Committee approves changes to spending policy rules for certain state endowments

The Senate Appropriations Committee voted to advance Senate File 70, a bill that adjusts spending policy for certain state trust funds to a more endowment-like model and employs multi-year averaging to smooth distributions.

Patrick Fleming and other officials told the committee the bill seeks to move specific funds from a quasi-endowment framework to a full endowment approach so the entities can rely on more predictable annual distributions. "...this has been a well thought out, hardworking, group of individuals that are trying to get both of these institutions to be able to be on a a more consistent spending path without the gyrations of the market," Fleming said.

Sarah Sheen, deputy director with State Parks Cultural Resources, told the committee the Cultural Trust Fund’s grant income has fluctuated and that smoothing would help the board and grant applicants plan. "This bill, we think, would likely level out the interest earnings that we receive in the Cultural Trust Fund...and that essentially would give the board and our constituents a better sense of what's coming down the road," Sheen said.

Officials said the bill would not draw on general tax dollars but would change how interest and other receipts are averaged for allowable annual spending. Committee members asked whether removing an "inviolate" status presents risk; Patrick Fleming said risk arises only if the spending policy is increased beyond anticipated earnings. Fleming told the panel the adjustment includes a multi-year (rolling) average to limit large year-to-year swings.

The bill passed on a roll-call vote with Senators Driscoll, Garou, Larson, Smith and Chairman Salazar recorded as aye. Supporters said the change would give boards predictable grant funding and help program planning; members asked for assurances about safeguards if spending policy changes were proposed in the future.