State Board hears annual School Trust report on lands, revenues and new projects

Paula Plant, director of the School Children’s Trust at the Utah State Board of Education, told the board the School Trust system must deliver an annual report because the State Board is the largest beneficiary of school lands and funds.

The report outlined how trust lands granted at statehood generate revenue that the School and Institutional Trust Lands Administration (SITLA) manages, and how the School and Institutional Trust Fund Office (SITFO) invests those receipts and returns distributions to schools. “The land office manages the land. They send the revenue to the fund office and the fund office manages the money,” Plant said.

Why this matters: The trust lands and the revenue they produce are not state tax dollars; they are permanent trust assets intended to benefit public education and two specialized beneficiaries, the schools for the deaf and blind. The board heard that the system’s annual distributions and fund management affect school budgets statewide and that recent statutory and policy work aims to increase clarity and Board involvement.

Paula Plant and other trust-system speakers described the roles of the principal entities. Stephanie Barber Renteria, managing director of SITLA’s Energy and Minerals Team, explained SITLA’s three revenue-generating business groups: Energy and Minerals (leases and royalties), Real Estate and Development (partnerships and development agreements), and Surface Resources (easements, grazing, special-use leases). “Our standard lease royalty rate is 16.67¢ on that dollar,” Barber Renteria said, describing mineral and energy royalty mechanics. She reported nearly $130 million in total revenue during the last fiscal year, with roughly $58 million from energy and minerals, $54 million from real estate and development, and about $17 million from surface resources.

Peter Madsen, director and chief investment officer of SITFO, described the fund office’s mission and investment approach, saying the office manages about a $4,000,000,000 portfolio and aims for steady growth and a distribution policy that smooths volatility. “Our responsibility to maximize the return is obviously one of the primary drivers,” Madsen said, and he emphasized the office’s long-term objective of inflation plus 5% and a prudent-investor approach to avoid risking distributions.

Board members asked about administrative costs, investment scope and transparency. In response to a question on overhead, Madsen said SITFO’s total fund expenses are about 0.14% of assets, roughly $3,000,000. On “global assets,” Madsen explained the office uses a diversified, global set of institutional investments across public and private equities, bonds, real estate and other asset classes.

The report summarized current SITLA projects and priorities: a land-characterization and strategic mapping project with GIS to centralize data about commodities and development potential; the John Dingell land exchange that closed in February (an exchange begun under earlier federal/public-lands legislation to swap lower-revenue lands for higher-revenue parcels); growing geothermal leasing interest tied to the University of Utah FORGE research and private follow-on activity; and a carbon-sequestration lease at the Drunkard’s Wash block to explore injection fees as a revenue source.

Kim Christie, director of the Land Trust Protection and Advocacy Office, explained payments in lieu of taxes (PILT) that the state distributes to counties for state-owned lands and other public properties. “Roughly a dollar per acre is paid through state PILT on average,” Christie said, and noted that farmland assessment values for private grazing lands typically yield lower property taxes than PILT payments on trust lands—an important factor for rural counties.

The Board was told that recent legal and policy changes shifted some board involvement away from the trust system but that the Board has asked the Trust Lands Advisory Committee and staff to review statutes and rules for clarity and simplification, and the advocacy office is recommending increased board engagement. Plant said the trust advisory committee will return recommendations to the Board later in the year.

Board members asked additional operational questions about how SITLA decides to sell or trade parcels, and Barber Renteria described the agency’s analysis of “highest and best use” and market conditions before sales or exchanges.

The presentation closed with an offer to answer follow-up questions and to provide more detail to board members or constituents who request it.