Oklahoma Finance Management Association August 6, 2015.
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Transcript of Oklahoma Finance Management Association August 6, 2015.
Oklahoma Finance ManagementAssociation
August 6, 2015
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 Beneficiaries?
• CLO’s beneficiaries are common schools and selected high education institutions
• All assets and earnings are viewed as State assets and are owned pro rata by all
• Distributions are not based on the location of the land or mineral holdings
“ Managing Assets to Support Education”
Who Are the Commissioners of the Agency?
• Governor• Lt. Governor• Auditor and Inspector• State Superintendent • Secretary of Agriculture
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)
• 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).
Thirteen Colleges and Universities receive distributions from CLO
University of OklahomaOklahoma State UniversityNorthern Oklahoma CollegeLangston UniversitySoutheastern Oklahoma State UniversityUniversity of Central Oklahoma
Thirteen Colleges and Universities receive distributions from CLO (Con’t)
East Central UniversityNortheastern State UniversityNorthwestern Oklahoma State UniversitySouthwestern Oklahoma State UniversityCameron UniversityOklahoma Panhandle State UniversityUniversity of Science and Arts of Oklahoma
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• 1,200,00 Mineral Acres
Real Estate and Minerals Inventory
• Import Map of holdings
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
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 bondsDividend income from equities
Lease Bonuses from mineral lease auctions.
Real Estate Division
• Achieved highest annual lease payments ($13,977,180) on surface acreage in agency history ($600,000 or 5%) higher than any prior year
Real Estate Division
• Added two new wind leases on CLO land
• 2nd highest annual easement revenues in agency history
Real Estate Division: Commercial Properties
• Enhance the value of the commercial properties
• Planning and engineering• Zoning and pre-
development• Roads and utilities
Minerals Management Division
• Electronic Payments from Mineral Lessees
Minerals Management Division
• Electronic Mineral Lease Auctions– Secure– Video and Audio
Streaming
Financial Services Division
• Surpassed the $2.3 Billion Dollar threshold in Permanent Trust funds
• Amended investment policies to enhance yield in low interest rate environment
• Nearly 40% of all revenue data from oil and gas is now being downloaded instead of hand keyed…– a huge time savings…– royalty posting is
completed 5 days sooner each month
– Fewer data entry errors
• Revised and modernized purchasing practices
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 in CLO history
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 $2.5 Billion has been Distributed…How Do Schools, Colleges and
Universities Use the Funds Generated by the CLO?
• Instruction• Equipment• Repairs• Buildings• Research
FY 2015 Distributions to Beneficiaries
• 2nd Highest Distributions in Agency History to Common Schools : $ 97.5 Million
• 4th Highest Distributions to Higher Education: $31,464,149.
• 2nd highest total annual distribution for all beneficiaries: $ 128.96 Million
10 Year CLO Distributions to Public Education
• YEAR COMMON SCHOOLS HIGHER EDUCATION TOTAL___ • FY 2006 $ 39,020,189 $14,572,327 $ 53,592,516
• FY 2007 $ 44,266,172 $16,427,114 $ 60,693,286• FY 2008 $ 53,282,727 $20,210,299 $ 73,493,024• FY 2009 $ 60,341,452 $22,313,150 $ 82,654,602• FY 2010 $ 83,212,998 $31,160,557 $114,373,555 Total 5 year $280,123,538 $104,683,447 $384,806,983
• FY 2011 $ 93,159,520 $31,009,615 $124,169,135• FY 2012 $102,144,986 $38,464,448 $140,609,434• FY 2013 $ 93,000,000 $35,753,058 $128,753,406• FY 2014 $ 93,626,721 $32,756,058 $126,382,779• FY 2015 $ 97,500,001 $31,464,149 $128,964,150 Total 5 year $479,431,227 $169,447,328 $648,878,904
Year Common Schools
Higher Education Total
FY 2011 $ 93,159,520 $ 31,009,615 $124,169,135
FY 2012 $102,144,986 $ 38,464,448 $140,609,434
FY 2013 $ 93,000,000 $ 35,753,406 $128,753,406
FY 2014 $ 93,393,887 $ 31,232,084 $124,625,971
FY 2015 $ 97,500,001 $ 31,464,149 $128,964,150
5 Year Distribution History
Fiscal Years 2011-2015
• Over the last 5 years the CLO has distributed $264,071,921 more to public education in Oklahoma than during any other five year period in Oklahoma’s history
• That is an increase of 69%
over the next highest five year distributions in state history
Fiscal Years 2011-2015
• K-12 distributions have been $199,300,000 greater in FY 2011-2015 than any other five year period (71% increase)
• Higher Education beneficiaries have received $64,700,000 more in FY 2011-2015 than any other five year period (62% increase)
The Past 5 Years
• It took ninety five years for CLO’s permanent trust funds to reach the $1 Billion threshold
• It took only eleven additional years for the permanent funds to pass the $2 Billion mark
• Since Governor Fallin and the current CLO Commissioners assumed office, the CLO permanent trust funds have grown by $750 Million. (45.0% increase)
• Every School child in the State of Oklahoma has a “trust fund” to help pay for his or her education in perpetuity….and we are growing that trust
Strategies to Increase Distributions• Land exchanges in Shawnee
and OKC $1,500,000 • Treatment of annual Capital
Losses $4,000,000• Distribution of Easement
Income $2,000,000• Revision of Portfolio
$8,000,000• Pursuit of Late Payment
Interest $1,000,000