Schools to get $22M in reserves

BOISE - The state Board of Land Commissioners agreed Wednesday to withdraw an additional $22 million from a state land endowment reserve fund to help offset budget cuts for public schools during the next fiscal year.

The board voted 3-2 Wednesday to dip into the reserve account, but the amount is less than half of the $52.8 million that Superintendent of Public Instruction Tom Luna wanted to help Idaho's K-12 public education system.

"I'm not going to walk away from $22 million when schools are looking at the kind of cuts that they're facing," Luna said after the vote. "But I was concerned we were leaving money on the table."

The panel is made up of Idaho's top five elected officials, including Luna.

The other commissioners include Gov. Butch Otter, Secretary of State Ben Ysursa, Attorney General Lawrence Wasden and state controller Donna Jones.

They oversee Idaho's endowment lands, timber sales and all activities that fall under Bacon's agency. Public schools, by far, are the biggest beneficiary of the state's land grant endowments and about 90 percent of the revenue goes to public schools. State law requires the land be managed for maximum profit over time, which is partly why the commissioners were reluctant to tap Idaho's land grant endowment fund reserves.

The state's controller, who along with Attorney General Wasden voted against the measure, said she had not heard enough compelling information to justify tapping the reserves in a time of financial uncertainty.

"We simply do not know what's ahead," said Jones said.

Wasden said there will still be significant questions about the impacts of the one-time additional transfer.

About $90 million in earnings from the Public Schools Permanent Endowment Fund has been banked in reserves and about $31 million is distributed to public schools each year.

Luna's plan to withdraw an additional $52.8 million would have left one year's worth in the reserve account. In July 2008, land board commissioners decided five years worth of the annual funding would be a sufficient level of reserves.

The Endowment Fund Investment Board cautioned land board members that the plan would represent a major policy shift in how Idaho's land endowments are managed and that the reserves were never to be used as a "rainy day" account.

The "special distribution" will impede the fund from growing fast enough to protect future distributions to public schools, said Larry Johnson, manager of investments for the Endowment Fund Investment Board.

"It's a fundamental change in mission, especially if it occurs more than once," Johnson said.

Ysursa, Idaho's Secretary of State, made the motion to tap the reserves for just $22 million and leave two years' worth in the reserve account, or about $62.8 million, instead of one year.

Public schools will have to absorb a minimum loss of $135 million during the next fiscal year, Luna said. Lawmakers have estimated that number could be as high as $160 million.

Last month, Luna presented a budget to lawmakers that pulled $52 million from the state's endowment reserves and used about $5.5 million in carry-over balances from funds for driver education and the safe and drug-free schools program for a total of $58 million in additional revenues.

The plan also includes $25.2 million in strategic cuts, some requiring lawmaker approval, including the elimination of an early retirement program and reimbursements to schools for field trips.

Under the plan, the state would also freeze pay raises for teachers based on experience and reduce the $300 teachers get each year for classroom supplies to $200.

Luna said he would not support further reductions, but if necessary, they should be carried out with an across-the-board 3.74 percent reduction in several areas, including salaries and state-paid benefits.

The land board's vote to leave out $30 million of Luna's plan will mean even deeper cuts for public education programs, and require another across-the-board reduction of about 2 percent, he said.

"The further we get from the $135 million than the higher that percentage goes up," Luna said.

On the Net:

Idaho State Department of Education: http://www.sde.idaho.gov/

Idaho State Board of Land Commissioners: http://www.idl.idaho.gov