Don’t eat the seed corn.
This is a simple but sound bit of advice that has been handed down from one wise farmer to the next for many generations. Along the way, sage investors discovered it applies just as well to finance as it does to agriculture. No wonder the phrase, “Don’t eat the seed corn” became the mantra of the Utah State Legislature when they set management policy for millions of acres of public land that were designated as school trust lands when Utah became a state. The Utah Constitution directs funds from that land to be managed by the School and Institutional Trust Lands Administration (SITLA). Currently SITLA distributes millions of dollars per year in strictly interest revenue to Utah’s public and charter schools.
That strategy has worked well in the past, allowing the fund to grow over time from $18 million to $2 billion. However, there has been tremendous financial innovation over the past several decades in the types of investments that are now available to public trust funds. Standard management practices for endowment funds have grown more complex and varied as well. Just as long-held agricultural practices must adapt to equipment innovations and scientific advancements, the state legislature determined that SITLA’s investment and disbursement practices need to adapt as well. That is why they approved Senate Joint Resolution 9 and Senate Bill 109 in the 2016 Legislative Session. Those bills, sponsored by Senator Ann Millner and Representative Mel Brown, will give Utahns the opportunity this November to amend the State’s Constitution to better reflect modern public land investment and school funding practices.
If approved by voters, Amendment B (as the measure will be noted on the 2016 General Election ballot) will allow SITLA to:
- Remove interest only restriction on SITLA investment strategies
- Increase funding available to all Utah Schools
- Improve the stability of the public lands funding stream
- Broaden and strengthen the endowment’s investment practices
- Provide a consistent and secure return on future investments
- Allow local community councils to determine best use for funds for each school
- All without raising taxes
In a nod to the wisdom of that wise old saying about preserving the seed corn, the State Legislature insisted that the proposed changes include a 4% annual cap on fund distribution so that the endowment principle will continue to build, thus providing more money for Utah schools now and into the future. A prosperous community is fueled by education to maintain opportunity for our children and a vibrant economy for Utah’s future, we need to make strategic investments and changes. Amendment B, may just be of those key changes.
For more information on the Constitutional Amendment B on this year’s ballot visit amendmentb.com