South Dakota's $10 billion in state assets tumbled in the past fiscal year, losing 8.65 percent or $692 million.

Not bad, according to the state's Legislative Executive Board, which granted the state's chief investment officer a whopping $147,178 bonus.

Where did the system get so off-track that underperformance is rewarded?

While the state searches for highway dollars and debates endlessly over school funding, state investment officer Matt Clark was granted the bonus despite the down year.

"You have to look at the long term, not just a single year," said Rep. Larry Tidemann, who is chairman of the executive board.

We are looking at the long term. Last year, Clark was given a $250,000 bonus after investments showed a 21 percent return. Not bad, and a bonus may be merited in light of those returns.

It's common for the South Dakota Investment Office top officer to receive a bonus when the state's investments are performing above expectations. Although we cringe trying to understand anyone in South Dakota receiving a $250,000 bonus, that's the kind of money, they say, it takes to keep the top people on board.

But the state shouldn't be running on a business model that rewards underperformance. In good years, the legislature gives outlandish bonuses based on successful investments; in a bad year, the legislature shouldn't. Doing otherwise is a recipe to guarantee mediocrity.

The state investment officer pulls in about $350,000 a year making the position the highest paid in the state. In a state where the average salaries are low compared with much of the nation, we question the legislator's wisdom in granting such a bonus.

Others in the state investment office receive raises of up to 20 percent until they get into the $150,000-plus salary range. The reason? They'd get more to work in the private sector.

We're not buying it. South Dakota wages are low across the board, and the state shouldn't be subsidizing one profession over others with high pay. If the state is interested in keeping the best and brightest, it should be finding ways to raise pay in all occupations.

Meanwhile, school districts are struggling to find teachers in South Dakota, the state with the distinction of being the worst for teacher pay. State highway funding is in shambles. Legislators are studying ways to save the highways meaning, find more dollars from Joe and Jane Taxpayer.

Apparently, it's too easy for the state legislature to hand out a big bonus in a down year. Taxpayers may remember that when the state is looking for road, school, healthcare funding and the state's many other needs in the 2009 Legislative session.