When Idaho put 10% of timber, grazing, and recreation site lease income into a special fund for state land maintenance, did interest on those endowment-derived dollars belong to the general fund or to the endowment lands themselves?
Opinion 85-3: Keeping endowment land interest with the endowment
Plain-English summary
The Director of the Department of Lands asked whether interest earned on the special fund created by Idaho Code § 58-140 should be accounted for separately by endowment so that the interest would benefit the originating endowment lands, rather than going to the general fund.
Section 58-140 lets up to 10% of moneys from state timber sales, grazing leases, and recreation site leases be set aside in a special account for maintenance, management, and protection of the lands. Most of those lands are endowment lands, granted to the state in trust for specific purposes (public schools and other endowed institutions). Until July 1, 1985, the special fund was consolidated in the state operating fund under § 57-804, and idle-fund interest in the state operating fund went to the general fund. Section 57-804 was repealed by Ch. 195, 1985 S.L., effective July 1, 1985, leaving the State Auditor authorized to classify accounts within the funds established by § 57-803.
The AG concluded that to avoid violating the constitutional land grant provisions in article 9, §§ 7 and 8 of the Idaho Constitution, the special fund should be consolidated in the agency asset fund (not the state operating fund) effective July 1, 1985, so that interest is separately accounted for and credited to the benefit of the endowment account that generated the principal.
Currency note
This opinion was issued in 1985. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Background and statutory framework
Article 9, § 7 of the Idaho Constitution vests management and control of state lands in the State Board of Land Commissioners (governor, superintendent of public instruction, secretary of state, attorney general, and state auditor). Article 9, § 8 imposes a constitutional duty to provide for "the location, protection, sale or rental of all the lands heretofore, or which may hereafter be granted to or acquired by the state by or from the general government" in a manner that secures "the maximum long term financial return to the institution to which granted or to the state if not specifically granted." The legislature must provide that general grants of land "shall be judiciously located and carefully preserved and held in trust, subject to disposal at public auction for the use and benefit of the respective object for which said grants of land were made," and provide for the faithful application of the proceeds.
Section 58-140 creates the 10% special fund for timber, grazing, and recreation site lease proceeds. The provided text emphasizes that funds derived from endowment land grants must be used only for "the maintenance, management and protection of lands of the same endowment grant."
What the AG concluded at the time
Constitutional fidelity to the trust
Article 9, § 8 requires faithful application of land grant proceeds to the use and benefit of the institution granted the land. If the principal of the special fund is endowment-derived, the interest is too. Putting that interest into the general fund would breach the trust character of the land grant.
Pre-July 1, 1985 mechanics
Until July 1, 1985, § 57-804 consolidated agency funds in the state operating fund, and idle-fund interest in that fund flowed to the general fund. Practically, this meant interest on the special fund went to the general fund, not back to the endowment lands. The AG flagged this as a problem under article 9, § 8.
Post-July 1, 1985 fix
Chapter 195, 1985 Sess. L. repealed § 57-804 effective July 1, 1985. After that date, the State Auditor was authorized to classify accounts within the funds established by § 57-803, providing flexibility to put the special fund somewhere other than the state operating fund.
The AG recommended that, effective July 1, 1985, the State Auditor transfer the special fund from the state operating fund to the agency asset fund. This would let the State Treasurer keep separate records by endowment category and allocate interest accordingly.
Allocation by endowment category
Section 58-140 already requires the State Treasurer to "show separately moneys received from each category of endowment lands." Once moved to the agency asset fund, interest can be tracked the same way and credited back to the originating endowment.
Common questions
Did this opinion change the maximum 10% special fund cap?
No. The 10% cap in § 58-140 stayed put. The recommendation addressed accounting placement, not how much could go into the fund.
Could the special fund's interest be used for general state purposes if it came from non-endowment lands?
Conceivably yes, but the opinion's reasoning rested on the trust character of endowment land proceeds. Non-endowment proceeds within the same fund would still need separate accounting to avoid contaminating the endowment portion.
Was the State Land Board required to approve this transfer?
The opinion addressed the State Auditor's classification authority under § 57-803 (post-July 1, 1985). The Board's general management role under article 9, § 7 reinforced the recommendation but the mechanical transfer was within the Auditor's classification powers.
Citations
- Idaho Constitution art. 9, §§ 7, 8 — State Board of Land Commissioners and trust character of land grants.
- Idaho Code § 58-140 — 10% special fund for state-land maintenance, management, and protection.
- Idaho Code § 57-803 — current funds-classification framework.
- Idaho Code § 57-804 (repealed 1985) — prior consolidation in state operating fund.
- Ch. 195, 1985 Sess. L. — repealing § 57-804.
Source
- Landing page: https://www.ag.idaho.gov/office-resources/opinions/
- Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP85-03.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.
STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
JIM JONES
ATTORNEY GENERAL
BOISE 83720
TELEPHONE (208) 334-2400
ATTORNEY GENERAL OPINION NO. 85-3
TO: Mr. Stanley F. Hamilton
Director
Department of Lands
STATEHOUSE MAIL
PER REQUEST FOR ATTORNEY GENERAL'S OPINION
Regarding: Idaho Code § 58-140
QUESTION PRESENTED:
Idaho Code § 58-140 provides that up to 10% of the income from state timber sales, grazing leases, and recreation site leases upon state lands shall be paid to a special fund to be used for maintenance, management, and protection of such state owned lands. Most of such lands are endowment lands. Should proceeds from endowment lands be accounted for and invested separately from other state funds so that any interest income earned thereon benefits the endowment lands or endowment funds rather than the general fund?
CONCLUSION:
Until July 1, 1985, the special fund provided by Idaho Code § 58-140 is consolidated in the state operating fund, pursuant to Idaho Code § 57-804. Interest upon idle funds in the state operating fund is paid to the general fund. Idaho Code § 57-804 was repealed by Ch. 195, 1985 S.L., effective July 1, 1985. Thereafter, the state auditor is authorized to classify accounts within the funds established by Idaho Code § 57-803.
To avoid violation of constitutional and land grant provisions, the special fund should be consolidated in the agency asset fund so that interest will be accounted for separately for the benefit of the account.
Accordingly, we recommend that effective July 1, 1985, the state auditor transfer the special fund from the state operating fund to the agency asset fund.
ANALYSIS:
Management and control of state lands is vested in the state board of land commissioners pursuant to Idaho Const. art. 9, §§ 7 and 8. Article 9, § 7 provides:
The governor, superintendent of public instruction, secretary of state, attorney general and state auditor shall constitute the state board of land commissioners, who shall have the direction, control and disposition of the public lands of the state, under such regulations as may be prescribed by law.
Idaho Const. art. 9, § 8, provides, in pertinent part:
It shall be the duty of the state board of land commissioners to provide for the location, protection, sale or rental of all the lands heretofore, or which may hereafter be granted to or acquired by the state by or from the general government, under such regulations as may be prescribed by law, and in such manner as will secure the maximum long term financial return to the institution to which granted or to the state if not specifically granted; . . . The legislature shall, at the earliest practicable period, provide by law that the general grants of land made by congress to the state shall be judiciously located and carefully preserved and held in trust, subject to disposal at public auction for the use and benefit of the respective object for which said grants of land were made, and the legislature shall provide for the sale of said lands from time to time and for the sale of timber on all state lands and for the faithful application of the proceeds thereof in accordance with the terms of said grants; . . .
Thus, the constitution imposes a duty upon the board of land commissioners to provide for the location, protection, sale and rental of land grants in such a manner as to secure maximum long-term financial return therefrom. The constitution imposes a duty upon the legislature to provide laws such that land grants shall be judiciously located, carefully preserved, and held in trust to further the purposes of the land grants. Also, the legislature is required to provide for the sale of lands and timber and to provide for the faithful application of the proceeds thereof in accordance with the terms of the land grants.
Idaho Code § 58-140 provides a statutory funding mechanism to carry out this constitutional mandate. The section provides, in pertinent part:
A reasonable amount not to exceed ten per centum (10%) of the moneys received from the sale of standing timber, from grazing leases and from recreation site leases shall constitute a special account, which is hereby created to be used for maintenance, management and protection of state owned timber lands, grazing lands and recreation site lands: provided, that any moneys constituting part of such account received from a sale of standing timber or from leases of lands which are a part of any endowment land grant shall be used only for the maintenance, management and protection of lands of the same endowment grant. Provided further, that all such funds collected from timber sales shall be expended solely for the purpose of management, protection and reforestation of state lands. All such funds collected from recreation site leases shall be expended for the maintenance, protection and improvement of both new lease sites, and existing recreation areas situate on state lands. All such funds collected from grazing leases shall be expended for the maintenance, management and protection of state owned grazing lands. Control and eradication of noxious weeds is a part of the maintenance, protection and improvement programs.
The state board of land commissioners is hereby authorized to establish rules and regulations fixing a percentage of the amount received from each sale of standing timber and from each grazing and recreation site lease, not to exceed ten per centum (10%) of the total, which shall constitute the special account herein created. The account shall be deposited with the state treasurer, who shall keep a record thereof which shall show separately moneys received from each category of endowment lands. All moneys deposited in the account are hereby appropriated continually to the state board of land commissioners . . .
[The opinion proceeds to apply art. 9, § 8 to the accounting question and concludes that placing the special fund in the agency asset fund (rather than the state operating fund) preserves the trust character of endowment proceeds and ensures interest is credited back to the originating endowment.]
DATED this 17th day of June, 1985.
ATTORNEY GENERAL
State of Idaho