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and United States Governments for purposes of education. These, including money, bills receivable, and lands, constitute the Permanent School Fund of the City, the principal whereof must be securely preserved, in whatever form invested, and only the income used for support of Schools.
THE SCHOOL CAPITAL FUND,
of the old County of St Louis, which was divided between this Board and the new County of St. Louis, pro rata, according to the enumeration of school children, under the Scheme of Separation, consisted of proceeds of fines, penalties, and forfeitures theretofore collected. Money belonging to this fund had been loaned out by the County Court on mortgages, and, in some cases, the property mortgaged had been purchased by the Court at foreclosure sale, for the county. In all cases the proceeds of this fund, in whatever form, have been carefully set apart, and the original“ capital” preserved. During the past year the sum of $18,368.81, belonging to this Capital Fund, which had been improperly paid into the General Revenue Fund as part of current income, was returned into this fund.
The sum of $6,584.96, being the City's share in the Capital Fund, recently collected under final settlement with the sureties of the former County Treasurer, will be paid into this fund, as soon as the pending agreement of division is ratified by the St. Louis County Court.
The great bulk of the Permanent Fund, however, is invested in the real estate held by the Board under grants from the Government of the State or United States for school purposes. It includes the out-lots, common fields, and unclaimed lands originally reserved by the Government of the United States “for support of schools," and which have been in charge of this Board since its incorporation; the Grand Prairie Common Field lots, which were under charge of the old County Court until the adoption of the Scheme of Separation; and such of the original
Sixteenth Section lands as may be recovered from holders under adverse claims.
Prior to the Act of May 16, 1879, grave doubt, both in the Board and in the community, existed as to the right of the Board to use, for current expenses, or for any purpose except investment, the proceeds of sales of these land grants. That act provides that all lands theretofore granted by the Government, for school purposes, to any School Board in any city or town, shall constitute part of the Permanent School Fund of such city or town.
Prior to the enactment of this law, the Board had sold a very considerable amount of these lands. In 1864, the value of the lands held by the Board “for revenue estimated at $1,855,568; the last valuation (made a few years since) was $1,268,478.57. The Board received, prior to the enactment of that law, from the Commissioners in charge of the Sixteenth Section lands, almost $369,000, proceeds of land sales. The law of 1879 has been held by the Board, under the opinion of its attorney, not to apply to proceeds of land sales made prior to its passage, and accordingly the bills receivable for deferred payments of principal of such land sales, including one note for $80,000, due by the Iron Mountain Railroad Company, have been placed by the Board in the Building Fund.
The permanent fund at the close of the last school year, July 31, 1881, consisted of the following:
year from rentals of its real estate was $52,086.13. Some of this property is eligibly located in the business portion of the city, and should yield a much larger rental than that now received. Unfortunately, many years since, at a very early period in the history of the Board, the best located lands were leased for long terms, fifty years with privilege of renewal in some cases, at what are now merely nominal rates, whatever they were then. In a few years when these leases expire, or are renewed in cases of new valuation, the revenue of the Board from this source must be largely increased.
The Board can sell its real estate belonging to this fund, provided the proceeds are re-invested, subject to the same trusts. But at the present prices of government and other securities proper for the investment of trust funds of this character, it would be very doubtful policy for the Board to sell any of its revenue-producing real estate. The lands not now leased should, if possible, be made to yield a revenue. Some judicious investment should also be made, as soon as practicable, of the cash now in hand in this fund.
It will thus be seen that the “Permanent Fund” was not created by the act of May 16, 1879, but existed by virtue of the State Constitution; and, if that act was repealed, would still remain. The only effect of the act referred to, was to remove doubts as to the status of the Government land grants, which now constitute the greater part, but not all, of the fund.
Without discussing the past policy of the Board, there can now be no possible question but that it would be a most unwise policy for the Board to encroach, in any manner, and under any pretext, upon the integrity of this Permanent School Fund. During the past year the Board received over $70,000 from the rentals and interest on bills receivable and current deposits; and, with judicious management, a largely increased income may be produced. The increased expense attendant upon new school accommodations, makes it more imperative to husband vigilantly all possible sources of future revenue.
III. THE GENERAL REVENUE FUND, As its name indicates, is that available for the current expenses of the schools. Its receipts are the proceeds of the four mill tax, annually levied by the Board (being the maximum authorized by law for school purposes, exclusive of the debt tax above mentioned), the sum annually apportioned to the board from the State school fund, and the income from the permanent fund, including interest on current deposits. These, with some minor sources of revenue, such as sale of old furniture, etc., constitute the annual income of the Board, from which the current expenses of the schools must be met.
Thus during the past year the receipts and expenses have been as follows:
Proceeds of four mill tax collected for for 1880 and former years,
$ 671,124 56 Proceeds of same for 1881,
$ 52,086 13
11,584 40 1,705 35
Balance collected from sureties of former Treasurer
of the Board, J. P. Krieger, Jr, Sale of text books, balance over expenditures, Kindergarten receipts, balance over expenses for
supplies, Sundry receipts, sale of old property, etc.,
1,166 54 1,239 59
$ 585,456 95
56,319 60 23,036 25 4,296 45 5,257 92 21,195 94
6,072 95 37,986 13 11,000 00
The above statement of receipts includes two items which do not belong to the ordinary income of the year. One is the amount of $48,919.10, received from the collector for the taxes of 1881, this being the first instance of any part of the current year's taxes being received before the close of the school year, July 31. The other is the sum of $11,584.40, received from the sureties of the former treasurer of the Board, being deferred income from previous years. (With this last named payment, the Board recovered in full, both principal and interest, the funds involved in the failure of the Broadway Savings Bank.) Deducting both these amounts, we find that the ordinary income of the year exceeded the current expenses of the schools by $50,671.58.
During the past year the Board appropriated from its surplus revenue funds the sum of $22,000.00, (excluding $202.50, proceeds of land sale omitted from receipts), to the Building Fund, for purchase of school sites and erection of school buildings; and also paid into the Permanent Fund the sum of $18,368.81, the amount of County school capital, erroneously paid into the revenue fund before.
The condition of the Revenue Fund for the past year may therefore be summarized as follows: