Section 5. Permanent School Funds May be Loaned to Districts or Counties for School Purposes
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Investment of Permanent School and Swamp Land Funds
The permanent school fund of the state shall consist of (a) the proceeds of such lands as are or hereafter may be granted by the United States for the use of schools within each township, (b) the proceeds derived from swamp lands granted to the state, and (c) all cash and investments now or hereafter credited to the permanent school fund and to the swamp land fund. No portion of said 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 such 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, to secure the maximum return thereon consistent with the maintenance of the perpetuity of the fund, such 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 said 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 said 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; provided, that this shall not prevent the sale of any public or private stocks or bonds at less than the cost thereof to the fund; however, all losses not offset by all gains, shall be repaid to the fund from the interest and dividends earned thereafter. The net interest and dividends arising from the investment thereof shall be distributed to the different school districts of the state in proportion to the number of scholars in each district between the ages of five and twenty-one years. No such investment shall be made until approved by a board of investment consisting of the governor, the state auditor, the state treasurer, the secretary of state, and the attorney general, who are hereby constituted a state board of investment for the purpose of administering and directing the investment of all state funds.
The state board of investment shall not permit the fund to be used for the underwriting or direct purchase of municipal securities from the issuer or his agent.
This item is based on 2 items:
Permanent School Funds May be Loaned to Districts or Counties for School Purposes
The permanent school funds of the state may be loaned upon interest at the rate of five (5) per cent per annum to the several counties or school districts of the state, to be used in the erection of county or school buildings. No such loan shall be made until approved by a board consisting of the governor, the state auditor and the state treasurer, who are hereby constituted an investment board for the purpose of the loans hereby authorized; nor shall any such loan be for an amount exceeding three per cent of the last preceding assessed valuation of the real estate of the county or school district receiving the same. The state auditor shall annually, at the time of certifying the state tax to the several county auditors, also certify to each auditor to whose county, or to any of the school districts of whose county any such loan shall have been made. The tax necessary to be levied to meet the accruing interest or principal of any such loan, and it shall be the duty of every such county auditor forthwith to levy and extend such tax upon all the taxable property of his county, or of the several school districts respectively, liable for such loans,-- as the case may be,-- and in all such cases the tax so assessed shall be fifty per cent in excess of the amount actually necessary to be raised on account of such accruing principal or interest. It shall be levied, collected and paid into the county and state treasuries in the same manner as state taxes, and any excess collected over the amount of such principal or interest accruing in any given year shall be credited to the general funds of the respective counties or school districts. No change of the boundaries of any school district after the making of any such loan shall operate to withdraw any property from the taxation herein provided for; nor shall any law be passed extending the time of payment of any such principal or interest, or reducing the rate of such interest, or in any manner waiving or impairing any rights of the state in connection with any such loan. Suitable laws, not inconsistent with this amendment may be passed by the legislature for the purpose of carrying the same into effect.