BOISE – Political fireworks flew at the Idaho state Land Board last week, as, for the second time in five years, state schools Superintendent Tom Luna sought to boost the payout to schools from the state’s endowment beyond the recommendation of the investment board that oversees the endowment.
The Endowment Fund Investment Board is recommending fiscal year 2015 distribution increases to seven of the eight endowment beneficiaries but not to the largest: public schools. Instead, it’s proposing holding schools at $31 million.
Since the 2010 board decision to give schools a one-time additional $22 million distribution, the reserve fund for the schools hasn’t met the goal of holding five years worth of payments; it’s now just over three years and dropped to two years after the 2010 extra payment.
But Luna said the recommendation means departing from the board’s policy of distributing 5 percent of the three-year rolling average of the endowment to the schools each year and would drop schools next year to about a 4 percent distribution. Aside from the $22 million one-time boost, schools have been held at the $31 million level for five years now, Luna said, even as the number of public school students has grown by 15,000.
He argued that that means the balance has tipped between accommodating the needs of current and future public school students, and current students will be shorted.
“We’ve never had to reduce the balance of the reserve in order to meet distributions,” Luna argued. “And we just went through the worst recession that I think we’ve seen. And now we see a recovery. So I would argue that we should distribute the 5 percent of the rolling three-year average, per our policy. We still increase the amount in reserve in the years going forward. … It would mean an increase in the distribution of about $5.6 million.”
Luna said school districts are suffering now. “I guess what concerns me is that while we’re building our reserve, school districts are depleting theirs, and … many of them have no reserves left at all. They literally go from state distribution to state distribution.”
Luna made a motion to grant the increase, but it died for lack of a second. Attorney General Lawrence Wasden said, “A number of years ago, we addressed this issue, and really, it was part of a political ambush that was unleashed on the Land Board. And at that time my view was that we needed to send this matter to the Endowment Fund Investment Board for their analysis and report back to us.” Wasden said for the Land Board to exercise its fiduciary duty to the endowment, as required by the state constitution, the board should get the investment board’s input before making such a decision. He moved to delay a decision for a month and send Luna’s letter to the endowment board.
Secretary of State Ben Ysursa recalled “the way we agonized over the $22 million,” and noted that the 2010 extra payment was actually his motion; Luna had wanted more than twice that amount. “I reiterated that was a one-time deviation from the recommendation of the endowment fund,” Ysursa said. “That term ‘one-time’ continues to stick in my mind. But I think the superintendent has raised some good points.” He noted that the 2010 decision was a tense 3-2 vote.
Luna responded, “If I understand the motion, maybe not all the rhetoric that went with it, it’s that we will approve the distributions for all but public schools, and public schools we will set a distribution at our September meeting.” Wasden responded, “That is correct.”
Luna said he’s proposing sticking to the state policy regarding the distribution level, not violating it. But Ysursa noted that there’s also a policy targeting five years’ worth of distributions as the reserve level. “We’ve got two competing policies is what’s going on,” he said.
The board then voted unanimously for Wasden’s motion, putting off the decision on the public school distribution to its September meeting.
Boehner in Boise
U.S. House Speaker John Boehner is headed to Idaho for a campaign fundraiser for 2nd District U.S. Rep Mike Simpson on Monday, with plans calling for a $50-a-person lunch at the Boise Centre, plus a pricier private reception. The luncheon will begin at 11:30 a.m. and tickets are being sold through Simpson’s campaign; Boehner, Simpson and Idaho Gov. Butch Otter are scheduled to speak. Simpson faces a GOP primary challenge from Idaho Falls attorney Bryan Smith, who’s backed by the national group the Club for Growth.