The $330 million in total earnings for the Idaho State Endowment Fund in fiscal year 2014 wasn’t great news for our kids, corrections and mental health treatment. Instead the money was placed in the 1.8 billion stock and investment fund for the money managers to manage. The Fund is now up from an $800 million balance 10 years ago.

But, this windfall isn’t trickling down to benefit Idaho kids, corrections and mental health beneficiaries. The Endowment paid last September 30 only $32 million for K-12 schools and $20 million to others, which is not much different than recent annual distributions, and in fact the same or less than distributions 13 years ago.

And the yield is even less because general fund money is paying for the cost of firefighting and other services that benefit Endowment lands. These lands should pay their own expenses. It is roughly estimated that much firefighting expense, or $1 -$7 million this year, is for Endowment lands.

Today $345 million of the 1.8 billion is actually sitting in a “profit reserve” fund for the 8 beneficiaries pursuant to a policy that requires that 500 to 700 per cent of the annual payout be placed there. Thus, the K-12 portion of the past profit reserve is $164 million, and this year’s payout just $32 million. A 5-7 year reserve seems high especially when the Legislative rainy day fund is only 10 per cent of one year’s spending.

Even if one accepts that a 500 to 700 per cent “profit reserve” is necessary, there was $38 million in excess reserve profit above these high percentages. The 2013-2014 excess reserve included the “penitentiary” system (3 million), LCSC and ISU (1.3million), State Hospital South (10.7 million) Ag College (3.2 million), U of I (13.9 million) and others (6.2 million). Unfortunately, this money was placed in the permanent investment fund. This $38 million excess profit should have gone as one time money to present beneficiaries.

University students have regular tuition tax increases and they must buy health insurance, unlike the nominal amounts my generation paid to public universities. Corrections has serious personnel recruitment and retention issues, and the State has turned down community mental health requests because of a lack of funds. The Endowment was created in 1890 to address these needs.

But the “profit reserve” of $345 million including the $38 million excess profit, will be re-invested in stocks and other investments instead of the needs that we have now. This investment will be popular with money managers until they lose money. Whether this is good public policy and wiser than retaining Idaho land is the subject of another discussion.

For now, it would seem that some of this profit should be invested in our kids, mental health, corrections and other needs as intended by those who created the endowment.

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