Wednesday, January 16, 2013

North Dakota's School Land Permanent Trust Now Reaching $2 Billion

This is an excellent article in The Minot Daily News.
North Dakota's school land permanent trust fund is growing by leaps and bounds thanks to the Bakken development.
"It took 122 years to hit $1 billion," said deputy land commissioner Jeff Engleson of the North Dakota Department of Trust Lands. "It took two and two quarter years to hit the second billion."
North Dakota has about 743,000 surface acres of trust lands, located primarily in the western part of the state oil country. The land was granted to the state as it was to the majority of westward expansion states by the federal government at its founding and is intended to support public education for as long as the state exists.
This is one of those articles I hope it not lost due to archiving. I may come back to it and post data points so that if the article is lost, we have the major points.

I don't know if the trust lands referred to in this article are the same as those discussed in one of my earliest posts, and linked at the sidebar at the right, at the very bottom:
The origins of granting sections 16 and 36 of each township to public education.

Early History of North Dakota: Essential Outlines of American History
by Clement Augustus Lounsberry, p. 628.

"The idea of assigning a constant share of all United States public lands, for the support of free education, wherever the public domain might extend beyond the limits of the original states, was first engrafted upon this nation, by our Revolutionary forefathers, in the general ordinance for public surveys, passed by Congress May 20, 1785; this great statute devoting section 16 in each township "for the maintenance of public schools within the said township."
From the North Dakota Department of Trust Lands:
In 1889 the brand new State of North Dakota, through an act of Congress called The Enabling Act, received a gift of over 3 million acres of land from the Federal Government for the purpose of funding public education in the State to perpetuity. Typically, that transfer included Sections 16 and 36 in every North Dakota township. To manage the assets, Article IX of the North Dakota Constitution created the Board of University and School Lands, more commonly referred to as the Land Board. The Land Board is comprised of the Governor, Secretary of State, Attorney General, State Treasurer and Superintendant of Public Instruction.
If so, and if I understand the article correctly, it begs the question why we are still hearing about funding issues for the states public schools....maybe someone can enlighten me.

[Added: see comments below -- 3 million acres originally; then to 1.8 million acres and most of this was in the west.]

Other data points from the article:
North Dakota is in good shape compared with many other states, according to a recent study that examines the management of school trust lands for all 50 states. The team from Utah State University found that 30 states have lost school trust lands; 20 states still have permanent trust lands. Of those states, not all of them have managed their income as well as others.
Richard West, executive director and professor at the Center for the School of the Future at Utah State University in Logan, Utah, said other states have lost school trust lands due to mismanagement or neglect of fiduciary duty. California, for instance, had lost 92 percent of its original school trust fund acreage as of 2011 and had just $61 million in a permanent trust fund. Nevada had lost 100 percent of its original 4 million acreage and has $307 million in its permanent trust fund for schools. Wisconsin had lost nearly 100 percent of its original 1.5 million acreage and had a permanent trust fund valued at $836 million.
Other states, like North Dakota, have benefited from energy development. Texas, for instance, had $31.2 billion in its permanent trust fund in 2011.


  1. yes ,they are the same, but they also could be other sections then 16 and 36..

    1. Thank you. That is truly incredible. That amount of money coming into the public school system and it keeps coming in, day after day.

      North Dakota citizens should be asking for quarterly updates to be posted on how this money is being managed, and maybe indeed it is being posted.

  2. I am struggling with the number of acres. Its 1,160 sections. 32 townships. If they get a 1/2 section out of each townships. There isn't enough townships to make the math work. So the state obviously has land aside from the school quarters. I wonder in the 30's and 70/80's when farmers lost land that the state bank had borrowed money on if the land got turned back to the state, they kept those mineral acres as well as the school quarters. But again that doesn't make sense either, since the state bank wasn't the direct lender, so it would have been a more local bank that would have gotten the land back.

    As to why we fund public education, well we have a Divison 1 football champion and a pretty good hockey team at UND. Those cost money.

    Kent (I'm a fan of each)

    1. That's what I thought, also: the math doesn't work. That's why I suggested I might not be understanding this. But still .... $2 billion and growing.

  3. Bruce you note quarterly updates. I have been trying to find out what the real ND surplus is for years. There is this fund with 2 billion. The legacy fund has almost a billion, there is the tobacco fund. What else does the state have? I am glad they have it and don't feel we should cut income taxes at the state level, property taxes that is a different issue, but I would like to know what the balance is.


    1. I agree. I assume some enterprising reporter will start tracking the data; maybe a good project for a UND graduate student.


  4. Sections 16 and 32 of each section yields 1280 acres of land from each township, not 320 acres per township as stated in the comment.

    There are 70,704 square miles in North Dakota. If one out of every 18 sections were originally school land, 3928 square miles would be the theoretical amount of the original grant (and probably less). That equals 2.5 million acres.

    Over time, school grant land was sold (especially in the east) to raise money and fund the trust. Less than one third of the land is still owned with surface rights, but the following document states that school trust still owns 1.8 million acres with mineral rights.

    There is a map in this link that shows the school trust land holdings. Having grown up in rural eastern ND, most of the school lands in that area were sold by 1940 and probably much earlier. Ironically, because the lands in the current Bakken footprint were worth less early in state history, a huge fraction of original surface rights (and mineral rights) granted in the Bakken were retained.

    1. Thank you. I really appreciate that. Coincidentally, I was also researching the numbers. The original grant was 3.0 million acres (added to the post above), 1.8 million acres remaining fits nicely. It is interesting/ironic that the majority of land still held in trust ended up in the west.

      Thank you for taking the time to find this data. It is very much appreciated. I will add this to the main post so it's easier for folks to find.

  5. I should have known this as my family owned a section 36. We always referred to it as the "school quarter", so when I did my math, I used a quarter of section as the School portion, I forgot that it was the whole section that where the schools, not the quarter section. The other thing that came to mine is how many townships are in ND. I sure I did this math wrong, but it would be approximately 2,000 township (utilizing 6 mile by 6 mile blocks), which if you multiply by 2, gets near the 3,928 square miles you mention above.

    So with that said. Where is the money?

    1. As noted: I think it's only a matter of time before some "activist" starts a blog on North Dakota government money.

  6. Check out

    He had a plan for the legacy fund, but he needs to look into a couple of more funds.

  7. Did some quick research... Here is what I come up with, for things I know about.

    General Fund surplus projected to be $1.2 billion by end of biennium
    Bank of North Dakota $5.3 billion in assets (end of 2011 figures... probably pushing $5.5-$6 billion end of 2012?) BND though is not quite as liquid as they wouldn't be able to yank out $5 billion from BND and expect it to be ok, but still an "asset" to the state.
    Legacy Fund, Believe it was to hit $1 billion by end of biennium? Can't find anything other than the $545 million figure in August 2012.
    School Land Permanent Trust: From your article above $2 billion

    So my addition puts ND's "assets" at $9.5 billion...(not including anything else that is squirreled away that is not known about or "forgotten") Not all of this is readily accessible money so people can't gripe too much probably only the $1.2 billion surplus is the most liquid one. Kind of like a person's net worth is much more than what they can actually access at any given point.

    From my understanding a lot of school land (ND and countrywide) got sold in the 30s-40s because of the great depression trying to keep the schools operating. Western ND wasn't able to sell as nobody could afford it and there was plenty of land available for sale anyway. I think once it got into the 50s 60s the western schools knowing oil was in the area did sell surface rights (or rented out surface) but retained mineral rights. At least I know the school where I went to has a lot of mineral rights nearly in the heart of the Bakken.

    1. Very nice, thank you.

      So, for the 30-second sound bite: probably in excess of $10 billion.

      Certainly better than being in debt like so many other states.