SECTION 1. There shall be established and set up on the books of the Commonwealth a separate fund to be known as the public school improvement fund.  All monies in said fund shall be used solely for improvement, operation, and maintenance of public elementary and secondary education.  The fund shall be subject to Article LXIII of the Constitution of Massachusetts and none of the monies in said fund shall be expended except in accordance with this section and upon appropriation by the General Court.  Interest earned by the fund shall be retained as part of said fund.  No appropriation shall be made from the fund unless the annual state appropriation for the purpose of maintaining and operating public schools, including regional schools and independent vocational school districts, is equal to or greater than the appropriation for such purposes for the fiscal year ending June 30, 2005.

                 SECTION 2.   There shall be established and set up on the books of the Commonwealth a separate fund to be known as the public higher education improvement fund.  All monies in said fund shall be used solely for the improvement, operation, and maintenance of public higher education.  The fund shall be subject to Article LXIII of the Constitution of Massachusetts and none of the monies in said fund shall be expended except in accordance with this section and upon appropriation by the General Court.  Interest earned by the fund shall be retained as part of said fund.  No appropriation shall be made from the fund unless the annual state appropriation for the purpose of maintaining and operating the public colleges and universities and public higher education is equal to or greater than the appropriation for such purpose for the fiscal year ending June 30, 2005.

                 SECTION 3.   There shall be established and maintained under the authority of the board of higher education a public higher education endowment fund.  Interest earned through the investment of funds in said endowment fund shall be expended solely for the improvement and maintenance of public higher education in accordance with this section.  There shall be no expenditure of funds derived directly from the excise imposed in section 2 of chapter 64Hsection 4 of chapter 62 and deposited in the endowment fund.  Private contributions may also be deposited in the endowment fund.

            Within the endowment fund, there shall be established a fiscal emergency reserve which shall consist of an amount of not less than 10 percent of the endowment fund.  The board may, during a fiscal emergency, authorize the expenditure of funds credited to the fiscal emergency reserve for the purpose of supplementing annual operating appropriations to public colleges and universities.  For the purpose of this section, “fiscal emergency” shall mean a fiscal year during which the annual appropriation to an institution of higher education is at least 10 percent less the annual appropriation to said institution in the previous fiscal year.

            Said board shall authorize the expenditure of interest earned in the endowment fund for the purpose of awarding matching grants to public institutions of higher education for the development and expansion of public service and research at public institutions of higher education, as appropriate to said institutions; and for other purposes, excluding the operation of any institution of public higher education, which the board may deem appropriate; provided that said grants shall be held and expended in conjunction with funds raised by or for any such institutions.

            Said board shall appoint an unpaid investment advisory committee which shall have general supervision over the investment and reinvestment of funds in the endowment fund.  Said committee shall consist of seven members as follows: the chair of the board of higher education, who shall serve as chair of the committee; the president of the university of Massachusetts, the president of a state college, the president of a community college, and three members who shall be qualified by training and experience in the investment of funds as the result of having been principally employed in such occupation for a period of at least five years.  Each member of the committee shall serve for a term of three years.  Any member may be re-appointed and may serve more than one term.

            Subject to the approval of said board, the investment advisory committee shall invest and reinvest the funds in the endowment fund.  Funds shall be invested as much as is reasonably possible to benefit the mission of public institutions of higher education and campus populations and to benefit the economic climate within the Commonwealth, provided that such investments are consistent with sound investment policy.  The investment advisory committee shall annually, on or before January 31, file with the secretary of administration and finance a report listing all funds in the endowment fund and all investments held by the fund.

                 SECTION 4.   The Massachusetts cultural council, as created by section 52 of chapter 10 of the General Laws, is hereby authorized and directed to establish and maintain a Massachusetts cultural endowment fund.  Interest earned through the investment of funds in said endowment fund shall be expended solely for the purposes of stimulating and encouraging the practice, study, and appreciation of the arts, humanities, and interpretive sciences in the public interest.  There shall be no expenditure of funds derived directly from the excise imposed in section 2 of chapter 64Hsection 4 of chapter 62 and deposited in the endowment fund.  Private contributions may also be deposited in the endowment fund.  The council shall appoint an unpaid investment advisory committee of seven members which shall have general supervision over the investment and reinvestment of funds in the endowment fund.  The council shall annually, on or before January 31, file with the secretary of administration and finance a report listing all funds in the endowment fund and all investments held by the fund.

                 SECTION 5.   The Massachusetts historical commission, as created by section 26 of chapter 9 of the General Laws, is hereby authorized and directed to establish and maintain a Massachusetts historical preservation endowment fund.  Interest earned through the investment of funds in said endowment fund shall be expended solely for the purpose of preserving and maintaining historical buildings, properties, and landmarks.  There shall be no expenditure of funds directly from the excise imposed in section 2 of chapter 64Hsection 4 of chapter 62 and deposited in the endowment fund.  Private contributions may also be deposited in the endowment fund.  The commission shall appoint an unpaid investment advisory committee of seven members which shall have the general supervision over the investment and reinvestment of funds in the endowment fund.  The commission shall annually, on or before January 31, file with the secretary of administration and finance a report listing all funds in the endowment fund and all investments held by the fund.

                 SECTION 6.   The Massachusetts board of library commissioners, as created by section 14 of chapter 78 of the General Laws, is hereby authorized and directed to establish and maintain a public libraries endowment fund.  Interest earned through the investment of funds in said endowment fund shall be expended solely for the purpose of improving public libraries, the regional library systems, and the Massachusetts library and information network.  There shall be no expenditure of funds derived directly from the excise impose in section 2 of chapter 64Hsection 4 of chapter 62 and deposited in the endowment fund.  Private contributions may also be deposited in the endowment fund.  The board of library commissioners shall appoint an unpaid investment advisory committee of seven members which shall have general supervision over the investment and reinvestment of funds in the endowment fund.  The board of library commissioners shall annually, on or before January 31, file with the secretary of administration and finance a report listing all the funds in the endowment fund and all investments held by the fund.

                 SECTION 7.   Chapter 64H 62 of the General Laws, as appearing in the 2002 2008 Official Edition, is hereby amended in section 2 4 by striking out the word number “five5.3” in line 10 and inserting in place thereof the wordnumber:- six”5.5”.

                 SECTION 8.   One-sixth Two-tenths of the excise imposed in section 2 of chapter 64Hsection 4 of chapter 62 shall be appropriated entirely and solely for the purposes of public education, the arts, humanities, historical preservation, and public libraries in accordance with this section.  The sum of all revenues from Two-tenths one-sixth of said excise shall be apportioned annually as follows:

                 (a)    not more than 62.5 percent of said amount shall be deposited in the public school improvement fund established by section 1 of this act;

                 (b)   not more than 25 percent of said amount shall be deposited in the public higher education improvement fund established by section 2 of this act;

                 (c)    not less than 5 percent of said amount shall be deposited in the public higher education endowment fund established by section 3 of this act;

                 (d)   not less than 2 percent and not more than 3 percent of said amount shall be appropriated to the Massachusetts cultural council, as created by section 52 of chapter 10 of the General Laws; provided, however, that said amount shall be no less than the amount appropriated in the same fiscal year to said council from the state arts lottery fund;

                 (e)    not less than 2.5 percent of said amount shall be deposited in the Massachusetts cultural endowment fund established by section 4 of this act;

                 (f)     not less than one-half percent shall be appropriated to the Massachusetts historical commission for the purposes of preserving and maintaining historic buildings, properties, and landmarks; provided, however, that one-half of said amount shall be deposited in the Massachusetts historical preservation endowment fund established by section 5 of this act.