Oklahoma Finance Management Association August 6, 2015.
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Transcript of Oklahoma Finance Management Association August 6, 2015.
![Page 1: Oklahoma Finance Management Association August 6, 2015.](https://reader036.fdocuments.in/reader036/viewer/2022062519/56649e975503460f94b9a89d/html5/thumbnails/1.jpg)
Oklahoma Finance ManagementAssociation
August 6, 2015
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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.
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The CLO is Anchored in the Founding Documents of the State of Oklahoma
Oklahoma Enabling Act Oklahoma Constitution
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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
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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)
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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
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“ Managing Assets to Support Education”
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Who Are the Commissioners of the Agency?
• Governor• Lt. Governor• Auditor and Inspector• State Superintendent • Secretary of Agriculture
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Lands Assigned for Common Education
• Sections 16 and 36 of each Township were placed in trust for the benefit of Common Education.
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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)
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• 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).
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Thirteen Colleges and Universities receive distributions from CLO
University of OklahomaOklahoma State UniversityNorthern Oklahoma CollegeLangston UniversitySoutheastern Oklahoma State UniversityUniversity of Central Oklahoma
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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
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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
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Real Estate and Minerals Inventory
• Import Map of holdings
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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
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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.
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Income from agricultural leases
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Income from commercial leases
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Interest earnings from bondsDividend income from equities
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Lease Bonuses from mineral lease auctions.
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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
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Real Estate Division
• Added two new wind leases on CLO land
• 2nd highest annual easement revenues in agency history
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Real Estate Division: Commercial Properties
• Enhance the value of the commercial properties
• Planning and engineering• Zoning and pre-
development• Roads and utilities
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Minerals Management Division
• Electronic Payments from Mineral Lessees
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Minerals Management Division
• Electronic Mineral Lease Auctions– Secure– Video and Audio
Streaming
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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
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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
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Preservation of Assets
• Improved Stewardship… including soil and water conservation, and water resource development
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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
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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.
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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
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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
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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
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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
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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
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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)
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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
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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