School and Public Lands Office History When So uth Dakota b eca me a - PDF document

2 Agency Presentation - SPL - FY15 Tuesday, February 18, 2014 9:06 AM South Dakota Office of School and Public Lands February 20th, 2014 Appropriations Committee Presentation School & Public Lands Budget

School and Public Lands Office History When So uth Dakota b eca me a sta te in 1889, th e Federal Government granted th e state over 3.5 million a re s of l and. Township ections 16 and 36 were re se rved for sc h ool and pub li purpo ses; th ese are known as Co mmon School La nd s. If th e sections we re alread) sett le d, th e gove nunent pro , ided repla eme nt property known as indemnit y lan ds. Additional property was also provid ed to be u se d ho wever the state wi shed . Th e South Dako ta onsti tu tion divided th ese lan ds among the tat e' univers ities, th e h ool for the Vi s uall y Ha ndi ap p ed, the Sc ho ol for th e Deaf, State Tr a inin g School , an d th e D evelo pm e ntal en t er in. Redfield. To manage the se land s and the money gene rated, th onstitution esta blish ed th e Office of Schoo l and Publ ic Land s. Accor din g to th e ons titution , conu non sc hool and indenuuty lan ds were e ith er to be sol d or l eased and the pro e ds de po s ited in a permanent b.ust fund for edu ation. TI1e prin ipa l could be increa se d, but ne, er dimini shed. Int eres t from the f und was to be used for funding edu ation. Each yea r th e office r et urn s a ppro x im ately $10 nullion to sc hool di stricts and e ndo we d :iJ.1.stituti.011.s. TI1e mone y is genera ted from grazing, nu neral, oil and ga lease , :iJ.1.tere t from th e P er man e nt Fund , and int eres t e arned on land a nd sales co ntr acts. 2

Surface Division • ar for 5 y ar R v nu by Land a urfa la with a 5 y ar pti n $3,454,838.72 COMMON SCHOOL • V r 2800 l ~ uo• c o on S323, 175.37 SOUTH DAKOTA STATE UNIVERSITY $95,900.53 UNIVERSITY OF SOUTH DAKOTA 760,422.454 ac re $48,017.28 PUBLIC BUILDINGS $15 , 511 .89 SDSU EXPERIMENTAL STATION • tat manag s weed $24,364.02 DOC JUVENILE PROGRAMS and p t ontrol on $34, 151 .85 SCHOOL FOR THE DEAF $68,364.18 SCHOOL FOR THE VISUALLY IMPAIRED land tlu·ough th e $83,251 .73 REDFIELD HOSPITAL AND SCHOOL d a nd p t fund w $50,264.79 SCHOOL OF MINES $168,294.04 DAKOTA STATE UNIVERSITY $69,274.52 • Ex ut SPRINGFIELD $76,653.52 NORTHERN STATE UNIVERSITY an .d la nd $672.00 REDFIELD SD DEVELOPMENT CENTER $4, 331 .20 other agen ies in. state CORRECTIONS/PLANKINTON go mm nt TOTAL $4,517,065.64 3

Mineral Division • State owns 5.2 million acres of mineral rights • 50% of r v nu paid ut annually and 50% to th SPL Trust Fund Min era l, Oil & Ga L a R ntal $ 242,715.00 Oil & Gas Royalty (12.5 % ) $3,298,003.24 Mineral, Oil & Gas Bonu s $ 244,061.00 Oil & Ga Mi -- Han ou $ 35,759.43 TOTAL $3,820,538.67 Money sp lit $1.9 M paid out and $1.9 M to tru st fund 4

Permanent Trust Fund At statehood, the Permanent Trust Fund was e tablished wit h the intent of providing a contin uou s so ur e of revenue for public s hool s, universities a nd endowed institutions. Proceeds from th e sale of land are to be deposited in the fund, which can be added to but never diminished. The interest and dividend generated by the fund are apportion d to s hool distri t , universities, and endowed institutions. Constit utional ame ndm ent in 2000 allowed for two thin gs 1. Adjust for inflation • Pr viously r quir d to pay out all in ome • Land that sold for $20 an acre in 1900 was never adjusted. 2. Invest in Stocks throu gh the SD In veshnen t Council • Previously limited to savings bonds or direct loans • Much higher growth potential of the fund. 5

Asset Growth 23 ($ in millions) M ,-..; - N N 225 200 175 150 125 J% 100 75 50 25 0 '7 • The permanent fund is tarting to benefit from the year 2000 on titutional am ndment allowing for inflationary adju tment and inv sting in sto ks. 6 The futur payout will in rea e ignifi antly if th e 1narket hold

Dollars to Education • K-12 money is earned in previous fiscal year. FY13 payout is revenue generated in FY12. • K-12 S h ol in FY13- $7,422,431.60 • K-12 Schools in FY14- $8,773,821.56 (18% increase) • FY14 payout occurred on February 4th, 2014 • B oard of R g nt - $1,441,627.55 • Endowed In stitut ion s- $548,260.83 Total FY13 $9,412,319.98 Total FY14 $10.7 milli n timat d 7

Dollars Returned to Universities Sou th Dakota Stat Univ rsity $ 548,451.00 Dakota Stat Univ rsity $ 173,360.00 Univ rsity of Sou th Dakota $ 236,041.00 SD S hool of Min s & T hnology $ 12 7,022.55 Black Hills State University $ 173,360.00 Northern State University $ 183,393.00 $1,441,627.55 TOTAL 8

Dollars Returned to Endowed Institutions Ju v nil orr tions $ 92,642.77 SD & SVH Adnunistrativ Fund $ 47,063.99 R dfi ld D v lop1n nt C nt r $145,013.94 S hool for th D af $ 99,776.87 SDSU Experilnental Sta ti on $ 69,051.26 S hool for the Visually Handi apped $ 94,712.00 $548,260.83 TOTAL 9

Future of School and Public Lands Revenue • Surfa L asing- onsist nt, d p ndabl incom will ee som increases because of den1.and for land and the price of cattle. • Oil and Gas- Steady increases. FY14 royalties already higher than FY13. New wells ontinue to be drilled. • P rrnan nt Fund- R ov r d from th r ssion and th e sto k mark t ra h. Full amount of payouts i st ar ting to b r iv d. Long-term growth of the permanent fund will h elp adjust for 112 years of lo st value due to inflation. This will result in higher p you ts for th futur as th fund grows. 10

Other SPL topics • FY15 Budget- Similar to FY14 budget. No changes from the Governor's recommendation. • Dams- House Bi ll 1034 now in the Senate Appropriations Committee. HB 1034 extends time deadline on existing fundi ng. Future Topics • Land Trax Software System update needed in the future • Ranch Improvements 11