TAHLEQUAH, Okla. -- Tribal Councilors on Dec. 11 passed an act that establishes the Cherokee Nation Sovereign Wealth Fund, a fund that is expected to "ensure the continuation of tribal operations and the general welfare of tribal citizens for future generations."
Tribal Councilor Dick Lay spoke about the act's importance during the Nov. 14 Rules Committee.
"So the idea was to take a small amount of funding from the businesses, set it aside for just extreme financial emergencies, and I think (Treasurer) Lacey (Horn) and her group have been working along the same lines, so we're going to try and get those together," Lay said.
Horn said creating a "permanent fund" was something she had wanted to do, and after working on Lay's model with Controller Jamie Cole and Assistant Attorney General Chad Harsha they created an act to bring before Council.
"This act establishes a wealth fund, which shall be held by the treasurer in accordance with the act, and assets shall be maintained in an interest-bearing account or otherwise invested to promote growth of the fund's assets," she said.
Within the fund, Horn said, there would be an Emergency Reserve Fund that would "receive a direct and continuing appropriation."
"The Emergency Reserve Fund that receives the direct and continuing appropriation of 2 percent of the net income of our dividend-paying corporations as well as not less than 50 percent of funds received by the Cherokee Nation through judgment or settlement of legal claims," she said. "That's not to say that we couldn't put 90 percent. That's not to say that we couldn't put some percent higher, but it's just sort of setting that floor as to what's going to go into this fund."
The Motor Fuel Education Trust would also be moved to the new fund, which Horn confirmed would be an added "safety" measure.
"It had previously been collateralized in an interest-bearing CD that was used to borrow funds to build the Vinita (Health) Clinic, and that collateralization was removed whenever we entered into the loan with Bank of Oklahoma for the Tahlequah Joint Venture Project, and so these funds are...free and clear," she said. "So this will take that fund, put that within the construct of the Cherokee Nation Sovereign Wealth Fund and allow us to invest that fund and continue to grow it."
Horn said the fund could also have endowments, trusts or other funds incorporated within it periodically. "There's often endowments, trusts that we receive from individuals that need to be invested for income-generating purposes, and this would be the perfect place to put (those) up underneath as well."
Horn said all assets for the fund would be "reported and accounted" for separately and would support itself by not relying on any General Fund dollars.
"Expenses incurred and maintenance invested in the fund shall be paid for by the fund. So we won't be utilizing any General Fund dollars to operate this fund it will be self-sustaining," she said.
When it comes to distributing the fund's money, there must be approval from two-thirds of the Tribal Council as well as the principal chief. According to the act, "a distribution from the Reserve Fund may only be made in the event that a financial emergency exists, the severity of which threatens the life, property or financial stability of the Nation."
Also, according to the act, "a distribution from the Education Trust may only be made to satisfy a substantial need in higher education scholarships resulting from an unexpected funding loss or shortfall and distributions from all endowments, trusts or other funds held in the fund shall be made in accordance with any originating document or restriction applicable thereto, and subject to the appropriation laws of the Cherokee Nation."
The act also notes that the fund "may not be used to finance or influence political activities."
"I hope that you can see that we feel very strongly, very happy about this legislation that we put forward, and we hope the Tribal Council feels the same," Horn said.
Councilors also passed an act relating to the adjustment of dividends known as the Corporation Emergency Dividend Reserve Fund Act, which is included within the Sovereign Wealth Fund.
Lay presented the act during the Oct. 26 Rules Committee meeting where he said it's not an "original" idea but one that should be implemented as an "emergency fund."
"It would cause the chief and the super majority of council to bring funding out of it to be used only for abject financial emergencies," he said.
Cherokee Nation Principal Chief Bill John Baker was pleased to sign the Sovereign Wealth Fund into law.
"The idea of permanent fund was something we discussed within the administration several years ago. Having reached a number of major policy and legislative goals during the past six years, the time was right to focus our attention on this important safety net. I was pleased to sign this important act into law before year's end, and appreciate the collaborative effort of my team and members of the Council in achieving this goal."
According to the act, for-profit corporations that the tribe is the "sole or majority shareholder" and are under CN law "shall issue a monthly cash dividend in the amount of 30 percent" from a "special quarterly dividend" they "deem" appropriate. An additional 5 percent is set aside for Contract Health services for citizens. According to the act, another 2 percent would "be set aside exclusively for an unanticipated and extraordinary revenue or funding loss that creates a budget shortfall where appropriation from any other source would be unavailable."
To view the Sovereign Wealth Fund Act, click here.
To view the Corporation Emergency Dividend Reserve Fund Act, click here.