In adjusting the principal of the common school permanent fund and other educational and charitable funds by the rate of inflation pursuant to Article VIII, Section 3 of the South Dakota Constitution, the State Investment Council shall proceed as follows: (1) The inflation adjustment period is the fiscal year, beginning July first and ending June thirtieth. The first inflation adjustment period begins on November 15, 2000, and ends on June 30, 2001. The principal shall be credited each year for the inflation adjustment at the time of the common school apportionment beginning in 2002; (2) The rate of inflation is based on the consumer price index prepared by the Bureau of Labor Statistics of the United States Department of Labor; (3) The principal balance in each permanent school and other educational and charitable fund as of November 15, 2000, adjusted by amounts as provided by law, is the principal balance to be increased by the rate of inflation; and (4) The inflation adjustment requirement shall be met using realized net capital gains. If these are not sufficient, the interest, dividends, and other income shall be used. Any excess realized net capital gains shall be carried forward for the following year's inflation adjustment.
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