Date: 01/16/2013

Final
Briefing by the State Board of Land Commissioners

COMMITTEE ON JOINT AG AND JOINT ED

Votes: View--> Action Taken:
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07:31 AM -- Briefing by the State Board of Land Commissioners

Senator Hudak, Chair of the Senate Education Committee, welcomed the committee members and explained that the discussion with the State Board of Land Commissioners is required per Joint Rule 25. She did not take attendance. Senator Hudak gave a brief history of the School Land Trust. Senator Schwartz, Chair of the Senate Agriculture, Natural Resources, and Energy Committee, also welcomed the committee members.


07:34 AM

Mr. Bill Ryan, Director of the State Land Board, came to the table and introduced himself to the committee. He distributed four handouts (Attachments A, B, C, and D) and explained that the State Land Board (Board) was created when Colorado became a state and explained that its purpose is to manage revenue that supports a perpetual, inter-generational trust to support schools. He stated that the State Land Board currently manages eight trusts, but that the public school trust accounts for more than 95 percent of its assets and the majority of its revenues go to support K-12 education. He then explained that the Board manages more than 3 million surface acres of land and 4 million acres of mineral rights, called state trust lands. The Board has a dual mission to produce reasonable and consistent income for the trust and also provide sound stewardship for the state trust lands that it manages. Mr. Ryan stated the State Land Board is entirely funded by its own operations, and therefore does not use any tax dollars. He explained that it takes $5 million a year to run operations, and that these operations are funded by oil and gas leases, agriculture leases, highways, roads, pipelines and electrical lines that cross over rights-of-way, leasing land for recreational purposes, and income from operating ranches. Senator Hudak asked Mr. Ryan to explain why there are so many small areas of land holdings shown on the state trust lands map that was displayed in the room. Mr. Ryan explained that when Colorado received land grants from the federal government it received section 16 and section 36 of every township in the state.

13JtAgandEd0116AttachA.pdf13JtAgandEd0116AttachA.pdf 13JtAgAndEd0116AttachB.pdf13JtAgAndEd0116AttachB.pdf

13JtAgAndEd0116AttachC.pdf13JtAgAndEd0116AttachC.pdf 13JtAgAndEd0116AttachD.pdf13JtAgAndEd0116AttachD.pdf

07:42 AM

Mr. Ryan continued to explain how the school trust earns income, both from recurring and one time revenue sources. He talked in more detail about how income is generated by oil and gas leases and bonuses. Mr. Ryan discussed a possible drop in income in future years due to a decrease in the price of oil and the possibility of lower land productivity. He stated that in response, the Board is trying to develop its other recurring revenue sources, especially its real estate portfolio, recreation leases, and renewable energy projects to fill the gap created by non-recurring businesses.


07:49 AM

Mr. Ryan continued by explaining that the majority of the revenue in the trust is used for two education programs. The first is the Building Excellent Schools Today (BEST) program, which receives 50 percent of recurring and non-recurring revenues. The second 50 percent goes towards funding budget gaps in K-12 education as outlined in the School Finance Act. Senator Schwartz asked Mr. Ryan to discuss the management of trust assets in relation to mineral assets, oil and gas assets, terms of exploration leases, and terms of lease renewals. Mr. Ryan answered that it's a challenge to put an exact value on the mineral estate and the Board relies heavily on its operating partners for this determination.


07:58 AM

Senator Schwartz recessed the Joint Agriculture committee and the Joint Education Committee continued the meeting. Representative Hamner asked how the revenue from the land trust is statutorily required to be distributed. Senator Heath asked about the management of the School Permanent Fund and Mr. Ryan answered that it is managed by the state treasurer and the interest used to fund schools. He explained that according to the Colorado Constitution, the School Permanent Fund is not allowed to be touched, only the interest revenue can be used.


08:07 AM

Senator Renfroe asked Mr. Ryan to compare the State Land Board's land holdings to the federal government's land holdings. Representative Wilson asked Mr. Ryan to explain the increase in current operating expenses and Mr. Ryan answered that it is due to an appropriation to update the Board's asset management system, streamline its operations, and update its technology systems. Senator Johnston asked for further explanation about the constitutional restrictions on the School Permanent Fund, and Senator Hudak asked Mr. Ryan to explain the 300,000 acre Stewardship Trust of lands.


08:19 AM

The committee adjourned.