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Lawmakers reject ‘high-handed’ school bond fee proposed by state endowment board

The Senate State Affairs Committee has voted unanimously to reject a rule proposed by the Endowment Fund Investment Board to charge school districts a fee of up to $1,000 and up to 5 basis points for guarantees the board issues for districts’ school bond issues. The board originally proposed a fee of $100 and 2 basis points, and all the testimony it got on that administrative rule over the summer was negative; before that, no such fees were charged. The board then adjusted the rule to allow fees of up to $1,000 and up to 5 basis points. Karen Echeverria, head of the Idaho School Boards Association, testified against the rule to the committee, speaking on behalf of “education stakeholders” including her organization, the Idaho Association of School Administrators, the Idaho Education Association and the Idaho PTA.

Earlier, at a state Land Board meeting, state Superintendent of Schools Tom Luna expressed strong opposition to the rule, saying school districts need their funds more now than ever, and shouldn’t be paying such fees to another state agency. No Idaho school district has ever defaulted on a bond; the EFIB has never denied an application for a guarantee; and its investment manager, Larry Johnson, told the State Affairs Committee the guarantees are low-risk.

Senate Majority Leader Bart Davis, R-Idaho Falls, said the change in the rules to up the fees after even the lower level drew objections “seems to me a bit high-handed.” Senate Minority Leader Kate Kelly, D-Boise, questioned whether the endowment board has the authority to charge varying fees, rather than a fixed amount, without going back through the administrative rules process. “I have a big concern about the process that was followed in this particular case - about this particular board giving itself the authority to adjust the fee in policy,” Kelly said. “I think the process was flawed.”

Senate Assistant Majority Leader Joe Stegner, R-Lewiston, said he hoped lawmakers’ rejection of the rule would prompt the board to work with the education community to develop a new rule all could support. Stegner made the motion to reject the rule; it passed unanimously. Echeverria said after the hearing that she shared Stegner’s hope. Johnson said he needs to think about how that process would work.


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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