SENATE BILL REPORT

ESJR 8212

BYSenators Gaspard, Patterson, Rinehart and Saling

Authorizing the investment of public land permanent funds.

Senate Committee on Education

Senate Hearing Date(s):February 19, 1987

Majority Report:  Do pass.

      Signed by Senators Gaspard, Chairman; Rinehart, Vice Chairman; Bailey, Bender, Benitz, Patterson, Smitherman, Warnke.

Senate Staff:Judy McNickle (786-7423)

                  March 13, 1987

AS PASSED SENATE, MARCH 12, 1987

BACKGROUND:

Income from lands set aside by Washington's Enabling Act or the State Constitution is credited to five funds established within the State Treasury.  The funds include:  Agricultural College Permanent Fund (Fund No. 601), Normal School Permanent Fund (Fund No. 604), Permanent Common School Fund (Fund No. 605), Scientific School Permanent Fund (Fund No. 606), and University Permanent Fund (Fund No. 607).

In November, 1966 SJR 22 was adopted to amend Article XVI, Section 5 of the State Constitution and allow investment of funds in the Permanent Common School Fund in any manner allowed by law.  This effectively allows balances in this fund to be invested in equity instruments such as stocks, thus diversifying investment capability of these moneys and potentially improving the long-term return to this fund.  The remaining permanent accounts still can be invested only in specified fixed security instruments (such as national, state, county, municipal or school district bonds).  The June 30, 1986 market value of these permanent funds was:

!tp1,1,1 !tlAgriculture College !tl$44.5 million

!tl Normal School !tl $90.7 million

!tl Scientific School !tl$57.2 million

!tl University !tl$ 7.4 million

SUMMARY:

An amendment to the State Constitution is placed before voters at the next general election to allow income from the Agricultural College Permanent Fund, Normal School Permanent Fund, Scientific School Permanent Fund and University Permanent Fund to be invested in any manner authorized by law.

Fiscal Note:      none requested

Senate Committee - Testified: Jay Hartford, Washington State University; John Hitchman, State Investment Board