Lawrence Wasden has been consistent on one front — he believes the state should honor its constitutional mandate and manage its endowment for maximum long-range returns.

That philosophy has governed the attorney general's approach to the state's cabin lease controversy. And it leaves him wrestling with state schools superintendent Tom Luna's proposal to draw down reserves and limit cuts to public schools.

For the record, as I wrote here yesterday, Wasden hasn't staked out a position on Luna's proposal. "I don't know what I'm going to do," he said in an interview Monday. But he is clearly — and deeply — skeptical.

Looking at a Public Schools Earnings Reserve Fund that will sit at a projected $90.4 million, Luna wants to make a steep one-time withdrawal. He wants to use a $52.8 million to backfill the 2010-11 budget — in addition to the typical, annual $31.3 million fund disbursement to K-12.

Why is Wasden worried?

• In the short run, he is worried because Luna's plan assumes an uptick in the securities and timber markets — the reserve fund's primary sources of new money. "Is that a reasonable assumption?" says Wasden.

Looking at the stock market and housing starts, Wasden isn't sold.

• In the long run, the $52.8 million withdrawal could leave the K-12 fund with about $31.3 million on July 1, 2011 — enough to cover a 2011-12 payment, but without any buffer. The goal has been to set up a five-year reserve, Wasden says. This ensures reliable and gradually increasing annual payments to K-12 and other endowment beneficiaries, such as Idaho State University, State Hospital South and the University of Idaho.

Without a five-year buffer, the state would be forced to rethink its investment strategy for all endowment beneficiaries, said deputy attorney general Clive Strong. The state would have to move out of volatile but historically high-yield investments, and stick to safe, low-yield bonds.

There's no question Wasden is feeling some political heat, and he isn't alone. Luna's plan is drawing strong reviews from editorial boards, including the Statesman, Nampa's Idaho Press-Tribune and The Times-News in Twin Falls, among others.

Wednesday's vote on the Luna plan puts considerable pressure on the rest of the Land Board: Wasden; Gov. Butch Otter; Secretary of State Ben Ysursa; and Controller Donna Jones. A no vote will inevitably be construed as a vote against $52.8 million for schools. In an election year, that's toxic. It will resonate with voters who may not know, or care, that Wasden has done a fine job as attorney general.

Wasden didn't change my opinion Monday. I can't blame him for wanting to change the dialogue.

More reading: Opposition to Luna's plan appears to be mounting. Read Brian Murphy's story from today's Statesman.

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