Land board to mull public schools money

(AP) — In a state where lawmakers writing next year's budget are no longer scouring under rocks but pebbles for new money to avoid deeper cuts, public schools chief Tom Luna gave everyone a jolt.

He actually found some, more than $52 million, in state endowment fund reserves that could be used to help Idaho's K-12 public education system offset a $135 million loss in the next fiscal year.

The reserve money amounts to 1,000 teaching jobs, he said, or about 10 days on the school calendar.

"This $52 million is going to be critical in minimizing the cuts that we have to schools," Luna said.

The proposal, however, requires Luna to put a cornerstone of his plan to guide public schools through the financial storm in the hands of the state Board of Land Commissioners, which controls the reserve fund.

During what may become one of the most widely scrutinized land board meetings in recent memory, Luna will find out Wednesday if his wager paid off and a majority of the panel agrees to tap the reserve account.

And if the plan doesn't work?

"I don't know where else you go to get that kind of revenue," Luna told The Associated Press in an interview Tuesday.

As one of five members on the panel, Luna already has one of the three votes needed to pass the measure. The four other commissioners include Gov. C.L. "Butch" Otter, Secretary of State Ben Ysursa, Attorney General Lawrence Wasden and state controller Donna Jones. All are up for re-election this year.

"It does bring into play a dynamic that is not usually there in a land board decision," Luna said.

The relatively little-known panel convenes monthly and its creation dates back to the writing of the state constitution, said George Bacon, head of the state Department of Lands. Idaho received 3.6 million acres from the federal government in 1890 when it became a state as endowment land to be used to support state institutions.

The state Board of Land Commissioners supervise 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. About 90 percent of the revenue goes to public schools, and state law requires the land be managed for maximum profit over time.

"That's why the superintendent's on the land board," Bacon said.

In the past decade, the land board has banked about $90 million in earnings from the Public Schools Permanent Endowment Fund in a rainy day account, which distributes about $31 million to public schools each year, Luna said.

His plan, unveiled to lawmakers Jan. 28, would draw an additional $52.8 million from the reserves during the fiscal year that starts July 1 to help offset some of the shortfall in funding for the state's K-12 public education system.

The land board commissioners should take months, not just weeks, to consider the one-time withdrawal, said Larry Johnson, manager of investments for the Endowment Fund Investment Board.

"This is a major change in policy. The reserve funds have never been considered what one would call, rainy day funds," Johnson said. "We just fear this decision is being made too quickly."

In July 2008, land board commissioners decided five years worth of the annual funding sent public schools would be a sufficient level of reserves from the Public Schools Permanent Endowment Fund, Johnson said.

Luna's plan would leave one year's worth in the reserve account, which he argues is enough.

"Do we really need to continue to pursue building a fund of five years worth of distribution when our beneficiary, the schools, are suffering the way they are because other sources of revenue are in decline?" Luna said. "I don't think you can justify the damage that our public schools, our beneficiary, are going to suffer."

Luna said he has been watching the reserve fund for the past few years and visited the idea of tapping those funds in 2009 amid cuts to state funding for public schools, but dropped it when the federal stimulus money was announced.

In January, the governor recommended a budget for fiscal year 2011 that spends about $1.2 billion in state general funds on Idaho public schools, or about $14.3 million less compared to this year.

Luna said public schools will actually lose about $135 million when factoring in the loss of one-time federal stimulus money and expected decreases in state dedicated funds, such as cigarette and lottery taxes.

The proposed cuts to the state's K-12 education system, without finding new revenues and making other strategic cuts, are unmanageable and could cripple student achievement gains, Luna said.

The state Department of Education released scores statewide test scores in August that showed about 66 percent of Idaho schools made adequate progress under No Child Left Behind during the most recent school year. That number has nearly tripled since two years ago, when 26 percent of schools made adequate progress.

"This is the first time I think in a long time, if maybe ever, that the land board has dealt with something so global that affects every person in the state, every school and every community across Idaho," Luna said.

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On the Net:

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

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