A Teachable Moment: Leveraging Oregon’s School Trust Lands

John A. Charles, Jr.QuickPoint!

Oregon owns a billion dollars worth of agricultural and timber land that is supposed to be generating funds for public schools. Much of it is in eastern and southwestern Oregon, and was deeded to Oregon from the federal government at the time of statehood in 1859. By law, these lands must be managed to generate maximum revenue for schools over the long term.

Unfortunately, the lands only earn about 3% on asset value annually, and some rangelands actually lose money. In order to improve this, the state could sell these lands and invest the money in stocks and bonds. This is how funds are invested on behalf of the Public Employee Retirement Fund, and the results have been impressive: the average annual return over the past 3 years from these investments has been 15%.

Selling the trust lands was recommended to the state in 1994 by a Department of Forestry consultant, but the State Land Board chose to retain ownership. That decision has cost schools more than $4 billion in lost asset appreciation.

The Land Board is currently updating its management strategy for the school trust lands. They should immediately take steps to sell off under-performing parcels and place the revenues in higher-earning investments. That’s what we do for unionized public employees. If it’s good enough for them, it’s good enough for the students who are supposed to be benefiting from these trust lands.

John A. Charles, Jr. is president and CEO at Cascade Policy Institute, a Portland, Oregon based think tank.

© 2006, Cascade Policy Institute. All rights reserved. Permission to reprint in whole or in part is hereby granted, provided the author and Cascade Policy Institute are cited. Contact Cascade at (503) 242-0900 to arrange print or broadcast interviews on this topic. For more topics visit the QuickPoint! archive.

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