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Issue Position: Trust Funds

Issue Position

By:
Location: Unknown

Calls for Raiding the Funds, Short-Sighted

Major fluctuations hit annual Returns

Legislators (my opponent among them) who continue to call for raiding the Trust Funds for immediate payouts, sacrifice the reliability and the solvency of the Funds. The current volatility of the financial market (evidenced by a 14% return in FY 07 followed by a 6% loss in FY '08) reinforces our responsibility to follow the prudent counsel of the Investment Office, one of the country's best. Their long-term recommendations are based on objectives of assuring essential annual payouts and maintaining the purchasing power for future generations. The annual payouts, this year totaling $43 million, range from 4%-5% and are set by either law or by Constitution. I differ with my opponent who continues to call for raiding the funds by taking out more than the recommended percentage.

Throughout our history, beginning with the Permanent Trust Fund (School and Public Lands,) in 1889, South Dakota citizens have created trust funds to provide continuous annual revenue from one generation to the next. Because of that historic commitment created in 1889, $8.8 million was paid to the K-12 school districts; $1.95 million to the Board of Regents in 2008 from the Permanent Trust (market value $169 million). The Sioux Falls School District received $1.4 million in 2008.

Over 100 years later, three additional trust funds were established by the voters to provide revenue for enhancement of education and health.

Dakota Cement Trust Fund (market value $251 million) provided $13.2 million in revenue to the State's general fund. Created with the proceeds from the sale of the State's cement business, some of these dollars are helping to fund the SD Opportunity Scholarships.

Education Enhancement Trust Fund (market value $384 million) provided $15.5 million in revenue. This was funded primarily by the tobacco settlement.

Health Care Trust Fund (market value $102 million) provided $3.9 million. This was funded by the Federal government through a long term care provisions. (Market values as of June 30, 2008. Numbers and percentages are rounded)


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