REGIONAL—A just-completed inventory of the state’s school trust lands should help policymakers and natural resource officials more effectively manage the roughly 2.5 million acres of state lands owned by the trust. It’s a big issue here in St. Louis County, where approximately 481,000 acres of school trust lands— or nearly one-fifth of the statewide total— are located.

The report, delivered to the Legislature this week, was the first, critical step in helping officials with the Department of Natural Resources develop better strategies for maximizing the long-term financial return to the school trust, which provides annual funding to all Minnesota public schools.

“This is just the inventory,” said Minnesota school trust coordinator Aaron Vande Linde. “This doesn’t recommend any policies, or plans,” he said.

Those recommendations will come in a separate report—essentially a business plan— which Vande Linde expects to complete by the end of the year.

The new inventory, however, does give DNR officials their first comprehensive look at the nature of the roughly 65,000 forty-acre parcels that make up the school trust’s current holdings. DNR officials used a GIS model to help determine the various characteristics of each parcel. “We tried to approach the 2.5 million acres as holistically as possible, to capture the natural resource attributes as best we could,” said Vande Linde.

The DNR developed a total of nine separate classifications, based on their potential highest value or priority for revenue generation. The classifications, in order of likely revenue potential, include:

• Lands with valuable minerals.

• Lands with real estate potential.

• Productive forestland.

• Lands with aggregate potential.

• Lands with agricultural potential.

• Recreational lands.

• Lands with shoreline.

• Lands for stewardship.

• Non-productive lands.

Many of the parcels examined fit within more than one category, said Vande Linde, but in each case, parcels were added to the category with the highest potential value. That means, for example, that lands with mineral potential, as well as productive forest and recreational potential, would be classified as mineral lands.

The effort to better understand and utilize the school trust lands was prompted by legislative action in 2012, which established the position of land trust coordinator and mandated that the lands be managed with a greater emphasis on maximizing financial return.

At the time, some legislators were pushing for more aggressive timber harvesting on school trust lands, but it’s unclear, said Vande Linde, whether such an approach actually leads to the maximization of revenues. “You don’t want to flood the market,” said Vande Linde, noting that such a move can quickly drive down stumpage prices. “I think we have a very good model that we’re working on, that will provide the industry with the fiber that it needs, and the state with the revenue it needs,” he added.

By not flooding the market with wood, the state has kept stumpage prices relatively high, at an average of $20-$22 a cord. “We want to maintain something on that order,” said Vande Linde.

The situation illustrates that the real policy objectives sought by legislators aren’t always furthered by their legislation. Back in 2012, some northern Minnesota legislators had wanted to boost school trust timber sales as a way of lowering stumpage prices for loggers and wood products manufacturers, still struggling through the Great Recession. Yet such an objective may well be inconsistent with a mandate to maximize returns to the trust.

Similar factors suggest that the DNR may well take a “go-slow” approach to the sale of trust lands identified as having potential for development. While such lands are found all across the state, many of the lands in this category, particularly in northern Minnesota, are found on or near lakes, and have the potential for sale as lake home property.

But don’t look for a fire sale on those lands anytime soon. Again, said Vande Linde, putting too much land on the market at once tends to drive down values. In many cases, lands identified as potentially valuable real estate, may well be managed for other uses for a time, and possibly sold during periods when market prices are higher than they are today.

In the meantime, said Vande Linde, the DNR does not have the authority to lease lakeshore property, as was often done in the past. The trust can, however, lease public access points it owns on lakes and rivers to other state agencies, such as the DNR. For years, the DNR utilized school trust lands for public access or other such purposes, without compensating the trust. That practice is likely to change, said Vande Linde, given the new legislative direction to trust managers.

The same holds true of school trust lands with unique biological resources, such as old growth forest or endangered species. While those areas may well be managed for those purposes, said Vande Linde, other agencies of state government will need to compensate the trust for doing so.

While most of the school trust property has potential value on one kind or another, that’s not always the case. According to the inventory, about 441,000 acres of school trust land is classified as “non-productive,” and most of that is swampland or bog, with few, if any, marketable resources. But that doesn’t mean that Vande Linde isn’t exploring ideas. He said the DNR is considering hiring a consultant later this year to explore possible ways of generating revenue from such lands, such as carbon sequestration or wetland banking. “We have to look at all the possibilities,” he said.

Consolidating its resources

While the details won’t be available until Vande Linde releases his management plan about a year from now, he said he hopes to reduce the cost of managing school trust lands as another way to boost net revenues. Currently, management costs consume about 25 percent of the gross receipts that the school trust takes in, and Vande Linde says he’d like to reduce that figure.

One way to achieve that goal is to consolidate the trust lands wherever possible. When Minnesota became a state back in 1858, the federal government granted sections 16 and 36 of each township to the state’s school trust. That’s left the ownership pattern a veritable checkerboard across the state, and that inevitably increases the costs of managing those lands. Vande Linde said he wants to move towards greater consolidation of lands, an objective he can most likely achieve through land exchanges.