Idaho’s state Land Board has voted unanimously in favor of recommendations for distributions to the state endowment beneficiaries – the largest of which is public schools – that include only a small increase for schools. In fiscal year 2016, public schools would receive a $1.5 million increase in its endowment payment to $32.8 million. That’s a 4.7 percent increase; the state’s other, smaller endowments would see larger, 8.7 percent increases, except for one that would stay even, based on its reserve levels. Higher earnings in the other funds also would lead to a transfer from reserves to the permanent fund of $38.6 million.
Larry Johnson, investment manager for the state endowment fund, said if Idaho were to distribute its target of 5 percent of the permanent fund to schools in 2016, that’d be $40 million. But that level would cut too far into reserves, he said, which are targeted to cover five years of payouts.
New forecasts, however, show schools likely would be in for larger increases in payouts in subsequent years, Johnson told the Land Board. In fiscal year 2017, the public school payout likely would rise to $39 million, and in fiscal 2018, to $44 million. “I think the outlook going forward is very positive,” Johnson said. Among factors leading to that positive outlook are “the amount of timber that’s been pre-sold that we know is going to flow into the public school.”
State schools Superintendent Tom Luna questioned whether the state would ever get to those higher payouts, given its policy of having five years of reserves on hand to cover payouts of 5 percent of the permanent fund each year. If the permanent fund keeps growing, it’d be harder and harder to get up to five years’ worth of reserves, he noted, because that 5 percent figure would keep rising. Johnson said the distributions still would rise each year, though, to one-fifth of whatever is in the reserve at that point.
The point of the five years of reserves, he said, is that the payouts to the beneficiaries – including schools – would continue without reduction even in years when earnings are off. “We believe this is a conservative forecast,” Johnson said. Kevin Richert of Idaho Education News has a full report here.