Most of the 134 million school-trust acres granted to various states at the time they entered the union are no longer in public hands, choking off revenue streams that could be supporting public education.
That's according to a new report released this week by Utah State University, which found this massive asset base has been eroded thanks to "lax enforcement, competing priorities, and even malfeasance."
"There have been instances where land has been leased for as little as 3 cents an acre when it could been leased for $200. We know it has been sold for pennies on the dollar to friends of government officials. Once that land is gone, the school children have been robbed of that resource," said co-author Richard West, an education professor who directs USU's Center for the School of the Future. The center produced the report, titled "A Magnificent Endowment: America's School Trust Lands," with a U.S. Department of Education grant.
Only 20 states now hold school trust lands, totaling about 45 million acres, while states have established permanent school funds collectively worth $60 billion from managing or selling these lands. The report found Colorado and other states still raid school-trust revenues to fund things that have little do with schools.
Yet West's team found numerous signs of progress, particularly in Utah, which another co-author singled out as an example of how to manage school trust lands right. The state strives to maximize revenues and ensure local control in how proceeds are spent on schools, said Margaret Bird of the State Office of Education. But it wasn't that long ago that Utah was "the poster child for how to screw things up," she said.
As a researcher in that office in the 1980s, Bird documented numerous abuses. For example, operators were paying a 15-cent-per-ton royalty on coal at a time when the going rate was $2, then the money was not invested in education, said Bird, who now runs the program that disburses school-trust money. Such revelations spurred the 1994 creation of the School and Institutional Trust Lands Administration and a "paradigm shift" in how trust lands were managed.
Since then the State School Fund has grown from less than $50 million to nearly $1.4 billion, according to SITLA Executive Director Kevin Carter.
"The difference has been a focus on the mission," Carter said. "Prior to the change the attitude was these lands were to be used for any purpose deemed noble and good. In some cases it was OK to prohibit activities. ... It was a combination of giving away the asset and not taking advantage of opportunities."
According to the new study, New Mexico and Arizona have retained the largest trust land holdings at 6.8 million and 8.1 million acres, respectively, fueling trust funds valued at $10.7 billion and $3.1 billion in 2011. By contrast California and Nevada, which gained statehood decades earlier, have liquidated nearly all their holdings and have little to show for it today.
In this regard, Utah is middle of the pack, Bird said. Of the 6 million acres granted at statehood in 1896, 3.3 million acres remain in state hands. Lots had been sold to homesteaders for $1.25 an acre. After 1919, the state retained the mineral interests of the land it sold, so SITLA now controls more than 1 million acres of subsurface rights on private land, which can also be managed for the benefit of schools. Officials noted that one-third of Utah's private land is former trust lands.
The report also found Utah's trust fund grew by 37 percent between 2007 and 2011. Utah's was the second highest growth among trusts in Western states. Each year, state lands contribute around $70 million to 90 million to the school endowment, which paid out $29 million this year accounting for just 0.7 percent of public school spending.
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When states entered the union, the federal government granted them land to support education. But according to a new USU study, nearly three-fourths of that 134 million acres real estate the size of California is no longer in state hands thanks to neglect or mismanagement. Revenue off these lands through oil and gas leasing, mineral royalties, timber sales and grazing fees has built up trust funds worth about $60 billion over more than a century, but these endowments could be much larger, the study says.