What is a School Trust?

School trusts were created by the U.S. Congress at statehood. Congress granted 137 million acres in trust to support schools. The statehood act along with the state constitution create a sacred compact between the federal government and each state. States assumed the responsibility to manage the lands to support public education. Each school trust consists of two parts: lands and permanent school funds.

Trust Lands

School trust lands include lands that were granted by Congress to states at the time of their statehood, the mineral rights associated with those surface acres, lands acquired by exchanging school trust lands, and lands purchased with funds generated from a state’s school trust. How states manage school trust lands depends on the state. Some common uses of trust lands include oil and gas production, wind farms, grazing, agriculture, timber, solar farms, rights-of-way, and commercial, industrial and residential development.

Permanent School Funds

Permanent school funds are made up of the revenue generated from school trust lands. The main purpose of permanent school funds is to ensure that future generations of schoolchildren receive benefit from school trust lands in perpetuity. Throughout history, school trust lands have faced many challenges that have diminished their ability to fulfill their purpose: providing funding to public schools. Even today, the significant funding stream for the nation’s public schoolchildren that comes from school trust lands is threatened.

The permanent funds are generally managed by the State Treasurer, a professional investment board, or the Land Board.

Land Uses

Revenue from trust lands are placed in permanent funds.  Trust lands generate revenue by selling the land surface or minerals. In addition, money is earned from grazing, agriculture, timber, mining, commercial development, and right-of-way grants.  Revenue sources from the land that flow into the permanent fund vary from state to state. Every state places revenue from land sales in the permanent fund.

Funding Education

In some states all the revenue flows to the fund, growing the fund and investment revenue larger each year.  In others, it is only revenue from resources that are non-renewable that are deposited into the fund and renewable resources are distributed directly to schools.

Once the profits are placed in the trust land account it will be held for an indefinite time for the schools.  Each school has a community council that consists of the administration, parents, and teachers.  This committee determines how the school will use the trust land fund for the benefit of the students.

History

At one time, every state had a land grant and/or a school fund held in a trust for public education. The General Land Ordinance of 1785 set aside one square mile in each thirty-six square mile township (almost three percent of a state’s total land area) “for the benefit of public schools.” As western states entered the Union, the grants expanded to two square miles per township (about 5.5% of a state’s total land area). When Utah, Arizona, and New Mexico entered the Union, they were each granted four sections per township (over 11% of each state’s total land area), because their land was so arid.  (Learn more about the states here)