State Land Department Revenue
Summary of Revenue for Fiscal Year 2010
In this fiscal year, Land Department staff continued their diligent work and sincere dedication to support the Trust. Even in the current recession, we were successful in generating revenue for the beneficiaries. While the Department did not set new records, it did perform remarkably well in this economy. The following statistics help put the year's receipts into perspective:
- $155,429,219 Total Receipts - Ranks 7th all time
- $49,958,007 Expendable Receipts - Ranks 7th all time
- $94,511,605 Permanent Receipts - Ranks 7th all time
- $19,151,000 Land Sales - Ranks 19th all time
The Department's receipts were allocated as follows:
- $94.5 million from the sale of land and natural products was deposited into the Trust Permanent Fund, increasing the book value of the Fund to $2,331,097,000;
- $11.1 million was deposited into the Trust Land Management Fund, which is used to manage the Trust;
- Public schools and institutions received $50.0 million from land rents and interest income; and
- ($0.4 million) was deposited in the General Fund. The negative General Fund amount is due to $1.8 million in corrections being made to receipts that went to the General Fund in prior years that should have gone to the beneficiaries.
Each year as part of the Department's budget request, the Department provides a revenue forecast to the Governor's Office of Strategic Planning and Budgeting and to the Joint Legislative Budget Committee. The budget request due on September 1, 2010 included a forecast for fiscal years 2011, 2012, and 2013.
The forecast reflects the current real estate market and economy. The forecast assumes land sales of $91 million in FY 2011, $50 million in FY 2012, and $250 million in FY 2013. For comparison, $454 million was sold in FY 2007, $126 million in FY 2008, $72 million in FY 2009, and $19 million in FY 2010. Most of the FY 2011 and FY 2012 sales are expected to be to government entities for conservation purposes. Along with sales volume, the real estate market and economy significantly affect the amount received in early payoffs. The forecast does not assume any early payoffs or partial patents.
More significant than the early payoffs and partial patents is the number of current certificate of purchase (CP) holders that have requested, and will request, extensions for their scheduled payments. The Department has been able to work with the CP holders when it is in the best interest of the Trust. Extensions are not always in the best interest of the Trust or the CP holder; therefore, the Department forecasts some CPs to be cancelled during this three year period. If the land is returned to the Department, the principal received will be converted to expendable earnings. The longer the housing market continues to struggle, the more likely CPs will be cancelled.
Permanent Fund Revenue
Permanent Fund Revenues come from the sale of land or royalties from natural products of the land. The State Treasurer invests these funds in stocks, bonds, and other interest-bearing securities. The Treasurer distributes funds to the beneficiaries based on a constitutional formula based on the rate of return, inflation, and the market value.
|Permanent Fund Receipts and Balance by Beneficiary|
June 30, 2010 Balance*
FY 2010 Receipts
|Legislative, Executive, and Judicial||201||5,117,000||6,509,000|
|State Charitable, Penal and Reformatory||760,676||75,026,000||87,388,000|
|Agricultural & Mechanical Colleges||153,223||6,249,000||8,135,000|
|School of Mines||86,061||7,541,000||9,186,000|
|University Land Code||16,595||12,256,000||15,065,000|
|University of Arizona (Act of 2/18/1881)||161,963||25,955,000||32,269,000|
|School for the Deaf & Blind||433,850||2,969,000||3,861,000|
|*From the State Treasurer's Report dated July 29, 2010|
Expendable Revenue includes lease revenue from Trust land leases and permits, interest from sales contracts, and treasurer's formula distribution on Permanent Fund investments. Expendable Revenue is available to beneficiaries to use directly for their operations. Proposition 301, passed in 2001, provides that all Common School Expendable Revenue exceeding the FY 2001 base will go to the Classroom Site Fund.
|Expendable Revenue by Beneficiary|
Treasurer's Formula Distribution1
Lease & Sales Contract Interest
Total Expendable Revenue
|Legislative, Executive, and Judicial||0||252,296||252,296|
|State Charitable, Penal and Reformatory||0||5,341,811||5,341,811|
|Agricultural & Mechanical Colleges||0||84,261||84,261|
|School of Mines||0||307,338||307,338|
|University Land Code||0||1,824,531||1,824,531|
|University of Arizona (Act of 2/18/1881)||0||427,226||427,226|
|School for the Deaf & Blind||0||164,768||164,768|
|1 From the State Treasurer's Office|