The principal of the permanent school fund shall be perpetual 
  2.11  and inviolate forever.  This does not prevent the sale of 
  2.12  investments at less than the cost to the fund; however, all 
  2.13  losses not offset by gains shall be repaid to the fund from the 
  2.14  interest and dividends earned thereafter.  The net interest and 
  2.15  dividends arising from the fund shall be distributed to the 
  2.16  different school districts of the state in a manner prescribed 
  2.17  by law. 
  2.18     A board of investment consisting of the governor, the state 
  2.19  auditor, the state treasurer, the secretary of state, and the 
  2.20  attorney general is hereby constituted for the purpose of 
  2.21  administering and directing the investment of all state funds.  
  2.22  The board shall not permit state funds to be used for the 
  2.23  underwriting or direct purchase of municipal securities from the 
  2.24  issuer or the issuer's agent. 
  2.25     Sec. 5.  [PERMANENT CHILDREN'S ENDOWMENT FUND.] The 
  2.26  permanent children's endowment fund of the state consists of the 
  2.27  proceeds derived from swamp lands granted to the state and all 
  2.28  cash and investments credited to the swamp land fund.  No 
  2.29  portion of these lands shall be sold otherwise than at public 
  2.30  sale, and in the manner provided by law.  All funds arising from 
  2.31  the sale or other disposition of the lands, or income accruing 
  2.32  in any way before the sale or disposition thereof, shall be 
  2.33  credited to the permanent children's endowment fund.  Within 
  2.34  limitations prescribed by law, the fund shall be invested to 
  2.35  secure the maximum return consistent with the maintenance of the 
  2.36  perpetuity of the fund.  The principal of the permanent 
  3.1   children's endowment fund shall be perpetual and inviolate 
  3.2   forever.  This does not prevent the sale of investments at less 
  3.3   than the cost to the fund; however, all losses not offset by 
  3.4   gains shall be repaid to the fund from the interest and 
  3.5   dividends earned thereafter.  The assets of the fund must be 
  3.6   appropriated by law for purposes that will enhance the physical, 
  3.7   emotional, and intellectual development of children through the 
  3.8   age of four years.  The amount appropriated each year of a 
  3.9   biennium, commencing on July 1 in each odd-numbered year and 
  3.10  ending on and including June 30 in the next odd-numbered year, 
  3.11  may be up to five and one-half percent of the market value of 
  3.12  the fund on June 30 one year before the start of the biennium. 
  3.13     Sec. 6.  [Article XI, section 9, renumbered] 
  3.14     Sec. 7.  [Article XI, section 11, renumbered and amended] 
  3.15  [TIMBERLANDS SET APART AS STATE SCHOOL FORESTS; DISPOSITION OF 
  3.16  REVENUE.] School and other public lands of the state better 
  3.17  adapted for the production of timber than for agriculture may be 
  3.18  set apart as state school forests, or other state forests as the 
  3.19  legislature may provide.  The legislature may also provide for 
  3.20  their management on forestry principles.  The net revenue 
  3.21  therefrom from school trust lands and internal improvement lands 
  3.22  shall be used for the purposes for which the lands were granted 
  3.23  to the state. 
  3.24     Sec. 2.  [SCHEDULE AND QUESTION.] 
  3.25     The amendment shall be submitted to the people at the 1998 
  3.26  general election.  The question submitted shall be: 
  3.27     "Shall the Minnesota Constitution be amended to create a 
  3.28  permanent Children's Endowment Fund funded with the proceeds 
  3.29  derived from swamp lands granted to the state and used for 
  3.30  purposes established in law to enhance children's physical, 
  3.31  emotional, and intellectual development through the age of four 
  3.32  years? 
  3.33                                     Yes .......
  3.34                                     No ........"
  3.35     Sec. 3.  [119C.01] [DEFINITIONS.] 
  3.36     Subdivision 1.  [APPLICABILITY.] The definitions in this 
  4.1   section apply to sections 119C.01 to 119C.05. 
  4.2      Subd. 2.  [ENDOWMENT FUND.] "Endowment fund" means the 
  4.3   permanent children's endowment fund established in the Minnesota 
  4.4   Constitution, article XV, section 5. 
  4.5      Subd. 3.  [YOUNG CHILDREN.] "Young children" means children 
  4.6   through the age of four years. 
  4.7      Sec. 4.  [119C.02] [ENDOWMENT FUND NOT TO SUPPLANT EXISTING 
  4.8   FUNDING.] 
  4.9      The endowment fund may not be used as a substitute for 
  4.10  traditional sources of funding activities for young children and 
  4.11  their parents, but the endowment fund must be used to supplement 
  4.12  traditional sources, including sources used to support the 
  4.13  activities in section 119C.04. 
  4.14     Sec. 5.  [119C.03] [ENDOWMENT FUND ACCOUNT.] 
  4.15     Subdivision 1.  [ESTABLISHMENT OF ACCOUNT AND INVESTMENT.] 
  4.16  The children's endowment fund, under the Minnesota Constitution, 
  4.17  article XV, section 5, is an account in the state treasury.  The 
  4.18  commissioner of finance shall credit to the endowment fund the 
  4.19  amounts authorized under this section and section 119C.05.  The 
  4.20  state board of investment shall ensure that endowment fund money 
  4.21  is invested under section 11A.24.  All money earned by the 
  4.22  endowment fund must be credited to the endowment fund.  The 
  4.23  principal of the endowment fund and any unexpended earnings must 
  4.24  be invested and reinvested by the state board of investment.  
  4.25     Subd. 2.  [REVENUE.] Nothing in sections 3 to 8 limits the 
  4.26  source of contributions to the endowment fund. 
  4.27     Subd. 3.  [GIFTS AND DONATIONS.] Gifts and donations may be 
  4.28  made to the endowment fund.  Noncash gifts and donations must be 
  4.29  disposed of for cash as soon as the board prudently can maximize 
  4.30  the value of the gift or donation.  Gifts and donations of 
  4.31  marketable securities may be held or disposed of for cash at the 
  4.32  option of the board.  The cash receipts of gifts and donations 
  4.33  of cash or capital assets and marketable securities disposed of 
  4.34  for cash must be credited immediately to the principal of the 
  4.35  endowment fund.  The value of marketable securities at the time 
  4.36  the gift or donation is made must be credited to the principal 
  5.1   of the endowment fund, and any earnings from the marketable 
  5.2   securities are earnings of the endowment fund. 
  5.3      Subd. 4.  [AUDITS REQUIRED.] The legislative auditor shall 
  5.4   audit endowment fund expenditures to ensure that the money is 
  5.5   spent for the purposes set out in section 119C.04. 
  5.6      Sec. 6.  [119C.04] [ENDOWMENT FUND EXPENDITURES.] 
  5.7      Money in the endowment fund may be spent as appropriated by 
  5.8   law for: 
  5.9      (1) research that contributes to increasing the 
  5.10  understanding of the development of young children's brains or 
  5.11  to developing new methods to increase the effectiveness of 
  5.12  stimulation and educational activities that will improve brain 
  5.13  development in young children; 
  5.14     (2) collection, analysis, and distribution of information 
  5.15  to communities and families that assists in enhancing the 
  5.16  development of young children; 
  5.17     (3) enhancement of public education, awareness, and 
  5.18  understanding necessary for the promotion and encouragement of 
  5.19  activities and decisions that protect and stimulate young 
  5.20  children's development; 
  5.21     (4) supplemental funding to those projects that have 
  5.22  demonstrated successful outcomes in improving and enhancing the 
  5.23  development of young children; and 
  5.24     (5) administrative and investment expenses incurred by the 
  5.25  state board of investment in investing assets of the endowment 
  5.26  fund. 
  5.27     Sec. 7.  [119C.05] [ROYALTIES; COPYRIGHTS; PATENTS.] 
  5.28     This section applies to projects supported by the endowment 
  5.29  fund.  The endowment fund owns and shall take title to the 
  5.30  percentage of a royalty, copyright, or patent resulting from a 
  5.31  project supported by the fund equal to the percentage of the 
  5.32  project's total funding provided by the fund.  Cash receipts 
  5.33  resulting from a royalty, copyright, or patent, or the sale of 
  5.34  the endowment fund's rights to a royalty, copyright, or patent, 
  5.35  must be credited immediately to the principal of the endowment 
  5.36  fund. 
  6.1      Sec. 8.  [FUNDING OPTIONS; GOVERNANCE.] 
  6.2      A 20-member advisory task force of legislators and 
  6.3   representatives of the community and foundations shall: 
  6.4      (1) evaluate additional funding sources for the children's 
  6.5   endowment fund; 
  6.6      (2) develop a proposal for governance of the endowment 
  6.7   fund; and 
  6.8      (3) report to the legislature and the governor with 
  6.9   recommendations on additional funding options and a governance 
  6.10  structure by February 1, 1999. 
  6.11     Legislative appointments to the advisory task force shall 
  6.12  consist of:  five members appointed by the subcommittee on 
  6.13  committees of the committee on rules and administration in the 
  6.14  senate, including two minority members; and five members 
  6.15  appointed by the speaker of the house of representatives, 
  6.16  including two minority members.  In addition, the governor shall 
  6.17  appoint ten public members representing the community, including 
  6.18  parents and foundations.  The task force must consider all 
  6.19  sources of public and private funding to adequately establish 
  6.20  the endowment fund.  The task force must provide recommendations 
  6.21  on a governance structure, composition of the governing body, 
  6.22  authority and responsibility for managing funds, and how to best 
  6.23  focus the children's endowment fund to improve outcomes for 
  6.24  children through the age of four years. 
  6.25     Sec. 9.  [EFFECTIVE DATE.] 
  6.26     Sections 3 to 7 are effective July 1, 1999.  Section 8 is 
  6.27  effective the day after final enactment.