Idaho’s state Land Board has voted 4-1 to keep the endowment distribution for public schools next year at $31.3 million, the same level as this year, with only state Schools Superintendent Tom Luna objecting; you can read my full story here at spokesman.com. Luna made an impassioned plea to raise the payout for schools to $37 million, saying the number of students has risen but the endowment distribution has been frozen at the $31 million level for the past four years.
Larry Johnson, investment manager for the Endowment Fund Investment Board, presented a detailed analysis of Luna’s proposal, and said the endowment board still recommends sticking with the $31 million figure, to keep growing reserves in the school fund toward the goal of covering five years of payments, in order to weather ups and downs in land and fund investments in the future. He said the endowment board makes distribution decisions based on the financial condition of the fund - not on the beneficiaries' requests.
Luna offered a compromise proposal to boost the payment to schools next year to $34 million, saying that way, the reserve fund wouldn’t fall – it would grow by $3 million, and remain at 3.9 years of payments. Gov. Butch Otter seconded Luna’s motion “out of respect” so it didn’t die for lack of a second, but voted against it.
Luna presented charts and tables showing that the reserve fund has grown by 900 percent since 2001, while the payout to schools has dropped 30 percent from that year's level. But Johnson told the board, “In '01 and '02, we were distributing more than the assets could support, so at some point there had to be reductions.”
Gov. Otter said, “I can’t discuss this in a vacuum, without considering our goal and … our confidence in sort of our safety level, and that’s at five years. So as quick as I can get that to five years, then I can be a lot more generous.” He told Luna, “But I want to tell you I really appreciate the efforts that you and your department have put into it, because it is impressive. And maybe it does beg for change, but not exception.”
After voting down Luna’s substitute motion, the board approved the investment board recommendation with just Luna objecting, but at Attorney General Lawrence Wasden’s urging, it added two additional provisions, which Luna backed: It called on the investment board to complete a review of its investment and distribution strategy for the endowments, including the five-year target for the reserves; and it asked state Lands Director Tom Schultz to conduct a similar review for the lands portion of the state endowment, including reviewing strategies such as moving into commercial property investments in addition to the traditional timber and grazing land.