Colorado school trust fund to drop by $21 million
December 26, 2009
DENVER – A drop in coal production is translating into millions of dollars in declining revenue for Colorado’s school land trust, which helps fund public K-12 education.
The Denver Post reports that revenue to the trust fund is expected to decline by $21 million by June and that the decrease is forcing the State Land Board to re-evaluate how the trust gets its income. In the last decade, the trust fund has relied on the increasing mineral revenues, which form about 80 percent of the trust’s income.
But the revenue source is susceptible to market changes and its nonrenewable, which has land board officials thinking about how to manage the trust in the future.
“We’ve gravitated towards ‘bright-and-shiny-object projects,’ and there isn’t a long-term vision,” said Brownell Bailey, director of the Colorado State Land Board. Gov. Bill Ritter appointed Bailey in August.
The land board manages about 3 million acres of trust land throughout the state. The trust fund earns income when land is leased for ranching, farming, mineral and oil and gas production, and commercial uses. The state also owns about 4 million acres of mineral rights.
About 95 percent of the lands belongs to the state’s school trust fund to help public K-12 education.
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Bailey said that he plans to have meetings with the five volunteer board commissioners in January to talk about future strategies. The commissioners represent education, agriculture, local government, natural resources. There is also a citizen-at-large commissioner.
The majority of the trust’s revenue, about 81 percent, comes from minerals. Wyoming, Utah and New Mexico also rake in big revenues from the minerals and get millions of dollars more than Colorado because they have more trust land and more minerals to extract.
But what to do when that source runs out is a challenge that faces Western states, said Peter Culp, a Phoenix attorney and an expert on development, management and conservation of state trust lands.
“There needs to be a more modernizing approach to asset management, thinking about how assets will change, be preserved and generate revenue over time,” he said. “Unfortunately, there is a lot of focus on what produces the highest revenue at that moment.”