In re School Fund

[686] Opinion op the judges. To the Honorable the Board of Educational Lands and Funds: Gentlemen — Deeming an answer to the questions propounded by you in your communication of the 13th instant respecting the investment of permanent school funds of the state not inconsistent with our duties, we submit the following : To the first question, taking them in the order in which they are put, we answer that you clearly have the authority, under the sections of the constitution and statute to which you refer, to invest those funds in United States three per cent bonds if you deem it advisable to do so. The doubt you mention of your right to invest in these three per cent bonds was prompted, very likely, by the low rate of interest which they bear, together with the proviso in section 29 of the act of February 24th, 1883 [Comp. Stat., appendix, 1883, p. 888], relative to investments in “high rate of interest bonds” of counties, which cannot be made so as to net “a lower rate of interest than six per cent per annum.” But this restriction extends at most only to-the purchase of county bonds, and evidently has no reference whatever to investments in United States and state securities. As to the payments of premiums, if they be necessary in the purchases of United States bonds, these must be made out of the permanent school fund, for there is no authority for making them out of any other. The only cases in which premiums can be paid out of the temporary school fund are those of investments in “high rate of interestn county bonds, as provided in the above mentioned section. And even these, but for this special provision, would have to be made out of the permanent fund. The payment of [687] a premium in making an investment when the market value of the security purchased justifies and requires it, is a legitimate use of the money as a part of the investment, and does in no sense violate the constitutional provision that this fund “shall remain forever inviolate and undiminished.” Investments of this fund in any of the securities permitted by the constitution, whether at their par value, or above or below it, although made in the reasonable hope of an advance in their market value, and a consequent gain, must necessarily be at the hazard of a depreciation and consequent loss. Within the restriction of the constitution which limits these investments to United States and state securities, and registered county bonds, the law leaves them entirely to the judgment of your honorable body. To the second question, we answer, no. While, so far as we now see, a purchase of “high rate of interest” county bonds in the mode suggested by the question might produce substantially the same result as would that designated by the statute, it is different. And where the legislature in precise terms have specified the means by which to reach a desired end, those means should be used. By using the means provided there is absolute safety of action, while in adopting and using any other there is not. The mode of paying the premium required in the purchase of this sort of bonds the statute provides must be from the temporary school fund, and this should be followed. To the third question, we answer, no. ■ The authority given by the statute to the board is simply to direct investments of the money on hand in certain specified securities, hot to change investments, when once made, from one security to another. If the legislature had intended that such changes might be made, doubtless the power to make them would have been clearly expressed, and not left tó a forced construction of the statute. Where, however, securities in which investments have been made mature, and the money [688] is returned to the fund, it is then within the control of the board for reinvestment. Very respectfully, Geo. B. Lake, Chief Justice. Cobb and Maxwell, J.J., concur.