SALT LAKE CITY — The State School Board is asking lawmakers to shift control of the state's $1.6 billion school trust fund from the treasurer's office to an independent board of investment professionals.
Board members voted Friday to adopt a set of recommendations proposed by a special task force created in February to look into governance of the trust.
The permanent State School Fund consists of income earned by the School and Institutional Trust Lands Administration, or SITLA, which is invested in the form of an endowment. Interest and dividends from the fund are distributed to school community councils to spend at the local level as needed.
The fund is overseen by the Utah State Treasurer's Office and this year will provide $37 million to Utah's public schools.
Jennifer Johnson, a board member who served on the task force, said that because of the investment nature of the trust, decisions need to be made quickly in response to market changes. But because the trust is currently overseen by elected officials, there's potential for decisions to be delayed by statutory obligations.
"If there's a problem, you're dependent on legal processes that aren't very timely," Johnson said. "You can't wait for a process that takes months or weeks."
She also said that an independent board could draw from the long-term money managing experience of investment professionals, who would then be able to maximise the fund's return on investment.
"Many would argue the fund could be much more aggressive," Johnson said.
In addition to the creation of an independent governing board, the task force recommended that the distribution policies of the fund be studied and that enhanced reporting and an annual audit be required.
Johnson said a change of governance would require action by lawmakers.
"We would like to see put into force of law some of these recommendations," she said.
The task force also included Rep. Rich Cunningham, R-South Jordan; David Damschen, deputy state treasurer; David Hemingway, Zions Bancorp. executive vice president; Sterling Jensen, Wells Capital Management regional managing director; Kent Misener, Deseret Mutual Benefit Administrators chief investment officer; and Elizabeth Tashjian, University of Utah associate professor.Comment on this story
In a prepared statement, Cunningham said he would encourage his colleagues in the Legislature to take action in line with the task force's recommendations.
"This investment task force was a model of public-private partnership," he said. "Many knowledgeable investment professionals volunteered extensive amounts of time to study what was best for Utah's schoolchildren."