The Idaho Constitution mandates that losses suffered by the Public School Endowment Fund (the “Fund”) be reimbursed by legislative appropriation. Article 9, § 3 states:
“Public school fund to remain intact.— The public school fund of the state shall forever remain inviolate and intact; the interest thereon only shall be expended in the maintenance of the schools of the state, and shall be distributed among the several counties and school districts of the state in such manner as may be prescribed by law. No part of this fund, principal or interest, shall ever be transferred to any other fund, or used or appropriated except as herein provided. The state treasurer shall be the custodian of this fund, and the same shall be securely and profitably invested as may be by law directed. The state shall supply all losses thereof that may in any manner occur.”
By this appeal we are asked to determine whether the legislative implementation of an accounting procedure for computing the extent of capital losses, if any, through the accounting method set forth in I.C. § 57-724, passes constitutional muster 1.
*641The Fund is managed and invested by the Endowment Fund Investment Board which invests a portion of the funds in authorized corporate stocks, bonds, and debentures.
This action was originally filed in the U.S. District Court for the State of Idaho. The District Court’s dismissal of the complaint upon the abstension doctrine was affirmed by the Ninth Circuit Court of Appeals. Thereafter plaintiff filed her complaint in state district court, challenging the offset procedure dictated by I.C. § 57-724. The complaint was dismissed without prejudice by the district court on April 30, 1979, for lack of a justiciable controversy. In dismissing the complaint, the district court stated: “If the legislature fails or declines to execute its duties by accomplishing the purpose and intent of I.C. § 57-724, following July 1, 1979, then the plaintiff may renew her action.”
The endowment fund investment board issued copies of its audit report and financial statements to each member of the legislature on January 4,1980. The audit report indicated that there had been a $1,359,000 gain to the public school fund, and thus there were no losses to be made up. The auditors, for purposes of ascertaining whether there was a gain or loss to the fund, used the procedure provided in I.C. § 57-724. The treasurer asserts that if proper and constitutional accounting methods were used, there are losses to be made up of $7,009,385.60 principal and $6,431,-593.72 interest.
Following adjournment of the 1980 session of the legislature, respondent filed a supplemental complaint seeking an order requiring the board of examiners to allow the claims and requiring the legislature to reimburse the fund. The state board of examiners and the legislature filed a motion to dismiss, asserting that they had complied with the court’s earlier order and that the complaint failed to state a claim. The district court denied appellants’ motion to dismiss, granted a partial summary judgment to the respondent, denied appellants’ motion to reconsider and this appeal followed.
The specific issue on appeal is whether, as contended by the Treasurer and held by the trial court, the loss on each individual security trade must be reimbursed, or whether it is constitutionally proper, as per I.C. § 57-724, and as contended by the Board and the appellants, to offset capital gains against capital losses to determine whether there has been either a net loss or a net gain during the four-year accounting period.
Article 9, § 3 of the Idaho Constitution requiring the legislature to supply all losses to the Fund is not self-executing — rather it requires implementing legislation. In Moon v. Investment Board, 96 Idaho 140,143, 525 P.2d 335, 337 (1974), we stated:
“Implementation of constitutional principles is an appropriate function of legislation, and unless such implementing legislation is clearly in violation of the constitutional principle, it is a valid exercise of the legislative power .... ”
The question becomes, is the method of computing losses as contained in I.C. § 57— 724 in violation of a constitutional provision? We hold that it is not and reverse the judgment of the district court.
The public school endowment fund is a trust, the principal of which is derived primarily from the sale or lease of lands designated exclusively for school purposes. Idaho’s admission to the federal Union was conditioned upon the creation of a permanent school fund. Idaho accepted this condition of admission to the union by enacting *642Art. 9, § 3, of the Idaho Constitution. Duchesne County v. State Tax Comm’n, 104 Utah 365, 140 P.2d 335 (Utah 1943), held that an agreement whereby an Admission Act makes a gift to the State of certain government lands and makes the proceeds from the sale of such lands a permanent fund, the interest only of which is to be expended for support of common schools, and which gift is accepted by a reciprocal provision of the state constitution creating the states’ school fund, amounts to the creation of an express trust of which the state is trustee and guarantor of the trust estate against loss.
The Fund is a trust of the most sacred and highest order. See State v. Peterson, 61 Idaho 50, 97 P.2d 603 (1939); I.C. § 57-715. In United States v. Fenton, 27 F.Supp. 816 (D.Idaho 1939), the court stated:
“The express purpose of the Admission Act and the State Constitution is to protect and hold inviolate and intact the fund from the Acts of the Legislature or acts or failures of the officers of the State.” 27 F.Supp. at 818.
In Moon v. Investment Board, supra, we quoted from the proceedings and debates of the Idaho Constitutional Convention (1889), Vol. I, at 647, as instructive in ascertaining the intent of the Constitutional Convention in drafting article 9, § 3, as follows:
“Mr. McCONNELL: Mr. Chairman, I think no fund is more sacred than the school fund, and perhaps there is no other fund so sacred; it should be guarded in every manner possible, and by having this provision in here, the children will always be made sure there will be that much money to their credit, and we will have that much at stake in our schools. But if there is no provision for making this fund good in every way, it may be squandered, and the first thing we know our school fund will be so small that we can only maintain the schools by local taxation. I think the legislature can provide for making good any losses which may occur. They will probably be more careful in making investments if it is known that the state has to make it good.”
We held that this indicated that the Constitutional Convention intended the legislative branch of the government should have control over the fund and as an incentive to making sound investments, the convention provided that the legislature would have to make good all losses. A logical and common sense reading of the method used to compute losses as codified in I.C. § 57-724 leads us to the conclusion that this method does not violate the constitutional mandate. To require the legislature to make up losses incurred on each security sale might well act to the detriment of the school children of Idaho. It would unduly restrict the Endowment Fund Investment Board.
For example, the Fund frequently holds bonds, which if held to maturity would yield a certain profit, but which if sold before maturity at a loss, and with the proceeds elsewhere reinvested, would yield a higher long range profit. This flexibility and opportunity for higher profit would likely not be exercised if the legislature would be forced to make up the loss of the sale of the bonds.
The result contended for by the treasurer would have us interpret the terms “capital gains” and “interest” as being synonymous. Noting that the constitution provides the “interest thereon only shall be expended in the maintenance of the schools . . .,” she argues that to offset capital gains and capital losses would be to in effect spend the gains other than for school purposes. However, the constitution does not specify how losses shall be computed. It does not define capital gains and interest as being synonymous terms and we decline to do so.
We have reviewed the decision in State ex rel. Bottcher v. Bartling, 149 Neb. 491, 31 N.W.2d 422 (1948), relied on by the district court and respondents. There is a significant difference in the wording of the Nebraska Constitution interpreted therein and the wording of the Idaho Constitution.
With regard to the public school fund, the Nebraska Constitution makes no distinction between interest income and capital gain, but simply provides that all
*643“income arising therefrom shall be faithfully applied to the specific objects of the original grants or appropriations. 31 N.W.2d at 426. [Emphasis added.].”
In contrast, the Idaho Constitution provides that the portion of income represented by interest is to be spent on the maintenance of the schools. The Bartling decision merely stands for the proposition that capital gains are income to a public school fund and is not germain to interpreting the effect of the very different language of the Idaho Constitution.
Accordingly, we hold that I.C. § 57-724, permitting the offsetting of capital gains against capital losses at the end of a four-year accounting period, is in keeping with the constitutional mandate of Art. 9, § 3, of the Idaho Constitution. Under I.C. § 57-724, the net capital gains at the end of each four-year period become part of principal and then become inviolate.
It is to be noted that the legislative duty to offset losses occasioned by a breach of trust, or other mechanisms not placed in issue by the appeal, are not addressed by this decision. The requirement of Art. 9, § 3, is that the Public School Endowment Fund be kept inviolate. The accounting procedure adopted by the legislature in I.C. § 57-724 satisfies that mandate.
The judgment is reversed.
DONALDSON, C.J., and SHEPARD and BAKES, JJ., concur.. I.C. § 57-724. “Distribution of income from investments — Determination of net capital gains or losses. — The board shall distribute the income from the investments or securities in accordance with this act. For the purposes of this act, income shall not include capital gains derived from the sale of investments or securities. In computing net capital gains or net capital losses the board shall use the marketable value of the securities as of the effective date hereof [March 25, 1969] for its computation on July 1, 1971, and shall thereafter use the difference between acquisition cost of securities and actual proceeds received from the *641sale of securities as the determinate of the gain or loss. Gains or losses shall be determined for four (4) year periods, commencing on July 1, 1975. At the end of each such four (4) year period, the net amount of losses on the sale of securities, not offset by gains on the sale of securities during such period shall be computed and such net losses shall be made up from an appropriation from the general fund, and shall be credited to the appropriate fund. All net income or net losses from the investments or securities shall be distributed to each participating fund in the same rates as each fund’s average daily balance bears to the total average daily balance of all participating funds, provided, losses of the public school fund shall be maintained separate from all other funds as required by section 3 of article 9 of the Idaho Constitution.”