CHAPTER LVII WISCONSIN Title. SCHOOL FUND The titles "irreducible school fund," and "school trust fund" are sometimes applied to the permanent common school fund of Wisconsin. The title provided by the constituCondition, 1904 tion, and, therefore, the correct title is the School Fund.640 "No printed report (concerning the School Fund) has been available since June 30, 1904." 641 At that time the fund consisted of $3,609,212.96 and 25,148.27 acres of unsold lands estimated to be worth $99,000,641 making the total estimated value of the fund $3,708,212.96.* During the Civil War the state borrowed $1,563,700 from the School Fund; this sum has never been returned and is practically a permanent debt, secured by certificates of indebtedness on which the state pays seven per cent interest. This interest is derived from state taxes whenever the income from other sources is insufficient.641 The remainder of the fund is invested chiefly in "loans to school districts for two purposes only: building school-houses or refunding district indebtedness and loans to counties and cities for public buildings. The real estate of each of these is pledged to the state as security for the loan." 641 No school lands are at present rented.641 Wisconsin's total receipts from all sources for common schools in the year 1903-4 amounted to $8,019,230.08.643 Of this $210,419.51, 642 i. e., approximately two and sixty-two hundredths per cent (.0262+) was derived from the income of the School Fund. It is, perhaps, * Computed. 640 Constitution of Wis., 1848, Art. X, Sec. 2; Report U. S. Commissioner of Education, 1892-93, Vol. II, p. 1332. 641 Statement received from Wis. Dept. of Public Instruction, Sept. 12, 1906. 642 Biennial Report, Wis. Dept. of Public Instruction, 1902-04, Vol. I. p, 130. 643 Ibid., p. 125. because so much of this nominal income is in reality derived from taxation that the reports for 1905 include it in state taxes.344 Wisconsin provided for the establishment of her School Fund by her first constitution, which became effective upon her admission into the Union, 1848.640 The original capital conOrigin sisted of 958,649 acres 10 of sixteenth section lands, and 500,000 acres granted under the Congressional act of 1841,640 making the total amount of land thus originally devoted to the School Fund 1,458,649 acres. Sources of Loss The Constitution provides the following sources for increasing the principal of the School Fund: 640 (1) proceeds of land granted by the United States; (2) money and proceeds of property forfeited or escheated to the state; (3) military duty exemption moneys; (4) penal fines; (5) any grant of the state whose purpose is not specified; (6) five per cent of the proceeds of the sale of federal public lands lying within the state. The losses which the fund has suffered seem to be due chiefly to the following causes: defaulting of state officers; lands sold for less than real value; dishonest bookkeeping; partially-paid-for lands stripped of timber and returned comparatively worthless to the state; investment in poor securities; failure to add to the principal of the fund revenues from the sources devoted to it by law. Through the mismanagement and defaulting of state officers the lands in Wisconsin were sold at nominal prices to speculators and the interests of the state largely sacrificed.643a As early as 1858, ten years after admission as a state, the Superintendent of Public Instruction complains that the School Fund is being lost and wasted. In 1892 these complaints continue (cf. Report 1858, p. 23, and Report 1891-92, p. 141). Lyman C. Draper, Superintendent of Public Instruction, in his Report, 1859, pages 10-12, complains that exorbitant taxation leads many who have purchased school lands on mortgage to forfeit lands to state, and so throw them back upon the state, and deprive the state of interest. He cites a case in 643a Kiehle, History of Education in Minn., p. 18; Ill. and Minn. School Lands, Management of. which it is said $68.48 was charged as interest on the non-payment of $148.65 for one year, and $85.00 for one day.644 "The variation between ledger accounts of Wisconsin and Washington, divergences in various official statements, absence of all original vouchers in one large account, and the disappearance of many others in other accounts whose files are ostensibly complete render any attempt at making a trustworthy statement precarious." 645 "The original grants to our state for school purposes amounted according to earlier reports to 1,474,720 acres. The earlier state superintendents estimated that over $5,000,000 would be received from these sales. . . . Double that amount might have been easily received after the sale of all but 60,000 acres. The state can show but about $2,000,000 in its school fund credited to this source." 646 "It is notorious that state lands covered by valuable timber have been sold and a fraction of their purchase price paid, the timber removed and the land then allowed to lapse to the state." 647 "The certificates of indebtedness are evidence of the disappearance of nearly one-half of the school fund. The law which directed the investment of the school fund in the purchase of state bonds provided for the cancellation of all bonds and substitution therefor of certificates of indebtedness. The certificates are non-negotiable and non-transferable. No provision whatever is made for their payment. The discretionary authority of the commissioners, who are clothed with constitutional powers over its investment, is thereby destroyed by statutory enactment.650 The rate of interest on these certificates is 7%; 049 the effect is the creation of a perpetual state debt requiring the levy and collection of an annual state tax to the amount of $157,570 to pay the interest thereon. The interest paid . . . thus far amounts to about $4,200,000, and the process seems just begun. Additional burdens of taxation are the only fruits of the school fund, the very result which it was intended to avoid.” 650 "Nominal Amount of State School Fund (1892) "Certificates of Indebtedness (1892) Actual amount available for investment 644 Report Supt. of Public Instruction, Wis., 1859, p, 11. 646 Ibid., p. 143. 647 Ibid., p. 142. 648 Ibid., p. 152. 649 Ibid., p. 153. 650 Ibid., p. 154. $3,358,502.50 648 1,563,700.00 648 $1,794,802.50" 648 "This seems evident that a wise administration of all the provisions relating to the School Fund should have resulted in a permanent endowment of from $15,000,000 to $20,000,000; that we have instead cash and money invested to the amount of $3,401,461.49 and a permanent state debt of $2,251,000; that the application of the available productive funds to the liquidation of the state debts will practically leave the state as though no provision had ever been made for the support of its schools; that the necessity for the disappearance of this money is not apparent; that the laws and records have been witnesses to transactions of more than doubtful propriety; and that the security for the debt is of questionable validity. "Nominal amount of total (1892): Common School Fund University Fund Agricultural College Fund Normal School Fund . Total nominal amount of school fund . . Total amount represented by certificates of indebtedness Actual amount of productive funds. 651 Technically speaking, the money borrowed from the School Fund during the Civil War is not a loss, yet it must certainly be considered a misappropriation, and it is difficult to distinguish the difference between being taxed directly and being taxed to pay your own interest on an inherited trust fund.* The fund has suffered seriously from two sources; first, the wasting of the school lands, and, second, insufficient legislation respecting the sources of increase. Vast stretches of school lands were bought by lumber speculators for $2.50 per acre, who, it is said, were required to pay only forty cents on the acre. The timber was cut off and the lands then comparatively worthless reverted to the state. In 1904, $24,391.49 was derived from penal fines, which sum goes to increase the principal of the fund, but evidently the School Fund is not receiving all that it should from this source. It is difficult to understand why a county like Dane should contribute, in 1904, $2,431.10, while Milwaukee County contributed only $35.77. Dane *Many states buy state bonds with proceeds of school lands sales and pay interest out of taxes. See Minnesota. 651 Ibid., p. 161. County has a population of about 75,500 whereas Milwaukee County has a population of nearly 364,000. Dane is the capital city county and may be assumed to be reasonably intelligent and law-abiding and there is no reason for believing that in Milwaukee County there is a vastly greater respect for law than in Dane County. The School Fund is managed by a Board of Commissioners composed of the Secretary of State, Treasurer, Management and Attorney-General.652 The revenue is apportioned among the counties, towns, villages, and cities on the basis of the total school population of the same (four to twenty years).653 Apportionment The constitution provides that the revenue of the School Fund may be applied to the following objects: 640 (1) support and maintenance of common school in each school district; Objects (2) libraries; (3) apparatus: (4) the residue shall be appropriated to the support and maintenance of academies, normal schools and libraries and apparatus therefor. Conditions of In order to receive its share of the School Fund revenue the school corporation must fulfil the following conditions: 654 (1) it must raise annually by local tax or by transfer from the general fund to the School Fund of the school corporation, an amount equal to its quota of the School Fund revenue; (2) it must maintain a common school for six months taught by a qualified teacher unless excused for sufficient grounds by the Superintendent of Public Instruction; (3) it must submit the report required by law; (4) the report must contain an actual school census taken under the Board of Education or other supervisory body. 652 Constitution of Wis., Art. X, Sec. 7. 653 Revised Statutes, Wis., Chap. 28, Sec. 2. 654 School Laws of the State of Wis., 1897, XVI, pp. 181, 182. |