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Luna proposes tapping Idaho school endowment

Thu., Jan. 28, 2010, 3:27 p.m.

BOISE - Idaho state schools Superintendent Tom Luna on Thursday proposed dipping into a state endowment reserve fund for $52.8 million to help balance next year’s school budget - a proposal that surprised and pleased lawmakers who are facing the prospect of making big cuts in education.

“I give him credit for coming up with it,” said Senate Finance Chairman Dean Cameron, R-Rupert. “Those are the kind of ideas we need in order to balance this budget.”

Sen. Jim Hammond, R-Post Falls, a former school principal, said, “I thought it was a great plan. … We don’t need three years of reserves, we need one year of reserves. I quite frankly am delighted.”

The fund - the public school earnings reserve fund - can’t be tapped without a vote of the state Land Board; Luna is one of five members of that board. The others - the governor, secretary of state, attorney general and state controller - all indicated Thursday they need more information before deciding.

“It’s balancing the near term with the long term, that’s the question,” said Idaho Secretary of State Ben Ysursa. “I have not made up my mind on it; I’m still looking at the pros and cons. But I do understand his position - he’s looking under every rock he can to find money for schools, and that’s his role as superintendent.”

Luna said his proposal would leave $30 million in the reserve fund at the end of next year, instead of $90 million. Schools still would get their regular $31 million distribution from the fund next year.

“This endowment was created to benefit Idaho’s public schools, and as state superintendent and a member of the Land Board, I believe it is our responsibility to minimize the impact on our beneficiaries – the students of Idaho – during this tough economic time,” Luna declared. “If now is not the time, then when?”

The earnings reserve fund, set up in 1999, holds proceeds from timber sales on state school endowment land, along with investment earnings on the state’s permanent school endowment fund; annual endowment distributions to schools come out of the fund. Last year, the fund collected $17 million from timber sales and $16 million from investment earnings.

Luna also proposed drawing on two other funds in the state Department of Education for $3.3 million from the driver training account and $2.2 million from the Safe and Drug-Free Schools account. And even with the combined $58.3 million one-time budget boost the moves would bring schools, he called for $25.2 million worth of specific education cuts next year, plus an additional $51 million in across-the-board cuts in an array of areas if that’s also needed to make the budget balance.

All those moves combined would bring Idaho’s school funding next year up to the level Gov. Butch Otter has proposed - which is a 1.2 percent cut from this year’s level in state general funds, or $14.3 million; and a 7.7 percent cut overall, or $135 million.

“I will not sugar-coat this,” Luna told lawmakers. “We must be honest with Idaho’s parents and patrons. These cuts will be painful, and done wrong, will do significant damage to student achievement.”

He added, “I didn’t run for this office to cut funding for education, you didn’t run for this office to cut funding to education. There’s not one person in this room that wants to be in this situation.”

The six specific cuts Luna would make:

—- $6.1 million: Freezing experience movement on the teacher salary grid for a second year in a row. That means teachers wouldn’t get raises for additional experience.

—- $2 million from eliminating an early retirement incentive program.

—- $1.4 million from cutting funding for transportation for field trips.

—- $1.6 million from reducing classroom supplies funding from $300 per teacher per year to $200.

—- $5 million from eliminating the 99 percent average daily attendance protection for school districts, a funding mechanism that protects districts whose fall enrollment falls short of projections. Luna said he’d only support the move if districts get additional flexibility to manage declining enrollment.

—- $9.1 million from technology and textbooks purchases, giving districts the flexibility to spend remaining funds on either.

Luna said he doesn’t support cutting any deeper than that, but recognizes that another $51 million would be needed to meet the governor’s proposed budget for next year. If that must be done, he said, he recommends cutting remaining programs across the board, from state-paid salaries and benefits to transportation. A 3.74 percent across-the-board cut would add up to $51 million.

Sherri Wood, head of the Idaho Education Association, applauded Luna’s move to find new revenues, but said his proposed cuts would hurt. “I think that the cuts that we made last year hurt schools - we have fewer teachers teaching, we have fewer programs, we have fewer counselors, we have larger class sizes,” she said. “Any cuts to public schools will affect kids.”

Cameron said rather than directing across-the-board cuts, lawmakers may prefer to give local school districts more flexibility on what to cut.

Rep. Shirley Ringo, D-Moscow, said that’s what her local school superintendents want. “This could be a year when maybe we don’t want to tie them down that much,” she said.

Education groups also have been pushing to avoid mid-year cuts during the current school year - something Otter’s already proposed - and Cameron said he’ll be working to accomplish that, and delay the cuts into next year. “It doesn’t make any sense to hold onto reserves or stimulus dollars and hurt ‘em in 2010,” he said.

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