Oklahoma Finance Management
Association
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?
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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 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
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 bonds
Dividend 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 predevelopment
• 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?
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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
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YEAR
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
Total 5 year
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•
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
Total 5 year
COMMON SCHOOLS
$ 39,020,189
$ 44,266,172
$ 53,282,727
$ 60,341,452
$ 83,212,998
$280,123,538
$ 93,159,520
$102,144,986
$ 93,000,000
$ 93,626,721
$ 97,500,001
$479,431,227
HIGHER EDUCATION
$14,572,327
$16,427,114
$20,210,299
$22,313,150
$31,160,557
$104,683,447
$31,009,615
$38,464,448
$35,753,058
$32,756,058
$31,464,149
$169,447,328
TOTAL___
$ 53,592,516
$ 60,693,286
$ 73,493,024
$ 82,654,602
$114,373,555
$384,806,983
$124,169,135
$140,609,434
$128,753,406
$126,382,779
$128,964,150
$648,878,904
5 Year Distribution History
Year
Higher Education
FY 2011
Common
Schools
$ 93,159,520
Total
$ 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
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