Idaho School Trust Lands and Fund
On July 3, 1890, Idaho became a state and received sections 16 and 36 in each township of six square miles for public schools. Schools received 3,100,000 acres and today hold 2,100,000 million surface acres and almost 3 million mineral acres. Additional lands were granted by Congress to the University of Idaho, Idaho State University, Lewis Clark State College, the state mental hospital, corrections, schools for the deaf and blind, and veteran services. The school trust lands are part of a “sacred compact” between Idaho and Congress. This trust requires the state to act with undivided loyalty as it manages the school lands to support public schools. The school lands are managed in perpetuity to secure the maximum long-term financial return for the schools, the beneficiaries of the trust established at statehood. The Idaho Department of Lands is located at 300 North 6th Street, in Boise, ID 83702. These school lands are managed by Dustin Miller, under the direction of the 5-membher Idaho State Land Board, comprised of the top five statewide elected officials.
Gross Revenue from Idaho School Trust Lands
Timber and forest products are by far the major revenue sources, but rangelands add several more millions annually. Residential and commercial real estate also contribute millions. Other activities such as hunting, recreation, oil and gas leasing and bonuses, and mineral leases and bonuses also contribute.
At statehood, Idaho was required to establish the Public School Permanent Endowment Fund, “Proceeds of the sale of school land . . . shall be deposited in the public school permanent endowment fund and expended only for the support of public schools . . .[1] all revenue from mineral sources is deposited in the Public School Endowment Fund. Land sale revenue is either deposited in the permanent endowment fund or may be deposited in the land bank fund “to acquire land for beneficiaries.” If the money is not deployed within five years, it is invested in the permanent fund. The land has generated over a half-billion dollars in ten years, but only $155 million was invested to build the fund for school support this year.
All net revenue from renewable resources like timber, grazing, and real estate leases, and all net investment income are deposited in the Earning Reserve Account. All net revenue from mineral resources is invested in the Public School Endowment Fund. The annual distribution to schools is then set by the State Land Board. If actual income has fallen short of the approved distribution, the additional cash comes out of the Earnings Reserve Account, so schools do not run short. If more is earned, then the Earnings Reserve Account grows and is distributed in a future year or is reinvested in the permanent Public School Endowment Fund. In 1969, the Idaho legislature created the Endowment Fund Investment Board (EFIB). The Land Board comprised of the top five statewide elected officials, sets the policies for the Investment Board. The nine-member investment board is comprised of six individuals “knowledgeable and experienced in financial matters and the placement or management of investment assets,”[2] one state senator, one state representative, and one public school administrator.
Idaho School Trust Lands and Fund
The Public School Endowment Fund (EFIB) is now $1,648,000,000 including the earnings reserves. Funds are prudently and professionally invested with the following asset allocation:
Domestic Equity 38%
International Equity 19%
Global Equity 9%
Fixed Income 24%
Real Estate 10%
The 5-year total rate of return is 7.0%.
In addition to the Public School Endowment Fund providing annual revenue to schools, it also provides reduced interest costs on local school district bonds through the Credit Enhancement Program which provides a guaranty that reduces borrowing costs on voter approved general obligation school bonds. The EFIB makes a non-cancellable commitment to make the bond payment in the unlikely event that the bond payment is not made by the school district or the State Treasurer.
[1] Idaho Enabling Act Section 5(a)(2)(A)(ii).
[2] Idaho code 57-718.