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South Dakota Amendment A, Investment of Education Funds (1996)

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South Dakota Amendment A was on the November 5, 1996 ballot in South Dakota as a legislatively-referred constitutional amendment, where it was approved.

The proposal amended Section 11 of Article VIII of the South Dakota Constitution to transfer responsbility for management of school fund investments from the Commissioner of School and Public Lands to the State Investment Council.

Election results

Amendment A
Approveda Yes 191,771 62.99%

Text of measure

The text of the question was:

The Commissioner of School and Public Lands currently invests the permanent school and other education funds. These funds may be invested only in U.S. bonds, securities guaranteed by the U.S., or bonds issued by the State or its schools, counties or municipalities.

The proposed constitutional amendment would transfer school fund investment responsibility to the State Investment Council, which presently invests other state funds. The amendment would allow the school funds to be invested the same as other state funds. The amendment would broaden the types of investments which could be made with school funds, but would still prohibit the investment of school funds in stocks or other equity investments.

A vote "yes" would transfer investment responsibility to the Investment Council, thus broadening the types of investments which could be made with school funds.

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


Curt Johnson, the Commissioner of the Office of School and Public Lands, supported Amendment A. He submitted this argument in its favor to the official ballot pamphlet:

The 1996 South Dakota legislature passed a joint resolution placing Amendment A on the ballot. If approved, the authority to invest the $130 million Permanent Fund would be transferred from the Commissioner of School and Public Lands to the State Investment Council which invests other state funds.

This transfer would allow the council to professionally manage the fund and allow school trust funds to be invested the same as other state funds. It would also provide more investment choices such as corporate bonds. Investment in stocks and other equity investments would still be prohibited by the Constitution.

Members of the State Investment Council are professionals responsible for investing over $3 billion of state funds. The Commissioner of School and Public Lands has been, and would remain, a member of the council. The council has an excellent record, ranking in the top 25 percent of trust fund investors nationwide.

Amendment A means professional management, more diversification, and slightly higher returns. For the Future of South Dakota’s Schools--Vote Yes on Amendment A.


State Representative Mike Wagner, who at the time represented District 9, opposed Amendment A. He submitted this argument opposing it to the official ballot pamphlet:

This constitutional amendment would allow South Dakota’s permanent education funds to be invested in higher risk investments. Higher risk investments can earn more money for our schools. Higher risk investments can also lose money -- a risk that this State has never taken with education dollars.

This trade-off between higher risk and higher earnings is the same decision that every family must make as they plan for retirement, save for college education costs, or put money aside for a new home. Every family must ask themselves if they are willing to lose some of their money in an effort to earn faster rewards. You must now answer this same question for your State and for your schools.

There are two things to consider when making your decision on how to vote.

First, do you believe that we should take the risk with these education funds that have been conservatively invested for decades? It is true that the Investment Council has a good record of earnings -- but along with higher earnings come no guarantees and the possibility of financial loss.

The second issue is only one of philosophy. It is a similar issue that the people said “NO” to during the last election in 1994. I am not opposed to reconsidering an issue -- that strengthens the public debate. It is not a bad thing for legislators to disagree with a public vote and to work to change it -- that is part of our system of democratic checks and balances. However, the debate in the House of Representatives over this issue focused on the belief by many legislators that the people of South Dakota “did not know what they were voting on!” I find it arrogant for elected officials to say that the people of South Dakota are too ignorant to know what they voted for or against. I am convinced the people of South Dakota are smart enough to know why they voted “NO” two years ago.

See also

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