School-Funding Package Approved Changes Would Give State More Latitude In Managing Endowment Fund, State Lands

The Idaho Legislature took the first step on Tuesday toward pumping more cash into schools, dramatically revising the way the state manages its education endowment fund and lands.

“Education never quite has enough money,” Sen. Judi Danielson, R-Council, said. “This is one avenue that is absolutely painless.”

But a handful of critics questioned that assessment, warning that the House-passed legislative package - given overwhelming final approval in the Senate - could lead to sweetheart land leases or a wholesale sell-off of state-owned range.

Advocates of the plan discounted such drastic action, maintaining voters would rebel against any policy makers engaging in such maneuvers.

In a series of votes, the Senate approved two constitutional amendments, one change in state law and a petition asking Congress to modify the century-old bill admitting Idaho to the union.

Voters must approve the constitutional amendments in November and Congress must act before the enabling bill takes effect in mid-2000. It was unclear what would happen to the plan if voters defeated one of the amendments or Congress failed to act.

The point of the package is to provide officials more options for investing the $665 million endowment fund and managing 2.5 million acres of timber and range worth an estimated $3 billion.

“We have limited our ability to invest as a prudent investor would,” said Sen. Hal Bunderson, R-Meridian.

He said earnings on the endowment under existing management constraints are running about 3 percent a year. Increasing that by just a percentage point would generate more than $30 million more that could be funneled to education.

Had the same options been open for endowment investment that have been available to state pension fund managers, officials estimate the endowment fund balance would be nearly $200 million higher.

Included in the strategy, developed by a task force appointed by Gov. Phil Batt, is authority to create a special Land Bank Fund that would allow the state to sell off existing property and then buy more profitable land. Currently, the state Land Board can sell endowment land, but all proceeds must be deposited into the endowment fund and can only be invested.

Over the years, the state has sold about 1 million acres of endowment land for some $60 million.

The primary concern of skeptical senators was one of the task force’s tenets that underperforming assets should be jettisoned. They expressed concern that hundreds of thousands of acres of range land now leased to ranchers for grazing could be sold off - and removed from public access - so commercial property in downtown Boise or some other city can be bought.

“I just don’t want us to start selling off state lands,” said Sen. Gary Schroeder, R-Moscow.

“There are some who would like to sell off all our state lands and invest the money in the stock market.”

But Danielson pointed out that any sell-off is limited to 64,000 acres a year by the state Constitution, and no state official would dare incur the public wrath such a move would engender.

“It will never happen,” she said.