Minnesota Session Laws - 1984, Regular Session

  

                         Laws of Minnesota 1984 

                        CHAPTER 482-H.F.No. 1291
           An act proposing an amendment to the Minnesota 
          Constitution, article XI, section 8; removing the 
          constitutional restrictions on permanent school fund 
          investments; establishing statutory restrictions; 
          amending Minnesota Statutes 1982, section 11A.16, 
          subdivision 4. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [CONSTITUTIONAL AMENDMENT.] 
     The following amendment to the Minnesota Constitution, 
article XI, section 8, is proposed to the people.  If the 
amendment is adopted, article XI, section 8, will read as 
follows:  
    Sec. 8.  The permanent school fund of the state consists of 
(a) the proceeds of lands granted by the United States for the 
use of schools within each township, (b) the proceeds derived 
from swamp lands granted to the state, (c) all cash and 
investments credited to the permanent school fund and to the 
swamp land fund, and (d) all cash and investments credited to 
the internal improvement land fund and the lands therein.  No 
portion of these lands shall be sold otherwise than at public 
sale, and in the manner provided by law.  All funds arising from 
the sale or other disposition of the lands, or income accruing 
in any way before the sale or disposition thereof, shall be 
credited to the permanent school fund.  Within limitations 
prescribed by law, the fund shall be invested to secure the 
maximum return thereon consistent with the maintenance of the 
perpetuity of the fund, and with the approval of the board of 
investment, the fund may be invested in:  (1) interest bearing 
fixed income securities of the United States and of its 
agencies, fixed income securities guaranteed in full as to 
payment of principal and interest by the United States, bonds of 
the state of Minnesota or its political subdivisions or 
agencies, or of other states, but not more than 50 percent of 
any issue by a political subdivision shall be purchased; (2) 
stocks of corporations on which cash dividends have been paid 
from earnings for five consecutive years or longer immediately 
prior to purchase, but not more than 20 percent of the fund 
shall be invested therein at any given time nor more than one 
percent in stock of any one corporation, nor shall more than 
five percent of the voting stock of any one corporation be 
owned; (3) bonds of corporations whose earnings have been at 
least three times the interest requirements on outstanding bonds 
for five consecutive years or longer immediately prior to 
purchase, but not more than 40 percent of the fund shall be 
invested in corporate bonds at any given time.  The percentages 
referred to above shall be computed using the cost price of the 
stocks or bonds.  The principal of the permanent school fund 
shall be perpetual and inviolate forever.  This does not prevent 
the sale of any public or private stocks or bonds investments at 
less than the cost to the fund; however, all losses not offset 
by gains shall be repaid to the fund from the interest and 
dividends earned thereafter.  The net interest and dividends 
arising from the fund shall be distributed to the different 
school districts of the state in proportion to the number of 
students in each district between the ages of 5 and 21 years in 
a manner prescribed by law. 
    A board of investment consisting of the governor, the state 
auditor, the state treasurer, the secretary of state, and the 
attorney general is hereby constituted for the purpose of 
administering and directing the investment of all state funds.  
The board shall not permit state funds to be used for the 
underwriting or direct purchase of municipal securities from the 
issuer or his the issuer's agent. 
    Sec. 2.  [QUESTION.] 
    The proposed amendment shall be submitted to the people at 
the 1984 general election.  The question submitted shall be:  
    "Shall the Minnesota Constitution be amended to remove 
constitutional restrictions on the investment of the permanent 
school fund and to allow the limits on the investment of the 
fund and the apportionment of the returns on the investment to 
school districts to be set by law?  
                                   Yes .......
                                   No ........"
     Sec. 3.  Minnesota Statutes 1982, section 11A.16, 
subdivision 4, is amended to read: 
    Subd. 4.  [INVESTMENT.] The permanent school fund shall be 
invested by the state board in the following securities as 
directed by article XI, section 8 of the constitution of the 
state of Minnesota:  
    (a) Interest bearing fixed income securities of the United 
States and its agencies, including securities fully guaranteed 
by the United States, bonds of Minnesota or its political 
subdivisions or agencies, or of other states but not more than 
50 percent of any issue by a political subdivision;  
    (b) Stocks of corporations with cash dividends paid from 
earnings for the five consecutive years prior to purchase, but 
not more than 20 percent of the fund shall be invested therein 
nor more than one percent in stock of any one corporation, nor 
more than five percent of the voting stock of any one 
corporation shall be owned;  
    (c) Bonds of corporations whose earnings have been at least 
three times the interest requirements on outstanding bonds for 
five consecutive years or longer immediately prior to purchase, 
but not more than 40 percent of the fund shall be so invested;  
    (d) The percentages referred to above shall be computed 
using the cost price of the stocks or bonds subject to the 
provisions of section 11A.24.  
     Sec. 4.  [EFFECTIVE DATE.] 
    Section 3 is effective upon ratification of the amendment 
proposed in section 1. 
    Approved April 25, 1984