State Schools Supt. Tom Luna was prepared to go to the mat with his fellow state Land Board members this morning to try to get an additional one-time, $30 million payout from the state endowment to ease Idaho schools through budget cuts next year, but he withdrew the proposal this morning due to the oncoming federal stimulus money. Luna told the Land Board, “I submitted a budget to the Legislature identifying approximately $62 million from the public education fund,” which he said was the most he thought the state could cut in 2010 “without any long-term effect to the gains we have been making with student achievement. I also made it clear that any more cuts, we would need to look at other sources of revenue.” Then, it began to appear that schools could face up to $130 million in cuts next year. “Last week I requested this item be put on the agenda,” he said, for a “one-time distribution from the earnings reserve.”
Idaho’s endowment fund earnings go to schools and other beneficiaries, such as state universities, but a portion is placed into an earnings reserve fund, to allow full payouts in years when investment returns fall short. Luna said by the end of this fiscal year, the earnings reserve fund will have enough for three years’ payouts. “My question is, is it necessary to carry $90 million or three years’ worth of reserves, or wouldn’t two years be adequate under these circumstances, and do a $30 million one-time distribution?” He said it’s part of “looking under every rock” to find money for schools.
However, Luna’s fellow Land Board members raised questions about the plan, even as he sought to withdraw it. Secretary of State Ben Ysursa said, “Any sort of request like this would have to be vetted first in front of the endowment investment board.” Attorney General Lawrence Wasden said, “We have a fiduciary responsibility here … taking a dollar today inhibits our ability to distribute that dollar in the future.” Gov. Butch Otter asked Luna if the schools would then pay back the endowment fund in better times, since the fund is experiencing big losses now, including another 5 percent loss in January. Then he told Luna, “I’m just jabbing you.”
Luna said he’s “pretty confident” that Idaho will receive $245 million over two years for school budget stabilization. “I’m pretty confident we have the numbers nailed down, but what we don’t have is the timing and the flexibility,” he said. At this point, he said, it appears that there’s no need for cuts in public schools at all next year - Idaho should be able to keep schools at the current year’s level. “I don’t see any increases in the 2010 budget - the goal is, and I think we’d be truly tickled after all we’ve been through, if we could end up with a budget equal to ‘09. That would be a good thing for education.”