STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL
May 20, 1973
George D. Kane
Commissioner of School and Public Lands
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 73-14
School and Public Lands' funds may be pooled.
Dear Mr. Kane:
In your capacity as secretary to the School and Public Lands Board, you have asked for an opinion on the following factual situation:
The School and Public Lands Commission has, at the present time, twelve separate funds in the treasurer's office. Eighty-two percent of the Commission's funds are in the common school permanent fund, and the remaining eighteen percent is allocated among the remaining eleven funds.
Because of all the small amounts of monies in some of these funds, it is difficult to invest them. In some cases, the cost of administration wipes out the return on investments. If the funds were allowed to be pooled, a very substantial increase in income from the several small funds could be accomplished and if modest increase in income in the common school permanent fund could be expected.
In connection with this factual situation, you have asked the following question:
Is pooling of these funds permissible under present law?
The answer to your question is, YES; but statutory directives must be followed.
The existing funds were established pursuant to SDCL 5-10-1, which provides:
The income from the leased lands of each class of school and public lands and the interest on the permanent fund of that class shall be assigned by the state treasurer to a fund to be known as the interest and income fund of such class. The principal of money derived from the sale of each class of lands granted to the state for educational and charitable purposes shall be assigned by the state treasurer to a fund to be known as the permanent fund of such class. (Emphasis added)
According to Kohler, A Dictionary for Accountants, 204, (4th Ed.),
In governmental and institutional accounting, a fund is a sum of money and oft-en other assets constituting a separate accounting entity, created and maintained for a particular purpose and having transactions subject to legal or administrative restrictions. Its double-entry accounts are self-balancing, and from them a balance sheet and operating statement may be prepared. A separate budget is provided for each fund.
* * *
The accounts of each fund must be designed in such a way as to make possible a complete separation of the assets, liabilities, reserves, surplus, revenues, expenditures, receipts, and disbursements.
As inferred above, an account is a subdivision of an accounting entity or of a fund.
However, as you have pointed out, an unrestricted number of funds can increase the cost of administering them disproportionately. Perhaps in recognition of this fact, the 1966 Legislature passed pursuant to S. D. Const. Art. XII, Sec. 4, what is now SDCL 4-4-5:
The state budget director may authorize and direct the state auditor and state treasurer to account for funds in the state treasury as separate accounts in lieu of funds and the fund structure may be modified to conform to a uniform state accounting system.
The above section is not in conflict with §5-10-1. By its wording, it is clear the Legislature intended it to take precedence over statutes setting up special funds.
Your factual situation would seem to be the type of case which §4-4-5 was designed to correct. In order to comply with the statute, permission will have to be obtained from the state budget director to combine your funds, and a more meticulous attention to accounting details will be required to allot income and expenses so that each separate class of school lands will receive its proper settlement.
Respectfully submitted,
Kermit A. Sande
Attorney General
