A. A separate permanent fund shall be established for each
of the several objects for which the said grants are made and confirmed by the
enabling act to the state, and whenever any monies shall be in any manner
derived from any of said lands, the same shall be deposited by the state
treasurer in the permanent fund corresponding to the grant under which the
particular land producing such monies was, by the enabling act, conveyed or
confirmed.
B. No monies shall ever be taken from one permanent fund for deposit in
any other, or for any object other than that for which the land producing the
same was granted or confirmed.
C. All such monies shall be invested in safe interest-bearing
securities and prudent equity securities consistent with the requirements of
this section.
D. The legislature shall establish a board of investment to serve as
trustees of the permanent funds. The board shall provide for the management
of the assets of the funds consistent with the following conditions:
1. Not more than sixty percent of a fund at cost may be invested in
equities at any time.
2. Equities that are eligible for purchase are restricted to stocks
listed on any national stock exchange or eligible for trading through the
United States national association of securities dealers automated quotation
system, or successor institutions, except as may be prohibited by general
criteria or by a restriction on investment in a specific security adopted
pursuant to this subsection.
3. Not more than five percent of all of the funds combined at cost may
be invested in equity securities issued by the same institution, agency or
corporation, other than securities issued as direct obligations of and fully
guaranteed by the United States government.
E. In making investments under this section the state treasurer and
trustees shall exercise the judgment and care under the prevailing
circumstances that an institutional investor of ordinary prudence, discretion
and intelligence exercises in managing large investments entrusted to it, not
in regard to speculation, but in regard to the permanent disposition of
monies, considering the probable safety of capital as well as the probable
total rate of return over extended periods of time.
F. The earnings, interest, dividends and realized capital gains and
losses from investment of a permanent fund, shall be credited to that fund.
G. The board of investment shall determine the amount of the annual
distributions required by this section and allocate distributions pursuant to
law. The annual distribution from the permanent funds:
1. For fiscal years 2012-2013 through 2014-2015, shall be two and
one-half percent of the average monthly market values of the fund for the
immediately preceding five calendar years.
2. For fiscal years 2015-2016 through 2024-2025, shall be six and
nine-tenths percent of the average monthly market values of the fund for the
immediately preceding five calendar years, except that in fiscal year
2015-2016, the distribution made from the permanent state school fund shall be
$259,266,200.
3. Beginning with fiscal year 2025-2026, shall be two and one-half
percent of the average monthly market values of the fund for the immediately
preceding five calendar years.
H. For fiscal years 2015-2016 through 2024-2025, any increase in
expendable earnings under section 37-521, subsection B, paragraph 4, Arizona
Revised Statutes, that results from a distribution of more than two and
one-half percent of the average monthly market values of the fund for the
immediately preceding five calendar years pursuant to subsection G, paragraph
2 of this section shall be appropriated for basic state aid, including
inflation adjustments required by section 15-901.01, Arizona Revised Statutes.
I. On or before February 1 of each year, if the average monthly market
values of the fund for the immediately preceding five calendar years have
decreased compared to the average monthly market values of the fund for the
five-calendar-year period that immediately precedes the preceding five
calendar years, the director of the office of strategic planning and
budgeting, or its successor agency, and the director of the joint legislative
budget committee, or its successor agency, shall jointly notify the governor,
the president of the senate and the speaker of the house of representatives
that a reduction to the distribution prescribed in subsection G, paragraph 2
of this section is necessary to preserve the safety of the capital in the
fund. On receipt of that notification, the legislature may enact legislation,
with the approval of the governor, that reduces the distribution in subsection
G, paragraph 2 of this section for the next fiscal year to at least two and
one-half percent but less than six and nine-tenths percent of the average
monthly market values of the fund for the immediately preceding five calendar
years.
J. Any amount reduced pursuant to subsection I of this section is not
required to be paid or
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A. A separate permanent fund shall be established for each
of the several objects for which the said grants are made and confirmed by the
enabling act to the state, and whenever any monies shall be in any manner
derived from any of said lands, the same shall be deposited by the state
treasurer in the permanent fund corresponding to the grant under which the
particular land producing such monies was, by the enabling act, conveyed or
confirmed.
B. No monies shall ever be taken from one permanent fund for deposit in
any other, or for any object other than that for which the land producing the
same was granted or confirmed.
C. All such monies shall be invested in safe interest-bearing
securities and prudent equity securities consistent with the requirements of
this section.
D. The legislature shall establish a board of investment to serve as
trustees of the permanent funds. The board shall provide for the management
of the assets of the funds consistent with the following conditions:
1. Not more than sixty percent of a fund at cost may be invested in
equities at any time.
2. Equities that are eligible for purchase are restricted to stocks
listed on any national stock exchange or eligible for trading through the
United States national association of securities dealers automated quotation
system, or successor institutions, except as may be prohibited by general
criteria or by a restriction on investment in a specific security adopted
pursuant to this subsection.
3. Not more than five percent of all of the funds combined at cost may
be invested in equity securities issued by the same institution, agency or
corporation, other than securities issued as direct obligations of and fully
guaranteed by the United States government.
E. In making investments under this section the state treasurer and
trustees shall exercise the judgment and care under the prevailing
circumstances that an institutional investor of ordinary prudence, discretion
and intelligence exercises in managing large investments entrusted to it, not
in regard to speculation, but in regard to the permanent disposition of
monies, considering the probable safety of capital as well as the probable
total rate of return over extended periods of time.
F. The earnings, interest, dividends and realized capital gains and
losses from investment of a permanent fund, shall be credited to that fund.
G. The board of investment shall determine the amount of the annual
distributions required by this section and allocate distributions pursuant to
law. The annual distribution from the permanent funds:
1. For fiscal years 2012-2013 through 2014-2015, shall be two and
one-half percent of the average monthly market values of the fund for the
immediately preceding five calendar years.
2. For fiscal years 2015-2016 through 2024-2025, shall be six and
nine-tenths percent of the average monthly market values of the fund for the
immediately preceding five calendar years, except that in fiscal year
2015-2016, the distribution made from the permanent state school fund shall be
$259,266,200.
3. Beginning with fiscal year 2025-2026, shall be two and one-half
percent of the average monthly market values of the fund for the immediately
preceding five calendar years.
H. For fiscal years 2015-2016 through 2024-2025, any increase in
expendable earnings under section 37-521, subsection B, paragraph 4, Arizona
Revised Statutes, that results from a distribution of more than two and
one-half percent of the average monthly market values of the fund for the
immediately preceding five calendar years pursuant to subsection G, paragraph
2 of this section shall be appropriated for basic state aid, including
inflation adjustments required by section 15-901.01, Arizona Revised Statutes.
I. On or before February 1 of each year, if the average monthly market
values of the fund for the immediately preceding five calendar years have
decreased compared to the average monthly market values of the fund for the
five-calendar-year period that immediately precedes the preceding five
calendar years, the director of the office of strategic planning and
budgeting, or its successor agency, and the director of the joint legislative
budget committee, or its successor agency, shall jointly notify the governor,
the president of the senate and the speaker of the house of representatives
that a reduction to the distribution prescribed in subsection G, paragraph 2
of this section is necessary to preserve the safety of the capital in the
fund. On receipt of that notification, the legislature may enact legislation,
with the approval of the governor, that reduces the distribution in subsection
G, paragraph 2 of this section for the next fiscal year to at least two and
one-half percent but less than six and nine-tenths percent of the average
monthly market values of the fund for the immediately preceding five calendar
years.
J. Any amount reduced pursuant to subsection I of this section is not
required to be paid or distributed:
1. From any other source of public monies.
2. In any subsequent fiscal year.
K. If the legislature enacts legislation, with the approval of the
governor, that reduces the distribution pursuant to subsection I of this
section:
1. The legislature may reduce the base level for the next fiscal year
by an amount commensurate with the reduction in the distribution from the
permanent state school fund for the next fiscal year.
2. The amounts from the base level reduction are not required to be
paid or distributed in any subsequent fiscal year.
3. The base level reduction is not part of the calculation of the base
level for subsequent fiscal years.
L. This section preserves the authority vested in the legislature
pursuant to this constitution.
M. This section and article XI, section 11 of this Constitution and the
terms and appropriations of house bill 2001, fifty second legislature, first
special session, fully satisfy the requirements of section 15-901.01, Arizona
Revised Statutes.