With no debate, the state Land Board has unanimously approved distributions from the state endowment to its beneficiaries next year – the largest of which is the state’s public schools – that reflect a 12 percent increase. Public schools will get $36,724,800 in fiscal year 2017, up from the $32.8 million they’re due in the current year, fiscal year 2016. That’s a 12.1 percent, $3.97 million increase. Total endowment distributions to all beneficiaries will hit $63.2 million, an 11.8 percent increase from the current year’s $56.5 million level.
Increases for the other endowment beneficiaries will vary from zero for State Hospital South to 23.2 percent for the “charitable institutions” endowment, which benefits Idaho State University, Juvenile Corrections, State Hospital North, the Veterans Hospital, and the School for the Deaf & Blind. The differences are based on earnings in each endowment; each has specific assets. Six of the eight endowments also will transfer excess earnings to their permanent funds, with the largest $18.3 million in the charitable institutions endowment; public schools wouldn’t transfer anything to the permanent fund.
Today’s quick, debate-free vote was a contrast to some past years under former state schools Superintendent Tom Luna, who fought for boosts in the endowment distributions to schools when they were being hard-hit with state budget cuts. “You usually aren’t going to get much of an argument when there’s an increase,” Gov. Butch Otter said with a smile after the meeting; he chairs the Land Board. “With roughly $4 million bucks increase, that’s a pretty good percentage, and we’re also comfortable with the fact that it’s sustainable.”
Current schools Superintendent Sherri Ybarra joined in the unanimous vote and made no comments during the Land Board meeting. In 2010, a divided state Land Board backed Luna’s move to give schools an extra, one-time $22 million boost from the endowment fund. A year later, Luna was the only dissenter when no increase was approved; in 2013 he was outvoted 4-1 when he sought an extra $6 million for schools. Fund managers opposed the moves, saying it was more prudent to continue building reserves in the school fund to enable better payouts over the long term.
Otter said of the 2010 move, “It was a one-time deal, and we knew it was a one-time deal. I think it was just sort of a sign of the times, and not only that, it was Tom’s job. I suspect as Sherri gets a little bit more familiar, a little bit more comfortable, she, too will step forward and say, ‘Hey, why have I got all this in savings when I’ve got needs in my classrooms?’”
Otter said the 2010 boost, which came amid four years of otherwise frozen endowment payouts to the schools, was designed to “limit the potential damage we were doing to public education.”
The distributions for next year didn’t increase due to the auction of dozens of state-owned lake cabin sites; proceeds from those sales were deposited into the permanent fund. Larry Johnson, endowment investment manager, said recommended distributions are calculated based only on “sustainable cash income, so it would include lease revenues from cabin sites that year, but not any benefit from the sales.” The benefit from the sales would come in future years’ earnings and distributions. The recommendations from the Endowment Fund Investment Board were based on returns from the state’s permanent endowment fund of 3.03 percent, and land asset earnings of 3.85 percent, for combined earnings of 3.4 percent.
The state is planning additional cabin-site auctions, with an auction of 38 currently leased Priest Lake cabin sites set for Aug. 28 in Coeur d’Alene, and another for nine currently unleased lots at Priest Lake set for Sept. 26. In November, the state is planning to auction 25 cabin sites at Payette Lake.