Study Committee on BCPL, CSF Drafting Constitutional Amendment

The Legislative Council Study Committee on the Investment and Use of the School Trust Funds met November 14 to decide on draft legislation, including a resolution to amend the state constitution to modify the investment requirements of the Common School Fund.  They will meet for a final time on December 6 to vote on whether or not they want to introduce any of the draft bills next session.

They have asked for five bill drafts to be prepared:

1.  A constitutional amendment related to the investment of the Common School Fund (CSF). Members of the Committee would like to allow BCPL to dip into the principal of the fund to make payments to school libraries. Currently, BCPL only makes payments to school libraries using the income from the Fund as directed by the constitution.  Others would like to see school libraries get a set percentage of CSF income every year with BCPL allowed to invest the remaining income. Currently, libraries receive all of the income from the CSF.

2. Statutory changes to put some of BCPL's current CSF investment strategies into state law (i.e. the smoothing account they created a few years ago).

3. Giving the State of Wisconsin Investment Board (SWIB) the same authority to invest the CSF that BCPL gained in 2015 after the Legislature approved a bill allowing them use the prudent investor standard.

4. Eliminating the ability of municipalities to pass BCPL loan funds on to private developers.

5.  Allowing banks to lend to municipalities for longer terms.


BCPL testified to the Committee that they were given increased investment authority by the Legislature less than three years ago and are currently in the process of implementing a new investment strategy. They requested that the Committee give the current investment strategy a few years to fully take effect and then evaluate it to see how it's working. BCPL said the timing is not right to make a constitutional change.  They warned the Committee that other states have made changes to their trust funds with the goal of getting higher returns that have resulted in significant losses to the funds. Idaho adopted a new policy that led to a $342 million loss for their fund. BCPL said they have been cautious in their investment approach to avoid major losses like this. They told the Committee that every state that has a trust fund like ours looks different because every state has different needs, different beneficiaries and a different mix of assets.

Attorney General Brad Schimel, who is the current chair of the BCPL, sent a memo to the Committee urging them to be cautious when it comes to amending the state constitution. "I believe that BCPL should be given more time to transition its investment portfolio before considering significant changes to statutes or the constitution," wrote Schimel.