Final
Bill D

SCHOOL FINANCE SYSTEM

Votes:
Action Taken:
Page 4, line 2, insert, "$2 billion, 350 million".
Renewed her motion to approve Bill D, as amended, 		PASS
PASS
02:02 PM -- Bill D

Ms. van Mourik returned to the table to review Bill D, concerning state school lands (Attachment E). The bill was requested by Senator Windels. Ms. van Mourik discussed the provision that all moneys earned from the management of state school lands, including interest earned on the public school lands and proceeds received by the state for mineral leases, land surface leases, and timber sales on said lands, be deposited into the Public School Fund and treated as principal. She indicated that the bill would grow the corpus of the Public School Fund toward a specified amount. If Colorado personal income grows less than four and one-half percent, current triggers for using expenditures of up to $19 million of interest earned on the fund and of up to $12 million of proceeds received for mineral leases, land surface leases, and timber sales would apply.

02:06 PM

Senator Anderson requested that the committee find out how much was currently in the Public School Fund. Senator Windels responded to questions, and Senator Anderson said that she has long supported attempting to grow the Public School Fund. Representative Penry said that a critical question is how much revenue the General Assembly wishes to generate through the corpus.


02:08 PM

Ben Stein, Deputy State Treasurer, came to the table to respond to questions raised earlier. He indicated $407 million is the current balance of the Public School Fund. The committee discussed the additional investment authority contemplated for the State Treasurer in order to grow the corpus. Mr. Stein explained the potential interest rates depending on the types and durations of investments sought.


02:12 PM

Mr. Stein responded to further questions regarding the different characteristics of the Public School Fund and the State Education Fund. He discussed investment strategies that have been utilized for the two funds. Representative King raised concerns regarding the provisions for an "aggregate loss of principal" and what occurs in such instances. Mr. Stein made further explanation about the use of realized values, securities that are carried at cost, and explained that the use of realized values makes a loss unlikely.

02:19 PM

Representative Penry inquired about the provisions for limiting the use of the Public School Fund in times of economic downturn, specifically utilizing the current provision for using up to $19 million in interest. Representative Penry asked whether the potential for more flexibility provides a reason to have a higher limit, while Senator Anderson advocated retaining a narrower limit. Mr. Stein reminded the committee that a more aggressive investment strategy may result in less interest income during certain periods.


02:25 PM

Ms. van Mourik continued walking through the provisions of the bill, and specifically discussed the limits on the types of investments that the Treasurer may make. Several "clean up" provisions are included in the bill, according to Ms. van Mourik. Senator Anderson asked questions regarding amendments to conform language to reflect the constitutional term, "Public School Fund," rather than the Permanent School Fund. Mr. Stein said that it would be helpful to have specific targets in conjunction with the direction in the bill. Representative Penry asked whether a duration of time or a dollar target may be more helpful. Mr. Stein responded that a dollar target may be helpful.

2:34 PM

Senator Windels moved to approve Bill D, as amended, as a recommendation to the Legislative Council.

BILL:Bill D
TIME: 02:35:37 PM
MOVED:Anderson
MOTION:Page 4, line 2, insert, "$2 billion, 350 million". The motion passed on a 9-1 roll call vote.
SECONDED:
VOTE
Anderson
Yes
Bacon
Yes
Benefield
Yes
King
Yes
Penry
Yes
Pommer
Yes
Spence
Yes
Tupa
No
Merrifield
Yes
Windels
Yes
Not Final YES: 9 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:Bill D
TIME: 02:35:59 PM
MOVED:Windels
MOTION:Renewed her motion to approve Bill D, as amended, as a recommendation to the Legislative Council. The motion passed on a 10-0 roll call vote.
SECONDED:
VOTE
Anderson
Yes
Bacon
Yes
Benefield
Yes
King
Yes
Penry
Yes
Pommer
Yes
Spence
Yes
Tupa
Yes
Merrifield
Yes
Windels
Yes
Final YES: 10 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS



2:35 PM

Senator Windels is the Senate prime sponsor of the bill, and Representative Penry agreed to be the House sponsor of Bill D.