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Sources of increase. The sources provided by the constitution for increasing the principal of the permanent school fund fall into five classes:13 (1) the proceeds from the sale of all school land granted to the state by the Federal government for educational purposes; (2) all percentage of sales of public lands (5 per cent) granted by the United States; (3) the proceeds of all property falling to the state by escheat; (4) proceeds of all gifts or donations to the state for public schools, or not otherwise appropriated by the terms of the gift; (5) all property otherwise acquired for the public schools.

Table XI shows the sources which contributed to the growth of the fund during the year 1919-20. It shows also the disbursements for the year.

TABLE XI

SUMMARY OF RECEIPTS AND DISBURSEMENTS OF THE PERMANENT SCHOOL FUND DURING ONE YEAR, 1919-20a

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a State Treasurer Annual Report, 1920, p. 20.

b The balance on hand is the amount held by the state treasurer.

• Warrants paid to counties represent money turned over to the counties for investment, while "money returned" is money returned to the state treasurer by counties.

d Only items 2, 4, and 5 represent real additions to the fund, so the percentage was computed on these items.

Table XI does not show the amount of money which the counties have loaned out at interest, but is simply the state treasurer's summary of receipts and disbursements for the fund passing through his office during the year. This statement is not typical of all years, at least not as to the percentage of the amounts contributed by various sources. The report of the state commissioner of school and public lands for 1920 showed that the total amount of the land sales, which would correspond with item 2, Full and Deferred Payments, since statehood, had amounted to $23,809,161.511 or 86.8 per cent of the total fund of $27,434,983.83, leaving $3,625,822.32, or

13 Constitution of South Dakota, Art. VIII, sec. 2.

14 Commissioner of School and Public Lands Report, 1920, p. 25, statement 19.

13.2 per cent, coming from other sources. There is no statement available in state records showing the amounts contributed since statehood by these other sources.1 15

From this consideration of the sources of increase, we shall turn to the growth of the fund. Table XII shows the growth of the fund for twoyear intervals from 1910 to 1920. It shows also the annual income from the fund, including income from interest on loans, interest on deferred payments, lease of lands, and sale of sand, wood, coal, oil, gas, and from land belonging to the fund. Figure 3 shows graphically the growth of the fund, and the proportion the income is of the total school revenue.

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b Commissioner of School and Public Lands Biennial Report, 1910, pp. 155, 157. Amount given here computed by adding amount in hands of counties to loans and deferred payments.

e Ibid., p. 2, Table 3.

a Ibid., p. 5, Table 3.

• Ibid., 1912, pp. 177, 181. Computed. (Loans and deferred payments.)

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1 Ibid., pp. 48, 63, 75. Computed. (Interest and leases.)

k Ibid., 1916, pp. 4 and 5. Computed. (Loans and deferred payments.)

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a Ibid., 1920, p. 3.

Ibid., 1920, p. 8, statement 2.

* Ibid., pp. 40, 48, 62. Computed. (Interest and leases.)

This amount does not correspond with that given in Table VIII because Table VIII shows the amount of the income of the permanent school fund actually distributed to the schools during that year with the proportion it was of the total school revenues, while Table XII shows the actual income from the fund and the percentage this income was of the total school revenue.

United States Commissioner of General Land Office Report, 1920, p. 132, gives amount paid to states from 2, 3, and 5 per cent grants. According to this report, South Dakota received $343,868.30.

Table XII shows the very rapid growth of the permanent school fund and its income. It is important to note that the growth of the income has practically kept pace with the growth of expenditures by the state. Whether this income will keep pace with expenditures in the future can hardly be forecast. Payments for land have made such a large proportion of the principal of the fund, that it seems the fund will become practically fixed when the land is all sold.

SOUTH DAKOTA PERMANENT SCHOOL FUND, GROWTH AND IMPORTANCE 1910-1920

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Management of permanent school fund.-The management of the permanent school fund rests partly with the state and partly with the counties. In the sale and lease of land, state and county officers unite. In the investment of moneys belonging to the principal of the fund, the greater portion of responsibility rests upon the county as will be evident from the immediately following paragraphs.

County management.-In the handling of money composing the permanent school fund, the state acts merely as a receiving and disbursing agency. The actual investment is entrusted to the counties. The money of this fund is apportioned to the counties in proportion to their population. The counties hold, manage, and are responsible for the moneys belonging to this fund apportioned to them. It is to be loaned continually or returned to the state treasury in one thousand dollar amounts to be given to other counties

to loan. It is to be loaned at 5 per cent or a higher rate as fixed by the legislature. The county treasurer must report semiannually to the state treasurer the condition of the fund held by the county.1

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Lawful securities.-Although the investment is placed in the hands of the various counties, the laws make definite provisions as to the classes of securities in which the counties shall invest permanent school fund money, namely: (1) first farm mortgages on improved land at not more than one third of the value of the land; (2) bonds of school corporations; (3) bonds of organized counties; (4) bonds of townships or incorporated villages of South Dakota; (5) bonds of the United States or of South Dakota. It is provided that not more than $5000 may be loaned to any one person or corporation.15 The Legislature of 1915 authorized the counties. to charge one half of one per cent more than the rate of 5 per cent to the state and to retain it as reimbursement for deficiencies created by reason of portions of the fund remaining idle in the county treasuries while the loans are being perfected.17

Management and care of permanent school fund lands.-The management of the lands, belonging to the permanent school fund is vested in a commissioner of school and public lands. He is provided with a deputy, several clerks, and a stenographer. A scaler, forest supervisor, several forest rangers, and a fire watchman are provided to assist in caring for the forests.18 In the reports of 1916,19 1918,20 and 1920,21 the commissioner makes comments on the efficiency of his working force, from which one would infer that he considers the force sufficient to take care of the task. Only minor suggestions are made by the commissioner for the improvement of the service and of laws regulating the lease and sale of land.

An example of legislative care over school lands may be seen in four appropriations made in 1923 for the following purposes: an appropriation of $7493.86 for drainage projects on common school lands, 22 and three appropriations totaling $1597.50 for a deficiency in the funds of the commissioner of school and public lands, paying for meals, telephone service, and for notices printed in a paper, all for the department of the commissioner of school and public lands.28

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16 School Laws of South Dakota, Annotated, 1915, p. 133, sec. 412.

17 Session Laws of South Dakota, 1915, p. 451, ch. 225.

18 Commissioner of School and Public Lands Report, 1920, p. 2.

19 Ibid., 1916, p. 4.

20 Ibid., 1918, p. 4.

1 Ibid., 1920, p. 3.

22 Session Laws of South Dakota, 1923, ch. 53, p. 61.

23 Ibid., ch. 54, p. 64; ch. 55, p. 64; ch. 56, p. 65.

Mode of sale. The constitution provides that school land to be sold must be subdivided so as to get the largest price. The commissioner of school lands, the state auditor, and county superintendent of the county in which the land is located comprise a board of appraisal for lands they designate to be sold.24 The most valuable land must be sold first, and it must be sold for not less than the appraisal price, and in any case for not less than $10 per acre. It shall be sold at auction on sixty days' notice, One fourth of the purchase price shall be paid in cash; one fourth in five years; one fourth in ten years; and one fourth in fifteen years. Six per cent interest is paid on deferred payments. Any deferred payment may be made in advance if interest for one year in advance is paid at the same time. Land not especially subdivided is to be sold in smallest divisions. If land is not sold within four years after appraisal, it must be reappraised. All land sales are carried on by the commissioner of school and public lands and reports are made to him. No conveyance may be made until sixty days after the sale. All sales must be approved by the governor.24 It appears that the constitution and the laws provide sufficient safeguards for the land owned by the permanent school fund.

Lease of lands.-Lands owned by the state may be leased for pasturage, crops, etc., in lots of not more than one section, or for not more than five years.25 The commissioner, in his report of 1916, indicates that he recommended in his previous report that the period of lease be increased above five years. Such an amendment to the constitution was submitted by the legislature.26 In the report of 1918, the commissioner brands the leasing of lands for agricultural purposes a dismal failure because after the land has been tilled for a number of years it is very difficult to re-lease it. He recommends that the law allowing such leasing be repealed.27 Table XIII shows the amount of lands leased for agricultural and for grazing purposes and the amount of rent received for each year since 1915.

Provisions against losses.-The constitution provides that all losses, occasioned by defalcation, neglect, mismanagement, or fraud shall be a permanent funded debt against the state in favor of the fund sustaining the loss, and not less than six per cent interest shall be paid on the loss.28 In the case of the loss mentioned in the succeeding paragraphs, the state levied a tax, not only to pay the interest on the loss but also to repay the principal of the loss to the fund.

24 Constitution of South Dakota, Art. VIII, secs. 4, 5, 6.

25 Ibid., Art. VIII, sec. 9.

20 Commissioner of School and Public Lands Report, 1916, p. 7.

Ibid., 1918, p. 5.

28 Constitution of South Dakota, Art. VIII, sec. 13.

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