UA land: Facts and fiction: Questions around campus have answers one might not expect

Voices Of The Peninsula

Posted: Thursday, March 02, 2006

Every year at this time, I hear various comments around the Kenai Peninsula about University of Alaska funding. Along with this discussion comes the inevitable questioning of why does the university need as much as they’re asking for; aren’t there other funding sources available?

This year I’ve heard some people exclaim, “The University of Alaska is a land grant institution; why don’t they develop their land instead of asking for more money from the state?”

I’d like to separate this fiction from the facts:

· Only one other state land grant college in the United States has received a smaller land grant than UA, yet we sit in the largest state in the country. The University of Delaware is the only institution in the country with a smaller land grant than UA’s.

· UA’s land grant would be larger if it still included certain federal parcels promised by Congress in 1915 and 1929. Those lands were withdrawn, however, when the 1915 Act was repealed by the Alaska Statehood Act.

· Though we’re extremely grateful to Fairbanks state Rep. Jay Ramras and Gov. Frank Murkowski for their support of the land grant bill that passed last year, we haven’t yet actually received any land from it. We don’t expect to see significant benefits from it for about 10 more years.

· Annual income generated from university land varies depending on the number and quality of land sales in each given year. Approximately 13,650 acres, or 8 percent, of UA investment property has been sold since 1987, generating more than $43 million since that time. In addition to land sales, UA generated more than $37 million on timber and other resource sales during that same period.

· All the money generated from UA land and resource sales goes into the UA Land-Grant Endowment Trust Fund, managed by the UA Foundation Board of Trustees (a nonprofit and separate entity from UA) as a permanent endowment. This fund totals roughly $135 million today, with payouts on earnings set at 5 percent of market value on the prior five-year average year-end balance. This equates to a current payout of roughly $5 million annually.

· Less than 1 percent of the funding that UA needs annually comes from the land we own.

· Even when we receive the lands included in the 2005 land grant bill, total funding available from UA lands will account for 1 percent, or 2 percent at best, of the general funds we will require over the next 20 years.

· Current earning payouts from the UA Land/Natural Resource Fund will approach $5 million in 2007 and is expected to grow by about $500,000 per year until 2021 and then by $1 million per year beginning in 2022.

· Even if the Nenana Basin yields a gas deposit that meets the most optimistic expectations, we could realize up to $1 billion in principal, which would equate to a $50 million annual payout, but we’ll have to wait 20 years to cash these checks. Even then, that number will only represent 20 percent of the general funds the UA needs at the current 2006 funding level, not adjusted for 20 years of inflationary costs.

Far be it from me to ever proclaim being a land expert, but I do know basic addition and subtraction, and when you subtract $5 million from the university’s fiscal year 2007 $291-plus million request for state general funds, you wind up needing $286 million.

Maybe I need a new abacus, but these figures tell a story that needs to be told. Hopefully, these facts can be thrown in with all the fodder being bandied about on talk radio and other public discussions so we can lay this land revenue rumor to rest.

President Mark Hamilton has put it very well regarding funding for UA: There is a contract between a state university and its state — the state agrees to fund the university so it can educate the state’s residents so they will live and work here as adults and be good citizens of the state. We’re holding up our end of the bargain and have faith our governor and Legislature will hold up their end.

Gary J. Turner is the director of Kenai Peninsula College with campuses in Soldotna and Homer, extension sites in Seward and Anchorage, and the Mining and Petroleum Training Service based in Anchorage and Soldotna.

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