This proposed constitutional amendment does very little to support
education, although it proclaims to do so. The net proceeds from the
sale of the Cement Plant will be $227 million. Annual payments from the
fund are limited to 5% of the fund value. Thus, the trust fund does not
support education until after the fund grows to $240 million.
Even after the fund grows to $240 million, payments to education will
be modest, at best. For example, if the trust fund grows by 8% per year,
the total payment to education during the first 5 years is merely $3.5
million. In comparison, South Dakota presently invests more than $600
million for K-12 education every year. If the fund grows by 10% per
year, total additional education funding during the first 5 years is
only $6.7 million.
The mathematical formulas in this constitutional amendment will cause
the fund to grow to excessive levels if the South Dakota Investment
Council continues to achieve its historical returns on its investments.
If the fund grows by 13% per year, it will contain almost $500 million
in 10 years, yet can never reduce taxes by more than $12 million per
year. Government should not stockpile public monies and continue to levy
Finally, the Constitution is not a proper place for mathematical
formulas regarding disposition of state investments. Legislatures in the
distant future must retain flexibility to provide answers to questions
that cannot today be foreseen. Decades from now, the state's most
important needs might be environmental, or agricultural, or medical.
Since we cannot predict the future, we should not place mathematical
formulas in the state constitution and limit the choices available to
Send the legislature back to the drawing board. Tell them to write a
law that protects the principle and uses the income wisely.
Submitted by: Former Representative Mike Wilson, 301 Alta Vista
Drive, Rapid City, SD 57701. Wilson represented District 32 in