Education
Land Board Rewards Director
June 19, 2012 
Idaho’s state Land Board has bumped state Lands Director Tom Schultz’s salary from $112,800 per year to $120,000.
That’s keeping with a promised salary review when he was hired. He seems to be an OK guy, has a good resume and follows the will of the Board. We have a problem with the board’s decisions on deals Shultz presents.
He keeps two sets of books to disguise the millions of dollars the agency spends for “tenant improvements” on downtown Boise commercial real estate owned by the state. The state spends on the cash accounting method–real time dollars. Shultz and staff spend money for the benefit of private businesses–like a brew pub, but explain if the accrual accounting method is used, they actually would show a profit.
So far they are only spending, but claim that rental income will begin this year. While it was spent in one year, they show on the second set of books it can be spread over many years to look better.
Sorry Tom, can’t have it both ways. Truth is, schools are missing out on benefits. The GUARDIAN maintains the position that government should not be in business normally run by the private sector.
Here is a SPOKESMAN report by Betsy Russell.
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Comments & Discussion
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Jun 19, 2012, 9:28 pm
He keeps two sets of books? REALLY?
EDITOR NOTE–It isn’t a secret. The Idaho Dept. of Lands shows it on their website. I am working the day job out of town, perhaps Clancy can provide a link. Look under land board or endowment fund.
Jun 20, 2012, 8:21 am
I think you would find most complex government agencies run two sets of books, and it is not to hide performance, but rather to be in complaince with a diverse set of acounting rules and a burdensome overly complex tax code, which local jusridictions are not exempt from as many governments agencies recieve both taxable and non-taxable revenue streams.
Most private firms operate their books in accordance with Generally Accepted Accoutning Principles (GAAP) which in large part is determined by the Financial Accoutning Standards Board, or FASB.
Simialr to, but not exact, government adheres more to the Government Accountaing Standards Board, or GASB.
While the gaurdian brings up a few issues in the article, I do not see the accouting argument of concern and actually agree with the Director. It is unreasonable to assume there would be a return on investment for a tenant improvement project within the first year, so it would appear in cash method accoutning as a loss, however using the accrual method the cost of the TI would likely be depreciated and expensed over a 3-10 year time period, so realy only 10-20% of the TI expense should count against a profit and loss analysis.
Whether or not government should be in the development business is another argument and in my mind not as simple as all in or all out.
Jun 20, 2012, 12:45 pm
2011 Annual report (Page 22 has the accrual method) http://www.idl.idaho.gov/news/annual_reports/ar_2011.pdf
2010 Annual Report http://www.idl.idaho.gov/news/annual_reports/ar_2010.pdf
But I think Land Board should be reporting an accrual style accounting. They are not the typical government agency as they have a revenue stream besides taxes. They operate much like a private enterprise, thus need the accounting practices to accurately report the big(long term) picture.
Here are the standards set forth for state and local agencies to use accrual accounting.
Summary-
http://www.gasb.org/st/summary/gstsm34.html
Detailed-
http://www.gasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175824063624&blobheader=application%2Fpdf
Public housing authorities also have capital expenditures, tenant improvements and rent much like the Land Board. They have been encourage to use accrual accounting as they operate much like an enterprise.
http://www.hud.gov/offices/reac/pdf/gaapflyer1.pdf
Maybe Idaho Dept of Lands and the Land Board should switch to all Accrual accounting.
EDITOR NOTE–
Our issue is with the duty of the board to get best return on investment. It may be “good business” to make improvements with the hope of charging rent, but until the higher rent comes in and the investment is paid off, schools don’t get any revenue. This is not unlike buying a losing stock with the hope it will get better in the future. Housing agencies provide a service and receive income from several sources, but they don’t have to make a profit to support schools. IDL spends tax dollars with the hope of making a future return for schools. Until they get the cash return they can’t make payments.
Jun 20, 2012, 3:34 pm
Idaho is but a small part of the bigger problem. Expanding to justify spending.
http://www.usgovernmentspending.com/us_20th_century_chart.html
Jun 20, 2012, 6:48 pm
Zippo; totally agree but I think government expands not for self fulfillment, but because citizens constantly ask and expect more.
Rather than get involved and solve issues themselves or go without some want-to-haves, people complain to government and demand they do something about the homeless, un-mowed yards, tennis courts, dog parks, wild land preservation, transportation, refugee programs,shelters, all things that could done by NGO’s or citizen groups and private money if enough people really cared to solve society’s problems.
Having the government do it instead is just a cleasn way of keeping our own soft hands clean.
Jun 20, 2012, 10:40 pm
BG: The flaw in your argument is assuming that %100 of revenues are paid out each year. The real fact is that only %5 of the total fund is paid out to beneficiaries with the exception of the State Hospital South at %6.
The State of Idaho does have the legal obligation to make up any losses to any of the endowment funds under Article 9,Section 3 of the state constitution. But those losses need to happen for 10 consecutive years (Idaho Code 57-724). There are 2 of 9 endowment funds that are in this category but the Land Board is allowed to transfer funds from the Earnings Reserve to the Permanent Fund to cover the short.
This all can be found in the Asset Management Plan that was approved in at the end of 2011.
http://www.idl.idaho.gov/am/am.html
Jun 21, 2012, 1:06 am
BS JJ, you only listen to the citizens that would have you spend more. I don’t need or want 70% of what the government does. Please stay home and take a job in the private sector for the good of our nation.
Jun 21, 2012, 6:00 am
I hate this state, I wish that I never moved back here…
Jun 21, 2012, 12:45 pm
Zippo—1:06 AM, you must have been awake and grumpy.
I have a private sector job, I own small businesses and despite having the cash to do so, I will not open more locations in Idaho. I refuse to pay the horrible fes charged by the City, County, State and especialy ACHD for the pleasure of doing busines in the state/county/city. As the owner at-risk I make less than the taxes I pay to government who does not share in the risk of my business, I am too small for a tax break or bailout.
You missed my point-government is but a reflection of the citizens who are actively involved-
those who want less government are not as vocal or well organized as those who want big government. I attend city council meetings on occasion and watch group and after group explain why they think the city should be doing more, be it more dog parks, smoking/drinking/code/river enforcement, battered woman/child shleters, de-tox, more police, more fire, wild land preservation, etc.
Those who would oppose these expansions of government seem to stay home and then complain after the fact when taxes are raised.
In addition to blogging about it, I occasioanlly attend public meetings, I send written comments in advance of meetings, I write my legislatures and I donate to politiical candidiates who I think reflect my values of smaller government.
Too many people think whinning on a local blog counts as community invovlement, then they wonder why their government does not reflect their values.
Jun 21, 2012, 3:18 pm
Well Ronin, don’t let the door hit your you know what on the way out. I assume you’re not handcuffed to the radiator, so what’s stopping you?
Jun 21, 2012, 10:52 pm
JJ: I’m earning money and paying taxes @0136 (The world is very small thanks to Bill Gates or was it AlGore)
And I do routinely interact with our pathetic political leaders, but they have learned they can do what they want if they control the message at KTVB and Statesman.
This blog is not in their control, and they all read it. This blog is another way for me to tell that bunch what some people see/hear when they make a press release.
They have a choice aside from keeping the freeloaders happy. They make the choice to feather their nest rather than what is good for the community. Example: If you have kids and you could make your neighbor pay your bills, would you only listen to the whining kid with the big spending ideas and desperate need for the most expensive everything? Or would you also notice the quiet efficient kid that shows a wise sustainable spending path? Point is, the governments have become far too much about themselves (see the link on % of GDP in prior post). They turn a deaf ear to anyone that says they are sick of all the unnecessary spending (Your experience also I bet while watching public meetings) They even pay people to come on here and explain “it’s not their responsibility… they are only following the will of the people”, which is why I said what you said was BS.
All these supposed leaders need to do is to actually be a LEADER instead of the selfish, spineless dingleberries that they so often appear to be each time they speak.