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Administrators of a $2 billion public school trust fund want state and federal lawmakers to loosen the reins for distributing the cash.
The board of trustees for the School and Institutional Trust Fund, a permanent endowment for Utah's public education system, unanimously approved a resolution Tuesday seeking changes to the Utah Constitution and the Utah Enabling Act, which granted statehood in 1896.
State and federal laws allow only interest from the trust fund to be given to schools — a restriction that the fund's managers say prevents them from responding to volatility in the stock and bond markets.
The resolution, previously adopted by the Utah Board of Education, asks for legislation to modernize the fund's distribution formula and grant authority to the state to determine how payouts are managed.
"This change would give us flexibility to explore lots of different options to make sure the payouts are sustainable and equitable over time," Utah State Treasurer Richard Ellis said.
Money for the permanent State School Fund is generated from 3.3 million acres of public land managed by the School and Institutional Trust Lands Administration (SITLA).
The fund, Ellis said, is expected to pay out roughly $45 million next year — up from $14 million 10 years ago.
The money is distributed to individual schools on a per-student basis.
But because payouts are limited to interest on the endowment, Ellis said, school budgets can take a hit when interest rates plummet during an economic downturn.
Immediately after the recession, the amount distributed from the fund fell from $26 million to $23 million. Payouts have increased since then, Ellis said, but schools could have been held relatively harmless if administrators had the power to dip into the body of the endowment.
"If you're a school and you've got a program in place and planned, you don't necessarily want a lot of volatility," Ellis said. "If you see a 10 percent drop, that can have impacts on what you're trying to accomplish."
Unlike most education funding, which is filtered through school districts, trust fund money is given directly to the local school and spent at the discretion of the school community council.
The funds have been used for a variety of school projects, from purchasing iPads at Manti High School to creating online course offerings at East High School in Salt Lake City.
In April, SITLA held a contest in which schools were awarded cash prizes for showing off their trust funding purchases. Entries were submitted through the photo-sharing app Instagram and included art supplies, lab equipment, drinking fountains, additional faculty and stage lighting.
"It has a pretty significant impact at a place where the parents of those students can be a little bit more involved," state school board Chairman David Crandall said.
Crandall said he is optimistic the state will get the flexibility it's looking for.
Other states have had their enabling acts amended, Crandall said, and Utah lawmakers have expressed support for modernizing the funding formulas.
"I think we have good support from our [federal] delegation," he said, "and I think it will be something that can get through Congress no matter how pessimistic people might be, and rightly so, about getting things through Congress right now."
New Mexico, North Dakota and Arizona's enabling acts already have been amended to reflect the change Utah is seeking, according to the board's resolution.
Tim Donaldson, School Children's Trust director for the Utah State Office of Education, said modernizing the funding formula would not affect the size of Utah's endowment.
"The endowment world, the foundation world, made this kind of change 50 years ago," Donaldson said. "It's a best practice that everyone follows."