PIERRE, S.D. (KELO-AM) – South Dakota’s Education Enhancement Trust Fund has added over $7.7 million to its principal, thanks to the state’s management of its Master Settlement Agreement with major tobacco companies.
Each year, South Dakota receives payments due under the 1998 Master Settlement Agreement (MSA) among major tobacco companies and 46 states, including South Dakota.
In 2002, the state created the Education Enhancement Trust Fund with bonds issued by Educational Enhancement Funding Corporation (EEFC). The state pledged future Master Settlement payments to pay principal and interest on the bonds in exchange for a large lump-sum payment which was used to create the Trust Fund.
In 2013, at the request of Gov. Dennis Daugaard, the 2002 bonds were refinanced to restructure some aspects of the revenue pledge. Under the restructuring, annual bond debt service was reduced by extending the time frame to pledge payments.
As a result, the EEFC received more than $23.6 million this year as the state’s share of tobacco payments under the master settlement, with only $18.8 million required to make bond payments in 2014. The remaining $4.8 million will be transferred to the Education Enhancement Trust Fund.
In addition, over $2.8 million of withheld 2003 payment was also transferred to the Education Enhancement Trust Fund.
Gov. Daugaard praised the work of the Educational Enhancement Funding Corporation in moving forward with the refinancing as well as the diligent enforcement of the provisions of the MSA by the South Dakota Attorney General’s Office.
“Without this hard work, our citizens and our education community would not have reaped this windfall,” said the Governor. “On behalf of the citizens of South Dakota, I thank them for their efforts.”
Created by constitutional amendment, the Education Enhancement Trust Fund currently contains nearly $480 million in bond proceeds, Master Settlement payments and investment earnings. State law requires that 4 percent of the market value of the trust fund be used each fiscal year to enhance education in South Dakota.