Officials of the South Dakota Retirement System are looking into whether state law allows them to be involved in a letter urging the system's 70,000 members to vote against two ballot measures in the November general election.

The Retirement System's Board of Trustees last month went on record as opposing Initiated Measure 9, which would ban a common stock transaction, and Initiated Measure 10, which would make changes in campaign donation laws, restrict some lobbying and require details of state contracts to be placed on the Internet.

During a telephone conference meeting, Thursday, the board voted to support distribution of two documents dealing with the two ballot measures, subject to getting Attorney General Larry Long's opinion on whether such action would be legal under existing law.

State law prohibits the state, state agencies and the governing body of any county, city or other local government from spending public funds to influence elections for public offices and ballot issues.

However, that existing law also makes it clear it does not limit the freedom of speech of any government officer or employee. And it specifies that state and local governments can present factual information to educate voters on a ballot question.

The Retirement System Board approved the mailing of a newsletter that includes the attorney general's official explanation of Initiated Measures 9 and 10, along with brief statements written by those supporting and opposing each proposal.

Board members and staff said they are sure the newsletter complies with state law because it presents only facts to educate voters.

But they are less sure about the legality of mailing a letter signed by Board Chairman Elmer Brinkman and Executive Director Rob Wylie. That letter urges those covered by the Retirement System to vote against the two ballot measures because the proposed laws could hurt the system.

Wylie said the Retirement System would not spend any money on the letter because it would be prepared, printed and mailed by campaign committees that already exist to oppose the two ballot measures.

"The design of the letter is that it is from the chair and the executive director as opposed to the board. We've worked to separate all that activity away from the staff," Wylie said.

But Wylie noted that some people might interpret the law as barring the board from even discussing the issue.

State budget director Jason Dilges, a member of the board, said state government has received a lot of questions from state boards and commissions on what actions they can take on ballot measures.

"Essentially, we're permitted to present factual information simply to educate the voters, but we can't seek to influence the outcome," Dilges said.

Dilges said the attorney general's opinion is needed to determine whether the letter from Wylie and Brinkman can be sent.

Wylie said the Retirement System has a financial responsibility to its members, and that responsibility includes informing those members and taking positions to protect the system.

The ballot explanation written by the attorney general says Initiated Measure 9 would outlaw a common stock market transaction called a short sale, in which an investor who believes a stock is overpriced will borrow it from the owner, sell it and buy it later at a lower price to repay the loan.

The investor makes money in such a case if the price has fallen. If the stock price increases, the investor must repurchase it at the higher price to repay the loan and will lose money.

Supporters of the measure argue it does not end short selling, but just requires that stock must be delivered within three business days when sold.

The proposed letter from Wylie and Brinkman said Measure 9 would reduce the Retirement System's earnings.

The letter also said Initiated Measure 10 would hamper the system's ability to explain to members how a legislative bill might harm the Retirement System. The ballot measure also would prohibit system officials from seeking out members of the Legislature to talk about such bills during a legislative session, the letter said.

The attorney general's ballot explanation said both ballot measures are likely to be challenged in court and could be found to be unconstitutional or pre-empted by federal law.

Dena Espenscheid, a coordinator of the Yes on 10 campaign, said the measure's provisions would allow Retirement System officials to testify in legislative hearings and to lobby lawmakers. That would apply to those responsible for assessing the impact of such proposals, she said.

"It is fear-mongering to say 'Well, we wouldn't be able to communicate with the Legislature.' Of course they could because they have a duty to the citizens of South Dakota to do that. We made sure they still could," Espenscheid said. "What we don't want to see is them hiring tax-funded lobbyists to do the work for them."

Initiated Measure 10 is opposed by about four dozen organizations, including the state Republican and Democratic parties.