Battle is on over 2.5 million acres of school trust land in northern Minnesota

/ 15 February 2012 / jennifer

 John Myers, Duluth News Tribune, February 15, 2012 –

Natural vs. economic resources is at the center of the debate over control of Minnesota’s 150-year-old school trust land.

It’s more land than Yellowstone National Park, if you add up all the acres, and it stretches across northern Minnesota. Yet many Minnesotans have never heard of it.

It’s called school trust land — about 2.5 million acres of mostly forest and swamp in square-mile plots spread across more than 20 counties.

The federal government gave the land to the state more than 150 years ago to raise money for an education trust fund. That fund has grown over the years, both as land is sold and as the state earns money from mining, logging and other activities on trust land.

But some say it’s not building up fast enough. And this week a battle is heating up at the Capitol in St. Paul with new legislation introduced that would strip control of the school land from the Department of Natural Resources and give it to a trust manager housed in another state agency — a move supporters say would reduce overhead costs and shift focus away from natural resource protection and toward maximizing revenue for schools.

The bill passed its first committee Tuesday.

“I don’t want to criticize the DNR, but they have an inherent conflict of interest with trust lands,” state Rep. Denise Dittrich, R-Champlin, said. “The DNR’s mission is about conservation and preservation and maximizing recreation … and what the trustee should be doing is looking only at maximizing return. We need someone in charge with an undivided loyalty to the trust.”

Dittrich is among the leaders at the Capitol in the effort to draw more attention to the school trust, saying the DNR is spending too much money to manage the land and not generating enough money to increase the trust fund. The DNR should be working harder to encourage more logging, mining, land sales and trades and other development of trust land, Dittrich said.

Supporters of the change said the $700 million trust could have another $250 million in it if the DNR had better managed revenue potential off the land in recent years.

But skeptics say the change is more an effort to push sustainable natural resource management and environmental protection out of the picture on trust land, saying the move is less about school funding and more about mining. They note that lawmakers have gone so far as removing the words “sound natural resource conservation and management principles” from one version of the trust land management rules now being considered.

“They keep saying over and over that the destruction of Northeastern Minnesota is ‘for the children,’ ” said Lori Andresen, a Sierra Club activist in Duluth. “Their ‘for the children’ battle cry reminds me of the lead-up to war … on the Arrowhead region.”

Others have expressed concern that changing managers of the land may reduce access for deer hunters and others who have for more than a century used school trust land as they would any state or national forest.

DNR officials say they want to keep control of the trust land because most of it is in small parcels surrounded by state forest. It makes no sense to have separate management of small tracts, said Bob Meier, assistant DNR commissioner and the agency’s lead legislative liaison.

“Think of it as a table with 10 chairs around it. It makes no sense to call in one expert to fix nine of the chairs and then call in someone else to fix the 10th one,” Meier said. “Not only do we think this is going to cost more money in the long run, but you’re creating a new state bureaucracy in an age we’re supposed to be getting smaller and more efficient.”

There’s also a sustainability issue, Meier noted. What’s best for short-term profits may not be best for the land itself, which is where the real long-term value lies.

Meier said DNR Commissioner Tom Landwehr is close to adopting a new agency rule that would make the school land trust a higher priority, including hiring a new manager to oversee only trust lands and new emphasis on working around roadblocks to raising trust revenue. For example, if the DNR determines there are old-growth trees on trust land that should be protected, the agency would work to trade it for land that could be logged or mined to provide money for the fund.

So far, Gov. Mark Dayton has backed the DNR as the manager of trust land. But Dittrich met with Dayton on Tuesday. And she said legislative support for her plan is growing. Both the state school boards association and Education Minnesota, the state’s teachers union, support the push to get more money into and out of the trust fund.

“We have the school boards association on board. Education Minnesota (the state’s teachers union) supports it now. If we can get this to the floor we’re going to win,” she said.

Huge money

There’s now more than $700 million in the fund, and the interest earned is disbursed to school districts across the state. During the most recent two-year budget cycle, the fund contributed about $55 million to K-12 education. That amounts to about $26 per student in extra money that doesn’t come from the state’s general fund.

Last year alone taconite mining on school trust acres brought the fund more than $20 million in royalties, a number that’s projected to more than double in coming years as mining expands. And that doesn’t include mining for copper, nickel, titanium and platinum — by some estimates a potential $2.5 billion windfall for the school fund over the next 20-30 years.

State Rep. Tom Rukavina, DFL-Pike Township, has predicted that the trust fund that took 150 years to hit $700 million could more than double over the next decade or so if copper mining plans flourish on trust lands.

Dittrich points out that the $26 added another 50 percent to the $50 increase that schools got per student from traditional state sources for 2011.

“Maybe we can double or triple that and not have to affect other taxes to get the school increase,” she said.

But critics say even that would be a pittance of the more than $5,000 per student the state gives each school district. And some say leaving trust land unspoiled for future generations may have more value than rushing to reap mining royalties that might add a few dollars per year.

Tough call

Bob Krepps, director of the St. Louis County Department of Lands and Minerals, has served on the Legislature’s Permanent School Fund Advisory Committee for the past four years. Krepps said that, on paper, it appears DNR critics are correct — that the agency’s multiple responsibilities for natural resources preclude it from giving undivided attention to maximizing revenue to the trust.

But Krepps said it also makes no sense to have another entity managing the 2.5 million acres locked in the middle of DNR forest lands.

“We’ve already got state and county (forestry) trucks passing each other on the same road, and federal, now we’re going to add another color truck to the mix?” Krepps said.

Moreover, Krepps said the state can’t dictate how much wood area mills need and can’t force mining companies to dig under school trust land if that’s not where the minerals are. Trying to squeeze a lot more money out of state school trust lands is a noble goal, but not realistic in northern Minnesota, he said.

Lawmakers this week heard from Utah school trust officials who say removing the trust responsibilities from their state DNR helped improved revenue. Kevin Carter, Utah’s director of school and institutional trust lands, said the state’s school trust lands fund jumped from $18 million to $1.3 billion over the past 16 years.

But Krepps noted that much of that revenue came from selling trust land for suburban subdivisions near Salt Lake City and from oil and gas drilling revenue, things not likely to happen in northern Minnesota.

“I think there are changes coming, that the train is leaving the station to get the DNR out of this business, and I think we’re going to a have a few years of chaos when we have two agencies doing the same thing,” Krepps said. “There’s no doubt that the (DNR) commissioner really can’t be the trustee … but there’s not much sense in taking this land away from them, either.”