When men build on false ground, the more they build, the greater the ruin.
Luna Loses Loot on Speculative Investments
Updated to remind y'all of the debate in this race on Tuesday, October 5 @ 7 on IPTV.
Idaho's Superintendent of Public Instruction, Tom Luna, R-wingnutistan, took a bath on his personal investments in three homes he purchased in the Phoenix area. Luna borrowed $600,000 in 2005 to purchase the homes in the hope that he could capitalize on rapidly expanding real estate market, becoming an active player in inflating the real estate bubble, the popping of which significantly contributed to the economic collapse and the recession. He refuses to talk details about the settlement which returned all three homes to the lenders. So, of course, he talks only about those details which are beneficial to him.
The properties were sold at public auction in 2009, according to records in the Pinal County recorder's office. He said he is free and clear of any debt associated with the loans.
He also settled a claim by the development's home-owners association for back payments, which Luna said were between $4,000 and $6,000. Association officials declined comment.
"I satisfied all the debt at the expense of retirement accounts, savings accounts (and) personal net worth," Luna said in an interview with the Idaho Statesman. "I gave my pound of flesh and then some to be honest in my dealings."
Which begs the question of how much he entertained the alternative, to be dishonest in his dealings. In any event, the speculative investment makes dubious Luna's claim of fiscal conservative.
Greed is certainly a powerful motivator. But the easy credit market Luna exploited should give every Idahoan pause. The Superintendent is responsible for administering Idaho's education budget which this year is $1.7 billion, the single biggest budget item, and one which shrank for the first time in Idaho's history, by 7.5% for fiscal year 2011. He's also responsible for ascertaining the needs of education in allocating resources, more precious each year Luna is in office.
More significantly to this issue, Luna is an Idaho State Land Commissioner administering the State's Endowment Lands.
When Idaho was admitted to the Union as the 43rd state in 1890, it was granted approximately 3,672,000 acres of land for the support of state institutions. The land was granted under the condition that it be managed in perpetuity as a trust for the beneficiary institutions. This mandate was codified in Article IX Section 8 of the Idaho Constitution, which states that the lands are to be managed, "...in such manner as will secure the maximum long term financial return to the institution to which granted." Chief among the beneficiaries are the public schools, which received two sections of every township in the state (1/18 of the total land base). Other institutions include the University of Idaho, the Agricultural College, the Normal Schools, Penitentiary, Charitable Institutions, State Hospital South, School of Science and Public Buildings (now Capitol).
Management activities on state endowment trust land are not intended to benefit the general public, but are directed solely to the good of the beneficiaries of the original land grants. Money generated from the management of these lands is deposited into the earnings reserve fund from which the costs of management and payments to the beneficiaries are made. Revenue from mineral royalties is deposited into the permanent endowment fund. Both the earnings reserve and permanent fund are invested by the Endowment Fund Investment Board. The investment return is distributed to the beneficiaries. Land sale revenue is deposited into the land bank and is available to purchase other land. If not expended for that purpose within five years, the land sale revenue is deposited into the permanent fund.
Management of endowment trust lands is entrusted to the State Board of Land Commissioners. The Idaho Department of Lands is the administrative arm of the Board and carries out the executive directives of the Board to meet the constitutional trust mandate.
These commissioners have fiduciary obligations to their respective beneficiaries in administering these lands, a fiduciary obligation which would have been violated by such a speculative investment as Luna made.
Tom Luna is the incumbent in a race with Stan Olson, life long educator and recently retired Superintendent for the Boise School District. In contrast, Luna has never been an educator and fulfilled the minimum requirements for Superintendent by getting a BA degree in weights and measures online in 2002 just before running for the position. The qualifications of each candidate are explored here. Should Luna continue to be in charge of Idaho's greatest investment, our children?