State Land Department Education Support

The Relationship Between Public Education and the State Land Department

There is a special Trust based relationship between Arizona’s education community and the State Land Department. Public education is by far the largest beneficiary of Trust land managed by the Arizona State Land Department. Congress granted about 8.4 million acres to common schools by granting two sections of each township to common schools when Arizona became a territory and another two sections when Arizona became a state. Today, about 8.1 million acres remains in the Trust for common schools. The Land Department is the entity charged with the fiduciary responsibility to manage and safeguard the land trust in accordance with the Trust’s mission. 
The relationship between trustee and beneficiary has recently become considerably deeper and more interactive. The improved relationship is due to the Trust providing a greater and more direct benefit to education. The amount of support has grown as the urban areas have reached large areas of Trust land. This has resulted in a dramatic increase in the permanent fund balance and the amount distributed to the schools.
This increased level of dialog and coordination, as well as the continued evolution of this relationship, has resulted in a substantial benefit to the management and protection of the Trust.

State Trust Land Revenues and the Classroom Site Fund

Earning money for Arizona’s public schools is the primary mission of the Trust’s management.
Revenues earned from Trust land are classified as either permanent or expendable. Revenues derived from the sale of State Trust land, the sale of natural products (such as sand, gravel, water and fuel wood), and royalties from mineral materials are deposited in the Permanent Fund and invested in stocks, bonds, and interest-bearing securities by the State Treasurer. Expendable revenue is comprised of the Treasurer’s formula distribution from the Permanent Fund, rent from leases, and interest payments on sales financed through the Land Department. Expendable revenue is transferred directly to the beneficiaries for their operation. For FY 2010, the Land Department had $38.1 million in expendable receipts. The constitutional distribution formula resulted in the Treasurer distributing $0 for common schools. The Land Department also deposited $91.7 million into the Permanent Fund.

Proposition 301 (passed by voters in the 2000 elections) created a Classroom Site Fund whereby particular sources of funds, including revenue from the fiduciary management of State Trust land, are directed to fund such items as teachers’ salaries, classroom size reduction and dropout prevention programs. According to Proposition 301, the first $72.3 million in expendable revenue for common schools is used to fund the basic state aid formula used to fund education. Expendable revenue in excess of $72.3 million is deposited into the Classroom Site Fund. Unfortunately, no money was deposited into the Classroom Site Fund from the Trust in FY 2010.

The following charts show the recent history of expendable revenue for the Common Schools and Classroom Site Fund deposits.