Nebraska Private Sector Endowment Fund Investment, Constitutional Amendment 2 (2006)
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Nebraska Private Sector Endowment Fund Investment Amendment, also known as Amendment 2, was a legislatively-referred constitutional amendment on the November 7, 2006 general election ballot in Nebraska,, where it was defeated.
|Amendment 2 (Private Sector Endowment Fund Investment)|
Official results via: Nebraska Blue Book 2008-09 (p.264)
Text of measure
The language that appeared on the ballot:
- A vote FOR this amendment will authorize the Legislature to permit political subdivisions to invest public endowment funds in the same manner as would a prudent investor acting with skill, care, and diligence and in such investments that the political subdivision, acting in a fiduciary capacity for the exclusive purpose of protecting and benefiting such investment, may determine, subject to limitations as the Legislature may provide.
- A vote AGAINST this amendment will retain the existing, more limiting restrictions on a political subdivision’s ability to invest public endowment funds.
- A constitutional amendment to authorize the investment of the public endowment funds of cities, villages, school districts, public power districts, and other political subdivisions in such manner and in such investments as the governing body of such political subdivision may determine, subject to limitations by the Legislature.
The measure was sponsored by Nebraska state senator Chris Beutler, from Lincoln. It was defeated, with support from only 221,499 voters (43.1%). This measure would have amended Article XI-1 of the Nebraska Constitution to allow cities, counties, school districts, and other political subdivisions of the state to invest endowment funds they own into the private sector, i.e. stocks, with the hope of increasing their annual rates of return.
Objectives of the initiative
The primary objective of this proposition was to enable the Community Health Endowment of Lincoln (CHE) to invest its assets into stocks, with the expectation that its rate of return would be substantially increased. The CHE was formed in 1998 from the sale of publicly-owned Lincoln General Hospital to the privately-owned Bryan Hospital, and at the end of fiscal year 2006, it was worth $49,918,720 (see page 14 of attached document). There are very few public endowment funds owned by political subdivisions of Nebraska, and this is by far the largest. The CHE has been allowed to increase annually slightly faster than the rate of inflation, and additional interest and donations, averaging approximately $1 million annually (see page 2 of attached document), have been used for various community health purposes.
Arguments for the initiative
- Enabling the CHE to invest in higher-return investments will increase its ability to improve public health care in Lincoln, at no additional expense to the taxpayers.
- Passing the amendment might encourage other communities to form and develop high-return endowment funds, similar to the CHE, and likewise improve their community services at little expense to the taxpayers.
Arguments against the initiative
- Private individuals and entities have much more incentive to invest wisely and profitably than government entities, as a failed private investment results in an obvious loss of wealth to the invester, whereas if a publicly owned, or government, entity, such as the CHE, fails in an investment, the government can simply raise taxes to recoup the loss, and the only real losers are the taxpayers. Therefore, government entities should not be allowed to keep and invest an excess of public money, much less in potentially risky stocks, but should cut taxes if they have too much money.
- Some opponents think that the best way to improve Lincoln's health care into the future would be to return the value of the endowment fund to the taxpayers, who would then be able to invest the money from the tax refund, or tax cut, to create wealth with it, and in the following years, the increase in the net wealth of residents of Lincoln would be taxable, in one way or another, and would have the same impact as freeing up the CHE to invest in stocks.
Donors to the campaign for the measure:
- Nebraskans for Amendment 2 Committee: $21,188
- Total: $21,188
- Nebraska Blue Book 2006-07(p.988)
- Nebraska Blue Book 2008-09
- Text of the proposed 2006 amendments (see page 2)
- Vote totals by county
- Brief summary and explanation of proposed amendments
- Nebraska Secretary of State, Proposed Constitutional Amendments Appearing on the 2006 General Election Ballot
- Follow the Money, "Donors"