Arizona School Trust Lands And Fund
On February 14, 1912, Arizona joined the union, and Congress granted 10.9 million acres to Arizona, including four sections per township for the support of public schools. Schools received 9.49 million acres and now hold 8,272,106 million surface acres and 937,212 mineral acres. About a half million acres[1] are caught within federal designations, meaning they are not generating revenue for schools as Congress required. All school trust lands are managed under the direction of Robyn Sahid, the State Land Commissioner, who is appointed by the governor. The Arizona Land Department is located at 1110 W Washington in Phoenix. The phone is (602) 542-4631. These lands are held in a multi-generational perpetual trust for the benefit of the public schools (https://land.az.gov).
Gross Annual Revenue from Arizona School Lands
During Fiscal Year 2022, the school trust lands generated $580 million in gross revenue and $521 million was invested to continue to support Arizona’s public schools. The largest revenue sources are land sales and royalties, commercial lease payments, and interest on land sales. During FY 2022, there were 16 sales at auction which generated $596 million. Wow! It was the second highest ever total land sale value since statehood. This year the office completed the Southlands Conceptual Master Plan to create a framework of zoning banks and development of 32,000 acres near Tucson.
Expendable revenue from renewable sources, like leases and royalties, are sent monthly by the State Land Department to the Department of Education. Those renewable sources are split between the Classroom Site Fund and the regular state aid to education.
Permanent fund revenue from land sales and non-renewable sources are invested by the elected State Treasurer, Kimberly Yee, in the Permanent Common School Fund. Monthly distributions are sent to the Department of Education to be distributed to individual school districts. Since September 2019, Arizona has had a 5-year lockout of the initial investments of the Permanent Common school Fund that will run FY2000 to FY 2024. Thereafter, the annual distribution will be 4%. Prior to this, Arizona was distributing the highest percentage of its school fund annually, meaning current school children were robbing future generations of school children. Due to Prop 123, Arizona was eating its seed corn. Several legal challenges ensued.
Arizona Permanent Common School Fund Market Value
Profitable management of the school trust lands with prudent investment should lead to rapid growth in the Permanent Common School Fund. The Permanent Land Endowment Trust Fund includes the School Trust plus trusts for 3 universities, schools for the deaf and blind, state buildings, the state hospital, Pioneers’ Home, and juvenile and adult corrections. Collectively these funds are managed by the Arizona State Treasurer. Tim White is the Director of Endowments, and his office is located at 1700 W. Washington Street, Suite 102 in Phoenix, and available at (601) 542-7836. The funds are invested with 60% in equity indexing and 40% in active fixed income. Over the last 10 years the annualized total return is 8.24%. The market value of the Permanent Common School Fund was $6.62 billion as of June 30, 2022. The five-year time weighted return net of fees is not available until 5 years after the inception date of September 2019.
Distributions to Arizona Department of Educaation
The Arizona School Trust has sent significant dollars to the Arizona Department of Education annually, even though the Enabling Act grant specifically stated the grant of four sections per township was to schools. Other western states comply with their enabling act and send the distribution directly to each district for distribution to their schools or directly to each school.
[1] There are 542,961 acres of school trust lands in federal designations in Arizona like National Monuments, National Parks, etc.