Maximizing return on trust land principal

"MN Education"

07/13/2010

Income generated by the 2.5 million-acre permanent school trust lands could be increased through the sale of nonproductive acreage, including 86,000 acres in the Boundary Waters Canoe Area Wilderness, and through a change in the fund’s investment portfolio.

Chaired by Rep. Denise Dittrich (DFL-Champlin), the Permanent School Fund Advisory Committee reviewed last session’s legislation regarding the lands and began discussion on how to financially maximize the asset.

School trust lands are a legacy of the nation’s founders, who, through the General Land Ordinance of 1785, designated parcels of each township in all future territories and states to be used to generate income for public school education.

Most bills in 2010 dealing with the lands stalled in the process except for one requiring the Department of Natural Resources, which oversees management of the land, to provide information to the advisory committee by July 15, 2010.

According to an Office of the Legislative Auditor’s report, the principal of the Permanent School Fund consists of cash and investments generated from the trust land. Income is primarily earned from land and timber sales, land leases and mineral royalties. The State Board of Investment is responsible for investing the principal.

The committee would like to see the state negotiate with the U.S. Department of Agriculture and exchange nonproductive BWCAW land. The money generated could be used to change the investment mix to include more stock equities, or for lands outside the protected area that would generate income.

The advisory group is expected to meet again to discuss what Dittrich described as their duty to generate a greater return on the asset for schools now and in the future.