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Legislators propose to overhaul school trust lands management
Posted by: Mike Kaszuba under Funding, Gov. Mark Dayton, Minnesota state senators, Democrats, Republicans, State budgets Updated: February 13, 2012 - 5:38 PM
Minnesota’s school trust lands, which cover 2.5 million acres mostly in northern Minnesota and were criticized Monday for being badly managed, may soon get transferred to a new oversight panel.
Republican and DFL legislators unveiled a plan Monday to create a permanent school fund panel, and remove the lands from the jurisdiction of the state Department of Natural Resources. The lands, created as part of Minnesota’s constitution, set aside acreage in every township in Minnesota that schools can use for investment purposes to produce another source of school funding.
But critics, including Republicans Sen. Benjamin Kruse, R-Brooklyn Park and Rep. Keith Downey, R-Edina, said attempts to squeeze revenue from the lands had long been inadequate and that turning their stewardship over to a bi-partisan panel could create millions for schools without a tax increase.
“Which school district in the state of Minnesota wouldn’t like to have some additional, predictable income?” said Rep. Tim O’Driscoll, R-Sartell, the chief House author of the legislation.
Supporters of the legislation said income from the school trust lands had been averaging between $22 million and $27 million annually over the past five years, and that managing the income more efficiently could almost immediately increase the yearly figure by 10 percent.
Downey said one analysis showed that had the school trust lands, which now have an endowment of more than $700 million, been managed “slightly different” over the past three decades they could have produced another $250 million.
Rep. Tom Rukavina, DFL-Virginia, said that much of the school trust land income had come from forestry, and said that mining could “double the size of the school trust in the next decade.”
But he said that some environmentalists – and some DFL legislators – would likely oppose being more aggressive in getting income from the lands. “They think it’s [all] about copper-nickel mining,” he said.
One other opponent is expected to be the DNR, which Rep. Denise Dittrich, DFL-Champlin, said Monday would also likely “fight it with every ounce of energy they have.” Dittrich however said the DNR had an “inherent conflict” because the agency was not primarily concerned with boosting revenues for the state’s public schools.
Dittrich said that while income from forestry on the lands during the past two years dropped 22 percent, money transferred to the fund had dropped 84 percent. “That dramatic drop in the transfer means ineffective and inefficient management,” she said.
Dittrich also said forestry management fees on the school trust lands had increased 128 percent over the past five years, and that administrative fees had risen by 326 percent.
"I think, personally, the DNR's doing a good job," DNR Commissioner Tom Landwehr said in response Monday.
Landwehr said he thought "there's a perception" that the agency had a conflict of interest in managing the school trust lands, largely because the agency was required by law to both maximize long-term revenue growth and manage the lands using sound natural resource policies.
Supporters said they planned to meet Tuesday with Gov. Mark Dayton, and have brought in experts from Utah, which made a similar move. Kevin Carter, Utah’s director of school and institutional trust lands, said the state’s school trust lands fund had risen from $18 million to $1.3 billion over the past 16 years.
Carter said other states with school trust lands have had similar problems trying to produce more income from the acreage. Across the country, he said, “it’s tales of woe and mismanagement and abuse pretty much across the board.”
But Landwehr said comparing Minnesota to Utah was "not completely apples and apples." Utah, he said, had large areas of grasslands that had significant oil and gas reserves. Minnesota, added Landwehr, had 2.5 million acres in school trust land, but only 1.5 million acres had commercial timber. And of that amount, he said, only 1 million acres is "even any good."
"We've got some high hurdles that they don't have," said Landwehr.
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