Oregon Considers Selling State Forest Land to Benefit Schools

Published June 11, 2014

Oregon public land officials are considering selling the 93,000-acre Elliot State Forest. Management of the forest previously generated important funds for public schools, but environmental restrictions have strangled logging activities, resulting in the state losing money managing the forest. 

Surplus Becomes a Deficit
Environmental groups and federal officials claim to be protecting habitat for threatened species, including the northern spotted owl, the marbled murrelet, and coho salmon. The litigation and federal red tape have thwarted efforts by the Oregon Land Board to increase logging in the forest to keep up with growing local demand for wood products. Last year the Oregon Land Board lost $3 million managing the forest. In previous years, the 146-square mile Elliott State Forest regularly produced between $6 million and $8 million in revenues.

The 2013 loss poses a significant problem for Oregon officials. Roughly 85,000 acres of the forest are managed for the primary purpose of raising funds for public schools. These lands are known as Common School Trust Lands, and the Oregon State Land Board is required by law to manage them for the trust beneficiaries: public school students. Net receipts from timber harvest sales on the Elliott are transferred to the Common School Fund, where assets are invested by the Oregon Investment Council in various financial instruments.

But with the Elliott no longer able to produce assets to help fund the state’s public schools, officials are scrambling to finds ways of meeting their fiduciary obligations.  The State Land Board, which is composed of the governor, the state treasurer, and the secretary of state, decided last December to sell five parcels, totaling approximately 2,700 acres of the forest, to get a better idea of the value of the land in light of the restrictions on logging in the forest.  

Unloading the entire forest, whether to a timber company or a conservation group, is just one of the options state officials are considering. 
Better Investments for Schools 
“It is well known that nothing really changes in government policy without a crisis.  When the Oregon Land Board manages to lose $3 million on a $500 million asset in the same year that the S&P 500 index returned 32 percent, that becomes a political crisis,” said John A. Charles Jr., president and CEO of the Cascade Policy Center.  

“Therefore, the Board is now considering selling off the entire forest,” Charles added. “This is a step forward, and the Board should be resolute in in getting itself out of the timberland ownership business.

“The public school beneficiaries would be much better off if the proceeds from the sale were invested in stocks, bonds, and other financial instruments,” Charles said.

Bonner R. Cohen, Ph. D., ([email protected]is a senior fellow at the National Center for Public Policy Research.