The five-member state Land Board and staff have done a great job of building the 1890 Idaho Endowment stock and equity investments to a record $1.8 billion — up from $800 million in 2000. And the endowment’s land asset is now worth $1.4 billion. The result, for the first time in fiscal year 2014: an approximate $25 million “excess profit” — above reserves — for underfunded universities and mental health beneficiaries, after inflation and population adjustments, and a similar amount in FY15. But instead of using the money to reduce tuition tax pressure and help underfunded mental health beneficiaries, it has been invested with the money managers.
It is disappointing that a $3.2 billion organization that brags about making a profit of $330 million in FY14 and $124 million in FY15 only pays $56.5 million and $63 million in benefits the following years, which is less than the endowment paid 15 years ago. This should be fixed.
The $1.8 billion investment includes a $384 million five- to seven-year reserve for the FY17 $63 million payment to K-12 and eight university and mental health beneficiaries. Some may think that is an excessive reserve. But in any event, several beneficiaries in FY15 earned $39 million in excess profit — above the reserve — including $10.9 million by Idaho State University education and Lewis-Clark State College; $7.8 million by the University of Idaho School of Science; and $18.3 million for State Hospital North, ISU and others. No part of this excess profit was distributed. Instead, it was invested and a minimal return promised in future years — maybe.
“Maybe” applies, because last year $10 million “excess profit” in the State Hospital South fund was placed in the stock and equities market, but the FY17 payout to State Hospital South is exactly the same as FY16.
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These beneficiaries have less state general fund support today than before the recession. Annual tuition tax increases, mandatory health insurance and demands that young people “Go On” have resulted in tremendous increases in postsecondary education costs — with no job guarantee. The endowment could help reduce tuition at several universities.
The endowment is not a retirement account. It was set up by Congress in 1890. More money was distributed 15 years ago. In 2012 the Land Board distributed some profit reserve to K-12. The money discussed here is “excess profit” above the profit reserve and population and inflation growth of the corpus. In fact, the General Fund and tax subsidies reduce net endowment payments to even lower levels. Our state has money to help our universities and education. It just doesn’t get spent.
John Gannon is a state representative for District 17A and served on legislative Endowment Assets Interim Committee in 2014.