Who Gets the Money?
Who gets the money?
The money earned from trust lands, less expenses, is either distributed directly to the beneficiary for immediate spending or is transferred to the beneficiary's Investment With State Treasurer (permanent fund) where it is invested but never spent. In the latter case, the beneficiary gets the earnings from its investments. State law determines which type of revenue is distributed directly to the beneficiary and which is transferred to the permanent fund. The Trust Lands Administration does not operate on tax revenues. Its expenses are paid from revenue generated by operating the real estate businesses of the 12 trusts.
In general, money made from the sale of trust land is put into the permanent funds. That way, the body of the trust is preserved either as a real estate asset or as a financial asset forever. Revenues from other sources are usually distributed directly to the beneficiary. However, the revenues of the largest beneficiary are handled differently.
The Common School Fund (public schools) has virtually all earnings put into its permanent fund (known as the Investment With State Treasurer). Then, only interest and dividend revenue from the Investment With State Treasurer (and other interest earnings from School Trust assets) is distributed directly to the beneficiary. This puts most Common School Trust revenues into Investment With State Treasurer - its permanent fund.
The effect of this policy, combined with better management of trust land assets, has contributed to the recent dramatic growth in the size of the Common School Investment With the State Treasurer. It should be remembered that market value (which includes the stock market value) fluctuates by the minute during the trading day. While the market has increased over the long-term, it is also possible for drops in market value - even below book value.
All of the trusts are managed to optimize the revenues from their trust lands, balancing both short and long-term activities to sustain the productivity of each trust.