Ybarra on endowment $$ boost for schools: ‘Pinch me, is it real?’

Here’s my full story from spokesman.com :

BOISE - Idaho’s public schools will get a $10 million boost in funding next year from the state endowment, thanks to strong earnings in 2014 and 2015.

The state Land Board unanimously approved the 28.1 percent increase in the distribution to public schools at its meeting Tuesday; it means the payout to schools next year will be $47.1 million, up $10.3 million from this year’s $36.7 million distribution.

In addition, the board voted to transfer $47.4 million to the permanent fund for the school endowment. Idaho Attorney General Lawrence Wasden termed that “a gift that keeps on giving,” because it will boost payouts to Idaho schools in all future years. “It is a very good thing,” Wasden said.

State schools Superintendent Sherri Ybarra said, “I second that, absolutely.”

Idaho’s state endowment is a permanent fund, plus land holdings, that generate annual payouts for specific state beneficiaries, the largest of which is the state’s public school system. The other beneficiaries include higher education, state hospitals for the mentally ill, state veterans homes, the Capitol building, the Idaho School for the Deaf and Blind, the state’s juvenile corrections system and its prison system; payouts to those beneficiaries next year won’t rise, instead staying at this year’s level.

When Idaho’s school endowment fund suffered losses during the economic downturn, then-Superintendent Tom Luna pushed successfully for an extra $22 million payout regardless. That’s meant that the school endowment has taken longer than Idaho’s other endowments to recover from those losses and rebuild its reserves to required levels. But as of the end of fiscal year 2016, which ended June 30, the school endowment finally was able to recognize $107 million in deferred gains from investment proceeds in the two previous fiscal years.

Of that amount, $10.3 million will go to the distribution increase for next year; $47.4 million will be transferred to the permanent fund; and the remainder will complete the needed bolstering of reserves.

“It’s exciting, exciting,” Ybarra said after the vote. “Pinch me, is it real?”

She said she had no problem with the transfer to the permanent fund. “I think it embodies sound investment practices on behalf of the investment board,” Ybarra said. “I think all of it is very positive for public schools – it’s been a long time coming.”

The overall endowment fund actually experienced a small loss over the course of the last fiscal year. However, earnings already have rebounded since then, with the overall state endowment fund seeing a 3.1 percent gain in July and big gains already this month.

State Endowment Investment Fund Manager Larry Johnson told the Land Board, “The decisions we’re recommending to you today are prudent and sustainable.” The proposals were recommended by the state’s Endowment Fund Investment Board, which includes an array of finance and investment experts along with two state lawmakers.

Total distributions from the state endowment for next year were set at $73.5 million, which will be a record high.

Though the state has made tens of millions of dollars for the school endowment selling off state-owned lake cabin sites in the past two years, that didn’t affect the calculation of next year’s payout. Proceeds from cabin site sales are largely slated to be reinvested into higher-earning land investments.