SHANTEL KREBS

2001 Amendment Text and Attorney General Explanation

Special Election April 10, 2001

Constitutional Amendment

The following amendments to the State Constitution are submitted to the voters by the Legislature. The amendments will not become effective unless approved by majority vote.

Constitutional Amendment A

Title: An amendment to Article XIII of the South Dakota Constitution authorizing the creation and administration of a trust fund for proceeds of the sale of the State Cement Plant.

Attorney General Explanation:

The South Dakota Legislature has authorized the sale of the State Cement Plant for approximately $252 million dollars.

If adopted, Constitutional Amendment A places the net proceeds from this sale into a trust fund. The South Dakota Investment Council is required to invest the trust fund. Twelve million dollars from the trust fund will be annually transferred into the state general fund. The principal of the trust fund may not be expended except for this $12 million annual transfer. If there are additional earnings on the trust fund after the $12 million annual transfer, the Legislature is required to make a limited annual appropriation to support education.

If Constitutional Amendment A is not adopted, the net proceeds of the Cement Plant sale will be deposited in the state general fund.

A vote "Yes" will place the net proceeds from the sale of the State Cement Plant into a trust fund, provide for investment of the fund, and authorize annual transfers of money from the trust fund.

A "No" vote will result in the net proceeds from the sale of the State Cement Plant being deposited into the state general fund.

Full Text:

Section 1. That Article XIII, of the Constitution of the State of South Dakota, be amended by adding thereto a NEW SECTION to read as follows:

§ 20. The net proceeds derived from the sale of state cement enterprises shall be deposited by the South Dakota Cement Commission in a trust fund hereby created to benefit the citizens of South Dakota. The South Dakota Investment Council or its successor shall invest the trust fund in stocks, bonds, mutual funds, and other financial instruments as provided by law. Each fiscal year beginning in fiscal year 2001, a transfer of twelve million dollars shall be made from the trust fund to the state general fund as provided by law.

Section 2. That Article XIII, of the Constitution of the State of South Dakota, be amended by adding thereto a NEW SECTION to read as follows:

§ 21. Except as provided in Article XIII, section 20 of the Constitution of the State of South Dakota, the original principal of the trust fund shall forever remain inviolate. However, the Legislature shall, by appropriation, make distributions from the difference between the twelve million dollar annual general fund transfer and five percent of the market value of the trust fund for the support of education, but not for the replacement of state aid to general education or special education, if the increase in the market value of the trust fund in that fiscal year was sufficient to maintain the original principal of the trust fund after such distributions. Beginning with fiscal year 2006, the market value of the trust fund shall be determined by adding the market value of the trust fund at the end of the sixteen most recent calendar quarters, and dividing that sum by sixteen.

Constitutional Amendment B

Title: An amendment to Article XII of the South Dakota Constitution authorizing the creation and administration of trust funds for health care and education.

Attorney General Explanation:

Constitutional Amendment B establishes two trust funds. The health care trust fund would be established with funds from the intergovernmental transfer fund. Money in this trust fund is dedicated to health care related programs. The education enhancement trust fund would be established with present and future tobacco settlement funds, proceeds from any sale of the right to receive payments from the tobacco settlement, and funds in the youth-at-risk trust fund. Money in this trust fund is dedicated to education enhancement programs.

The Legislature may appropriate additional money into these trust funds. The South Dakota Investment Council is required to invest these trust funds.

Beginning in fiscal year 2003, the Legislature is required to distribute money from the trust funds. A three-fourths vote of the Legislature is required to appropriate the principal of the trust funds, or to use the trust funds for other purposes.

A vote "yes" will establish the health and education trust funds, provide for investment of the funds, and authorize the distribution of money from these trust funds.

A vote "no" will leave the Constitution as it is.

Full Text:

Section 1. That Article XII of the Constitution, of the State of South Dakota, be amended by adding thereto NEW SECTIONS to read as follows:

§ 5. There is hereby created in the state treasury a trust fund named the health care trust fund. The state treasurer shall deposit into the health care trust fund any funds on deposit in the intergovernmental transfer fund as of July 1, 2001, and thereafter any funds appropriated to the health care trust fund as provided by law. The South Dakota Investment Council or its successor shall invest the health care trust fund in stocks, bonds, mutual funds, and other financial instruments as provided by law. Beginning in fiscal year 2003, and each year thereafter, the state treasurer shall make a distribution from the health care trust fund into the state general fund to be appropriated by law for health care related programs. The calculation of the distribution shall be defined by law and may promote growth of the fund and a steadily growing distribution amount. The health care trust fund may not be diverted for other purposes nor may the principal be invaded unless appropriated by a three-fourths vote of all the members-elect of each house of the Legislature.

§ 6. There is hereby created in the state treasury a trust fund named the education enhancement trust fund. The state treasurer shall deposit into the education enhancement trust fund any funds received as of July 1, 2001, and funds received thereafter by the state pursuant to the Master Settlement Agreement entered into on November 23, 1998, by the State of South Dakota and major United States tobacco product manufacturers or the net proceeds of any sale or securitization of rights to receive payments pursuant to the Master Settlement Agreement, any funds in the youth-at- risk trust fund as of July 1, 2001, and thereafter any funds appropriated to the education enhancement trust fund as provided by law. The South Dakota Investment Council or its successor shall invest the education enhancement trust fund in stocks, bonds, mutual funds, and other financial instruments as provided by law. Beginning in fiscal year 2003, and each year thereafter, the state treasurer shall make a distribution from the education enhancement trust fund into the state general fund to be appropriated by law for education enhancement programs. The calculation of the distribution shall be defined by law and may promote growth of the fund and a steadily growing distribution amount. The education enhancement trust fund may not be diverted for other purposes nor may the principal be invaded unless appropriated by a three-fourths vote of all the members-elect of each house of the Legislature.

Section 2. The provisions of section 2 of this Joint Resolution (section 1 of this amendment) shall be effective on July 1, 2001.