Study: SD one of only 20 states to retain school trust lands

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According to a new study published by Utah State University, South Dakota has sold nearly 75 percent of the school trust lands it received from the federal government upon statehood.

School trust lands were granted by the nation’s Continental Congress to the majority of westward expansion states to help them establish and maintain universal quality education.

The states manage trust lands to generate revenue through oil and gas, forest products, minerals, agriculture, and commercial and residential leasing. The revenue is then added to a school trust fund that the state manages. The valuation of South Dakota’s School Trust fund is about $184 million, and it is managed by the Office of School and Public Lands.

The study found 20 states still have school trust lands, including South Dakota, which retains about 27.2 percent of its original acreage from 1889.

Upon statehood, South Dakota received 2.8 million acres of school trust lands. That number is down to 761,000 acres.

According to the study, every state has decreased the amount of school trust land acres it first received. Of the 20 states with state trust land, South Dakota ranks 13th in the percentage of land remaining from original acreage. Minnesota, Nebraska and Montana all retained a higher percentage of original acreage than South Dakota. North Dakota, however, had a slightly lower retention with 25.3 percent, and Iowa no longer has school trust lands.

“Although there are many nuances related to individual states, the most disturbing finding of our study is that through mismanagement or neglect of fiduciary duty, many states have lost what should have been a valuable resource for public schools,” Richard P. West, Ph.D., executive director and professor at the Center for the School of the Future at USU, said in a news release.

Ryan Brunner, deputy commissioner for school and public lands in South Dakota, said school trust lands were sold periodically throughout the state’s history and the money was invested into the education trust fund.

“The biggest thing we watch is what is generating the highest return for education,” Brunner said. “It’s not as if we lost the land as soon as it was sold. We reinvest that money and create more revenue off the interest; we are still making money off those land sales today.”

Brunner said no school trust land has been sold for several years, in part because land values are so high. With higher land values, the state cannot only charge higher rent on that land, but it also creates a long-term value should it be sold at a later time.

In fiscal year 2012, $4.6 million was created on the 761,000 acres of South Dakota school and public land through lease agreements. The investment revenue in the same year from the school trust fund was roughly $8.4 million.

Brunner said whether state trust land will be sold in the future largely depends on future land prices compared to other investments.

“Like any good portfolio, we try to diversify our investments, and keeping land is part of that,” Brunner said. “I think we do a very good job managing the resources to get the highest return for our schools.”

During fiscal year 2012, the Office of School and Public Lands distributed $9.39 million to the state’s public schools, universities and endowed institutions.

By the numbers

SD school trust land, 1889: 2.8 million acres

SD school trust land today: 761,000 acres

2012 distributions from SD Office of School and Public Lands: $9.39 million

Tags: news, updates, state, schools