Oklahoma Association of School Business Officials April 26, 2018

A Mission Older Than the State The Organic Act passed by the US Congress in 1890 assured that when there was a state of Oklahoma, lands would be assigned to support education. The Enabling Act, which brought Oklahoma into the Union of States, assigned lands into trust to support education.

The CLO is Anchored in the Founding Documents of the State of Oklahoma Oklahoma Enabling Act Oklahoma Constitution

Restraints and Guides Enabling Act of 1906 by which Oklahoma became a State Constitutional provisions which restrict the use of the money The Oklahoma Constitution states that, “the principal (or corpus) shall be deemed a trust fund held by the state and shall ever remain inviolate.” The Oklahoma Supreme Court has called the Trusts “sacred”. State Statutes

What is the CLO’s Constitutional Role ? To manage assets for the benefit of our public education beneficiaries noted in the Oklahoma Enabling Act (Section 7) and the Oklahoma Constitution (Article 11, Section 1 and Section 2)

Who Are the Commissioners of the Agency? Governor Lt. Governor Auditor and Inspector State Superintendent Secretary of Agriculture

“ Managing Assets to Support Education”

CLO Holdings Much of the 3.2 million acres assigned for public education at statehood were sold early in the 20th century and the income placed in permanent trusts From among the original lands, these assets are under the management of the Commissioners of the Land Office 750,000 surface acres 1,200,000 mineral acres

Real Estate and Minerals Inventory Import Map of holdings

No land was assigned in Indian Territory (essentially the east half of Oklahoma). Funds in lieu of land in Indian Territory were placed in trust ($5 Million).

Lands Assigned for Common Education Sections 16 and 36 of each Township were placed in trust for the benefit of Common Education.

Lands Assigned for Higher Education Two categories of assignments were made to benefit specified institutions of Higher Education: Section 13 of each Township was set aside to benefit the Educational Institutions. A Permanent Trust is set to benefit the institutions that participate in the Section 13 funds. Quantity Grants were made, identifying specific land to be managed for the benefit of specific higher education institutions. (In Lieu of /New College Funds)

Thirteen Colleges and Universities receive distributions from CLO University of Oklahoma Oklahoma State University Northern Oklahoma College Langston University Southeastern Oklahoma State University University of Central Oklahoma

Thirteen Colleges and Universities receive distributions from CLO (Con’t) East Central University Northeastern State University Northwestern Oklahoma State University Southwestern Oklahoma State University Cameron University Oklahoma Panhandle State University University of Science and Arts of Oklahoma

How are moneys Apportioned ? Special grants of land were designated to Higher Education beneficiaries by the Oklahoma Enabling Act (Section 12)… University of Oklahoma Oklahoma A&M (OSU) Northern Oklahoma College Langston University Normal Schools

What are our Responsibilities ? To manage assets and permanent trusts for the benefit of current and future beneficiaries To create income consistent with a sound investment policy, while protecting and growing the corpus of the trust funds To manage and lease mineral holdings for beneficiaries To manage, maintain, improve and lease surface acreage for beneficiaries To manage an investment portfolio, consistent with CLO investment policies

Trusts Managed CLO manages the funds in 9 State Trusts: The assets in the largest trust fund are managed for common schools The assets in six trusts are managed for the benefit of higher education institutions. The assets in two small trusts are managed for the benefit of public buildings throughout the state. Proportionally…approximately 70% of the annual distributions are made to Oklahoma’s common schools, and 30% to higher education.

What Assets are Distributed Annually? Income from agriculture and commercial leases Income from interest earnings from bonds Dividend income from investments in equities Since 2010, the Lease Bonuses from mineral lease auctions

Income from agricultural leases

Income from commercial leases

Interest earnings from bonds Dividend income from equities

Lease Bonuses from mineral lease auctions

How are CLO Distributions Made to Public Schools? Each public school district receives monthly distribution based upon their average daily attendance. The Department of Education certifies the number of students, and CLO determines the payment due each based upon the funding available for distribution. The CLO advises the State Treasurer, and available funds are distributed monthly.

Since Statehood Nearly $3 Since Statehood Nearly $3.2 billion has been Distributed…How Do Schools, Colleges and Universities Use the Funds Generated by the CLO? Instruction Equipment Repairs Buildings Research

FY 2017 Distributions to Beneficiaries Highest annual distributions in agency history to K-12 beneficiaries: $103,403,605 Distributions to higher education: $34,042,873 2nd highest total annual distribution for all beneficiaries in state history: $137,473,478

5 Year Distribution History Common Schools Higher Education Total FY 2013 $ 93,000,000 $35,753,406 $128,753,406 FY 2014 $ 93,626,718 $32,756,046 $126,382,764 FY 2015 $ 97,500,001 $31,464,149 $128,964,150 FY 2016 $102,171,947 $32,156,709 $134,328,656 FY 2017 $103,403,605 $34,042,873 $137,446,478

Fiscal Years 2007-2017 The average K-12 school district received 234% more than 10 years ago Higher education institutions received 207% more than 10 years ago  

The Recent Years It took ninety five years for CLO’s permanent trust funds to reach the $1 billion threshold It took only fifteen additional years for the permanent funds to pass the $2.4 billion mark The CLO Permanent Trust funds have grown by $800 million (50% in the last 6 years)

CLO Innovations and Firsts First state agency to offer secure, electronic mineral lease bonus auctions with secure with video and audio streaming First state agency to acquire supplemental private insurance to protect state assets from disasters associated with burning red cedars

CLO Innovations and Firsts Triangulation of data among CLO, the Oklahoma Corporation Commission and Oklahoma Tax Commission to assure compliance Created five year rolling average to assure stability of distributions for beneficiaries First commercial office acquisitions since statehood

Strategies to Increase Distributions Grow the Trust funds Land exchanges to maximize the value of commercial parcels Distribution of easement income Diversification of Portfolio to include more reliance on growth stocks, MLP’s, and commercial real estate Pursuit of Late Payment Interest

Preserving the Assets for the Future Stewardship, Restoration and Protection of the Trust Assets Soil Conservation Noxious Infestations Develop water resources on the land Records Management

Preservation of Assets Improved Stewardship… including soil and water conservation, and water resource development

Preservation of Assets More Conservation Improvements on CLO Land than at any time since the 1980’s More acres of Red Cedar removal than any time in CLO history

Goals for the Fallin Years Continue to grow the professionalism, standards and efficiency of the Agency Distribute $1 billion to beneficiaries in the 8 year time frame Increase the value of the invested trust fund from $1.6 billion in 2011 to $2.7 billion by 2019 Use the commercial lands of the CLO to generate at least 3,000 jobs in Oklahoma and $10 million increase in annual distributions to beneficiaries

Every child in Oklahoma has a GROWING trust fund that helps to support his or her education