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News-Miner Opinion: Some long-overdue help for UA: Congress should act quickly to approve university lands bill

Washington, October 10, 2020

News-Miner opinion: News late last month that a bill has been introduced in Congress to finally provide a long-overdue additional allocation of land to the University of Alaska is certainly a welcome development.

Our university has been land-starved for far too long, but let’s be clear about one thing as this bill starts its path in Congress: No one back here in Alaska should take it to be a solution to the university’s long-term financial problems caused by years of state budget cuts.

But, as they say, every little bit helps.

 
 

The University of Alaska’s land grant, at 110,000 acres, is one of the smallest of any land grant university system in the nation, and several efforts over many long years to resolve problems entangled with an 1862 federal nationwide land grant law and subsequent laws haven’t changed that.

The University of Alaska Fiscal Foundation Act seeks to rectify the problem by providing the university with an additional 360,000 acres of federal land via the state’s unfilled entitlement from the Alaska Statehood Act. Bills with that title were introduced in the Senate by Sens. Lisa Murkowski and Dan Sullivan and in the House by Rep. Don Young.

Why does the university need land? It needs it to use as a means of supplementing its finances. And we all know that the university has been hit hard in recent years by a severe reduction in state funding.

Here’s some recent sour history about that state funding: UA is currently in year two of a three-year agreement with Gov. Mike Dunleavy to operate with $70 million less in state dollars over that period. The reduction from that agreement comes atop a previous reduction of $51 million since 2014. The governor had wanted to whack $135 million in one year.

For comparison, the University of Alaska Land Management Office generated $6,849,292 in gross receipts from real estate and natural resource development in fiscal 2019, according to a report of that year’s activities. Expenses, however, totaled $4,449,671.

The University of Alaska Fiscal Foundation Act clearly isn’t a way to offset those millions of state dollars that have been stripped from university over the years.

But, again, any new money that can be derived from holdings of the University Land Grant Trust would be good money.

 
 

The University Land Grant Trust has a few components: an endowment fund, the land itself, and other natural resource assets. Revenue from the sale, lease, development, and other income generated from trust lands goes into the endowment.

The endowment had a balance of $155.3 million at the end of fiscal 2019, almost entirely in cash, investments and real property. That’s not money to be spent in its entirety, however. It’s essentially seed money to grow more money.

And that’s where the University of Alaska Fiscal Foundation Act comes in. It will provide more seeds in the form of more land.

How does land for the university benefit Alaskans?

Here are two leading ways: Some of the revenue raised through use of university lands provides for the UA Scholars program, a program that provides $12,000 each to a percentage of Alaska’s top college-bound high school students to encourage them to attend a UA campus. Development of university lands also aids Alaska’s economy through timber harvesting jobs and getting land into private hands and local tax bases. And, of course, some of the revenue raised by the UA Land Management Office goes toward education programs.

Raising money from additional land won’t be a fast — or even easy — process, however.

Obtaining land and developing or disposing of it takes time. It’s also important to note that raising money from land holdings involves the public, including people who oppose development — and that leads to more expenses. The fiscal 2019 report from the UA Land Management Office captures the problem:

“Natural resource development activities, however, require a long lead time, are complex, often opposed by anti-development groups, and require strong support and considerable effort. A result is that significant and increasingly far greater LMO resources are being required and expended in order to monetize UA’s Trust investment lands as intended to obtain any positive income for the Trust. “

It’s been a long haul to get to this point, and now the work begins to get the legislation through Congress and signed by the president. Time is short for the remaining days of the current Congress, so we hope the bills rapidly gain their deserved support. University officials, including former UA President Jim Johnsen, have for years worked hard at making the case for fixing the university’s land deficiency, and they and others must be pleased to see the latest progress.

Let’s hope the bill has an easy ride through Congress and that UA can get on with raising some of the additional revenue it sorely needs.