School trust lands bill in crossfire at Minnesota Capitol

St. Paul — The struggle over who should control 2.5 million acres of school trust lands located in northern Minnesota continued at the state Capitol this week, with the authors of House legislation eschewing the virtues of a bill that would create an appointed director to oversee the lands, and the DNR explaining why it should remain the trustee and manager.

House bill 2244, authored by Sartell Republican Tim O’Driscoll, was scheduled to be heard in the House Ways and Means Committee on Tuesday. If approved by that committee, it would proceed to the House floor.

Since being introduced this year, the bill has undergone some changes, according to co-author Denise Dittrich, a DFLer from Champlin. Currently, it would create a five-member permanent school fund board to “oversee, administer, and manage Minnesota’s permanent (trust fund) lands.” Among the board’s activities: appoint a director of trust lands and mineral assets, “responsible for administering and managing school trust lands.”

The board also would report to the state Legislature, and review and make recommendations regarding trust fund laws and policies.

The bill also creates a legislative commission to advise that board and review legislation that would affect the school trust fund.

The century-old trust fund, created to provide a steady money stream to public education, currently contributes about $30 million annually (interest earned from the $750 million fund) to K-12 education in the state.

However, Dittrich says, in 1905 the state’s was the best-performing school trust fund in the nation. Now, she says, it’s ranked in the bottom one-third, due in part to “lack of oversight and accountability.”
Supporters of the House bill believe a new system could generate more revenue. Further, Dittrich believes after five years of pursuing the matter, bipartisan support this year bodes well for its passage. She’s also been a member of Permanent School Trust Fund Advisory Committee, established to review and advise the DNR on school trust land matters.

According to Dittrich, the DNR hasn’t been living up to what’s expected of a trustee of the lands, including “undivided loyalty,” and managing the lands – mostly in northeastern Minnesota – for the purpose of revenue generation, through forestry and mineral extraction.

But, she adds, “It’s a really high bar to meet. Right now, lands (state and trust) are commingled and (trust lands are) treated the same as state lands.”

One example: Dittrich said hunters, fishermen, bird watchers, and other users of school trust lands long have had access to the lands – just as they do to most other state forests and other lands – without paying for the privilege.

“School children have never been reimbursed a cent for use of the lands,” Dittrich said, adding that an independent director would be able to negotiate use of the land, as well as other matters, up front.
Dittrich also says the O’Driscoll bill would hasten the transfer/sale of school trust lands within the Boundary Water Canoe Area Wilderness that, due to restrictions, produce no revenue for the fund. Those 80,000-some acres have been the source of ongoing discussions with the U.S. Forest Service, with whom the state would offer up a trade for land outside the BWCAW, and who would pay for a portion of the trust lands within the wilderness area.

“I have contended all along if (the DNR is trustee of the school trust lands), the land trade will never happen,” Dittrich said. “If we don’t have one person (a director) working on this 24/7, it’s going to fall apart.”

However, DNR Commissioner Tom Landwehr recently said a BWCAW solution was nearing; he believed switching management of the trust lands midstream might jeopardize the progress that’s been made.

Landwehr also recently signed an “operational order,” a policy statement sent to officials in various DNR divisions with school trust land responsibilities.

Dave Schad, DNR deputy commissioner, said the operational order addresses concerns regarding management of the trust fund – shortcomings Landwehr acknowledged – most of which existed prior to his appointment a year ago, and many of them products of the Legislature.

The operational order, Schad said, focuses on those shortcomings. Further, he said, “We’ve never had a document that provided direction to staff” regarding management of and expectations for school trust lands.

The order, he said, would provide coordination and cohesiveness among DNR divisions regarding the lands.

Despite bill supporters’ contention to the contrary, the DNR believes the current system provides the greatest efficiency.

While Utah has been pointed to by some legislators as a “model” for what’s good in school trust lands management, Schad said that state has about 70 individuals whose time is devoted to school trust lands – lawyers, marketers, policy makers, etc. – things the department does that aren’t included in administrative costs, he said.

“There are many (DNR) people spending many hours, and none of those costs are charged to the trust,” he said. “There’s a ton of work that’s associated with managing this land.”

Furthermore, he added, “There are several millions of dollars in administrative costs that would need to be paid for in this bill,”

Schad said at minimum, the department estimates a board-appointed director would need four full-time workers to accomplish what’s currently being done in-house with the DNR. That doesn’t include actual on-the-ground management activities.

Still, Dittrich remains confident guardianship of the trust fund will change hands during this legislative session.

“I can’t change the past and what has happened with our children’s inheritance, but I can change the future,” she said.

A Senate committee is expected to hear a similar bill next week.

The school trust fund contribution represents about .2 percent of the state’s annual $12 billion school budget.

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