Over the past decade, higher education institutions have felt the sting of repeated budget cuts to the tune of $82 million in overall funding.  Louisiana’s universities and community colleges continue to take a beating when the state seeks out the money it needs to fill budget holes. If education were truly a priority for our state, we would put our money where our mouth is by enacting measures that ensured education funding was protected.

Louisiana voters did this in 1986 when they approved a constitutional amendment establishing the Kevin P. Reilly Sr. Louisiana Education Quality Trust Fund (LEQTF).  It’s hard to believe that more than 30 years have passed since the creation of the trust fund, and it’s still one of the smartest moves the state ever made for education.

The LEQTF was established with a $641 million settlement with the federal government over oil and gas revenues. Instead of using the windfall to fund current operating expenses, the state put $541 million away into a trust fund for education.

The LEQTF was the brainchild of my friend, the late Kevin P. Reilly, Sr., who spearheaded the legislation that led to its creation. Kevin was a former legislator and lifelong proponent of education.  His legislation permanently dedicated the proceeds from the oil and gas settlement with the federal government to benefit students in elementary, secondary and higher education. In 2013, lawmakers renamed the LEQTF in his honor.

The State Treasury has unique oversight of the LEQTF, and we work to preserve the fund’s capital, enhance its market value, and provide a stable income stream.  The three major sources of income for the trust fund are investments, capital gains/losses and royalties. For FY 2016, total income from all sources equaled $81.75 million.

Annual earnings on LEQTF investments are allocated pursuant to Act 698 of the 2001 Regular Legislative Session and then split between the Board of Regents for higher education and the Board of Elementary and Secondary Education (BESE) for students in K-12. For the 2016 Fiscal Year, the fund allocated $21.61 million to Regents and $21.55 million to BESE. Over the life of the LEQTF, these two agencies have received $1.635 billion in total allocations.

There are internal and legislative benchmarks the Treasury strives to meet when it comes to the investment of LEQTF dollars. The fund’s total rate of return during FY 2016 was 5.47 percent, which beat legislative benchmarks of the 30-day Treasury Bill which earned 0.11 percent, and the Two-year Treasury Note, which earned 1.25 percent. Fixed income investments earned a total rate of return of 5.44 percent during this time, beating the Barclays Government/Credit bond benchmark, which earned 4.33 percent. Equity investments earned a whopping 20.74 percent, beating the S&P 500, which earned 3.99 percent.

Investment income generated by the LEQTF is dedicated to providing educational enrichment programs. BESE and Regents use the money earned on LEQTF investments to fund research projects, grant proposals and other educational enhancements.

Because of the LEQTF, BESE has been able to dedicate millions for pre-K programs, teacher certifications, and virtual/state-wide distance learning. Regents has been able to fund graduate fellowships, scholarships and research projects. Because of continued budget cuts across education, many of these programs would fall by the wayside without the LEQTF.

The LEQTF, along with TOPS and the START 529 College Savings program, is one of a handful of programs in Louisiana that gets it right when it comes to prioritizing education. Louisiana leaders should continue to support programs like these that demonstrate our state’s commitment to education and protect much-needed funding for students of all ages.

Sarah Mulhearn
(225) 342-0012