Legislature(2017 - 2018)CAPITOL 106

02/20/2017 09:00 AM EDUCATION

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Audio Topic
09:06:08 AM Start
09:06:43 AM Presentation: University of Alaska, Public Land Deficit
09:38:05 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Presentation: University of AK TELECONFERENCED
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE EDUCATION STANDING COMMITTEE                                                                             
                       February 20, 2017                                                                                        
                           9:06 a.m.                                                                                            
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Harriet Drummond, Chair                                                                                          
Representative Justin Parish, Vice Chair                                                                                        
Representative Zach Fansler                                                                                                     
Representative Ivy Spohnholz                                                                                                    
Representative Jennifer Johnston                                                                                                
Representative Chuck Kopp                                                                                                       
Representative David Talerico                                                                                                   
Representative Lora Reinbold (Alternate)                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Geran Tarr (Alternate)                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  UNIVERSITY OF ALASKA~ PUBLIC LAND DEFICIT                                                                        
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JAMES JOHNSON, President                                                                                                        
University of Alaska (UA)                                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Provided the presentation on the University                                                              
of Alaska (UA) public land deficit.                                                                                             
                                                                                                                                
KIT DUKE, Administrator                                                                                                         
University of Alaska (UA) System                                                                                                
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Responded to questions during the                                                                        
presentation on the University of Alaska, Public Land Deficit.                                                                  
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:06:08 AM                                                                                                                    
                                                                                                                                
CHAIR  HARRIET  DRUMMOND  called  the  House  Education  Standing                                                             
Committee  meeting  to  order  at   9:06  a.m.    Representatives                                                               
Drummond,  Kopp,   Parish,  Fansler,  Johnston,   Spohnholz,  and                                                               
Talerico  were present  at  the call  to  order.   Representative                                                               
Reinbold (Alternate) arrived as the meeting was in progress.                                                                    
                                                                                                                                
^PRESENTATION:  University of Alaska, Public Land Deficit                                                                       
    PRESENTATION:  University of Alaska, Public Land Deficit                                                                
                                                                                                                                
9:06:43 AM                                                                                                                    
                                                                                                                                
CHAIR DRUMMOND  announced that the  only order of  business would                                                               
be  a presentation  from the  University  of Alaska  (UA) on  the                                                               
public land deficit.                                                                                                            
                                                                                                                                
9:06:55 AM                                                                                                                    
                                                                                                                                
JAMES JOHNSON,  President, University  of Alaska  (UA), explained                                                               
that one reason  the university depends heavily on  the state for                                                               
funding is  because it did not  receive its full land  grant.  He                                                               
said, "We're the  land grant university without the  land."  Only                                                               
Delaware received  a smaller public  land grant than  did Alaska,                                                               
he pointed  out, and added that  Hawaii received cash in  lieu of                                                               
any  land,  which  the  UA  would  also  find  acceptable.    The                                                               
University  of Alaska  received  approximately  110,000 acres  of                                                               
land, prior  to statehood.   The estimated deficit,  according to                                                               
what was to be awarded under the various grants, is 360,000.                                                                    
                                                                                                                                
9:09:51 AM                                                                                                                    
                                                                                                                                
PRESIDENT  JOHNSON  presented  the  timeline of  the  land  grant                                                               
history.   The Morrill  Act, 1862, was  passed by  Congress under                                                               
President  Abraham Lincoln,  and  provided more  than 11  million                                                               
acres of  land to states  and territories  to create a  system of                                                               
land  grant colleges  and universities.   It  further established                                                               
that  every existing  state,  and every  future  state, would  be                                                               
granted 30,000 acres per member  of Congress, representing 90,000                                                               
acres for Alaska, to be dedicated  to higher education.  In 1915,                                                               
the Wickersham Land Grant statute  was adopted by the territorial                                                               
legislature.  Under Sec. 33,  each township within a large Tanana                                                               
Valley rectangle, estimated at 336,000  acres, was to be conveyed                                                               
to  the  university;  however,  the  territorial  lands  remained                                                               
largely  un-surveyed, and  less  than five  percent was  actually                                                               
transferred.    The  Sutherland Land  Grant  statute,  1929,  was                                                               
adopted  by Congress  to convey  an additional  100,000 acres  of                                                               
land,  in the  Territory of  Alaska,  for the  exclusive use  and                                                               
benefit of the  Alaska Agricultural College and  School of Mines.                                                               
In 1959, the First Alaska  Legislature granted 1,000,000 acres to                                                               
the  university  but  Governor William  "Bill"  Egan  vetoed  the                                                               
action.   During  the  period of  1966-1980  Congress passed  the                                                               
Alaska  Native  Claims  Settlement  Act (ANSCA)  and  the  Alaska                                                               
National  Interest  Lands  Conservation  Act  (ANILCA),  but  the                                                               
question of  the UA land  entitlement remained unresolved.   From                                                               
1997-2005, Alaska's  congressional delegation  introduced several                                                               
federal bills in  an attempt to rectify the UA  land deficit.  In                                                               
2000, the  Alaska State Legislature  passed SB 7  authorizing the                                                               
university  to  select  up  to   260,000  acres  of  state  land.                                                               
However,  Governor  Tony  Knowles   vetoed  the  action  and  the                                                               
legislature tried but  did not have enough votes  to override the                                                               
veto.  The Alaska Supreme Court  ruled that conveyance of land is                                                               
not  an  appropriation  and declined  to  address  the  potential                                                               
dedication clause issue.   The 2005 State  Legislature passed, HB                                                               
130, identifying a  specific list of lands for  the Department of                                                               
Natural  Resources (DNR)  to  transfer to  the  university.   The                                                               
Southeast Alaska Conservation Council  (SEAC) filed a lawsuit, in                                                               
2007,  arguing  that  HB  130  was  in  violation  of  the  anti-                                                               
dedication clause  and the  university teamed  with the  state to                                                               
mount a  defense.  In 2009  the Alaska Supreme Court  handed down                                                               
its  decision  striking   down  HB  130  and   holding  that  the                                                               
legislature could not  set up a permanent land  endowment for the                                                               
university,  citing  the Constitution  of  the  State of  Alaska,                                                               
Article  9, Section  7, Dedicated  Funds clause.   Governor  Sean                                                               
Parnell introduced HB  295, in 2010, which  was partially modeled                                                               
after HB  130 but without  the permanent endowment aspects.   The                                                               
bill  failed  to  pass  the  legislature.   The  same  year,  the                                                               
university  complied with  the court's  deadline and  transferred                                                               
the HB 130 lands back to DNR.                                                                                                   
                                                                                                                                
9:14:56 AM                                                                                                                    
                                                                                                                                
PRESIDENT JOHNSON reviewed the options  and possible solutions to                                                               
make  up  the university's  360,000  acre  deficit.   He  said  a                                                               
permanent land endowment  would allow UA to  generate revenue and                                                               
moderate  the need  for the  state to  provide general  fund (GF)                                                               
allocations.  The constitution has  precluded all attempts by the                                                               
Alaska  legislature to  remedy the  deficit situation.   He  said                                                               
that, from  the federal  point of view,  the university  land was                                                               
included  in  the  Alaska  Statehood Act  grant  and,  thus,  has                                                               
resisted endeavors to  correct the deficit via  use of additional                                                               
federal land grants.  The  Dedicated Funds clause has an explicit                                                               
exemption, he said,  and read, "... when required  by the federal                                                               
government  for  state participation  in  federal  programs."   A                                                               
federal program, that establishes  a permanent UA land endowment,                                                               
consisting  of a  combination of  state and  federal lands,  will                                                               
ensure  compliance  with  this   clause,  he  suggested.    State                                                               
participation  in a  federal program  will require  the state  to                                                               
convey lands,  through the  program for  the purpose  of endowing                                                               
the  university's  permanent  land   trust.    He  reported  that                                                               
preliminary  discussions  are  underway  with  DNR  and  Alaska's                                                               
congressional   delegation  regarding   federal  legislation   to                                                               
establish such a program.                                                                                                       
                                                                                                                                
9:16:46 AM                                                                                                                    
                                                                                                                                
PRESIDENT  JOHNSON  said  the  existing   UA  land  holdings  are                                                               
approximately  150,700  acres,  mostly   acquired  under,  or  as                                                               
replacement for,  the lands received under  the Sutherland grant,                                                               
but  are also  lands acquired  from private  parties, as  well as                                                               
local, state,  or federal  governments.   The UA  Land Management                                                               
Office is  responsible for  managing, developing,  acquiring, and                                                               
disposing of all the university's  real property.  Since 1987, he                                                               
reported, the  land and  resource sale  have generated  over $204                                                               
million.  The income has  been deposited in the university's Land                                                               
Grant Endowment  Trust Fund;  a permanent  endowment.   The trust                                                               
fund is  managed by  the UA  Foundation Board  of Trustees.   The                                                               
earnings are  used to fund  an array of natural  resource related                                                               
education  and  research  projects,  which  include  programs  on                                                               
fisheries,    ocean   sciences,    biology,   and    agriculture.                                                               
Additionally,  the  trust  earnings   fund  the  Alaska  Scholars                                                               
Program (ASP).   The program awards $12,000 to  students who plan                                                               
to attend the UA,  and who graduate with a ranking  in the top 10                                                               
percent of their class.                                                                                                         
                                                                                                                                
9:18:38 AM                                                                                                                    
                                                                                                                                
PRESIDENT JOHNSON  said that of  the 150,700 total acres  held by                                                               
the  university, 12,183  are used  for  educational purposes  and                                                               
sites for  the UA system  campuses.  The remaining  138,517 acres                                                               
are investment properties, which he  detailed as follows:  17,000                                                               
potential timber  development, 10,018 national  parks inholdings;                                                               
8,604   residential   subdivisions  under   construction,   3,995                                                               
potential   material  sales,   2,087   potential   oil  and   gas                                                               
development, and 96,813 remaining acres.                                                                                        
                                                                                                                                
9:19:39 AM                                                                                                                    
                                                                                                                                
PRESIDENT  JOHNSON referred  to  the  committee handout,  titled,                                                               
"University  of   Alaska  Public  Land  Deficit,   House  Finance                                                               
Education  Subcommittee  February 20,  2017,"  page  12, and  the                                                               
investment property  chart, which provides specific  locations of                                                               
the acreage  involved and the land  use in each area.   Directing                                                               
attention  to  page  13,  titled, "UA  Land  Trust  Balance,"  he                                                               
explained  that the  bar graph  illustrates the  steady, monetary                                                               
return provided by the  trust from FY 89 to FY 16.   The trust is                                                               
an endowment,  he reminded, thus,  only the earnings are  part of                                                               
the university's budget.  The  goal is to maximize the investment                                                               
of  the lands  to  drive  the earnings  up.    He stressed  that,                                                               
ultimately, the  increased earnings will allow  the university to                                                               
work towards becoming financially  independent and less dependent                                                               
on state allocations.   Finally, he said,  despite failed efforts                                                               
in  the past,  a  viable plan  has been  created  to address  the                                                               
deficit and meet the goals.                                                                                                     
                                                                                                                                
9:22:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSTON asked  how many  acres were  returned to                                                               
the state following the latest court decision.                                                                                  
                                                                                                                                
PRESIDENT  JOHNSON   answered  that  about  250,000   acres  were                                                               
received and subsequently returned.                                                                                             
                                                                                                                                
REPRESENTATIVE JOHNSTON  surmised that  if the federal  and state                                                               
plan being  proposed works in  favor of the university,  the same                                                               
250,000  acres would  be reallocated  once more,  as a  beginning                                                               
point of reconciliation.                                                                                                        
                                                                                                                                
PRESIDENT JOHNSON acknowledged that it  may serve as the starting                                                               
point, and  opined that it would  be wise to also  consider other                                                               
locales,  such   as  lands  that  could   host  renewable  energy                                                               
projects.                                                                                                                       
                                                                                                                                
REPRESENTATIVE JOHNSTON  asked where the university  falls on the                                                               
federal list of organizations awaiting land allocations.                                                                        
                                                                                                                                
PRESIDENT  JOHNSON agreed  that there  are a  number of  entities                                                               
awaiting  federal land  grants, and  deferred further  comment to                                                               
Kit Duke.                                                                                                                       
                                                                                                                                
9:25:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TALERICO said  investment property  would be  any                                                               
land that  could be included  for any of the  purposes mentioned:                                                               
sale, lease, material sale, or other income opportunities.                                                                      
                                                                                                                                
PRESIDENT JOHNSON responded yes.                                                                                                
                                                                                                                                
REPRESENTATIVE TALERICO asked whether  the university holds lands                                                               
on the west side of Nenana and the Nenana River.                                                                                
                                                                                                                                
PRESIDENT JOHNSON deferred comment to Kit Duke.                                                                                 
                                                                                                                                
KIT DUKE,  Administrator, University of Alaska  (UA) System, said                                                               
the  university holds  two parcels  in  the Nenana  area.   Doyon                                                               
Limited  has  been given  access  to  one  of these  parcels  for                                                               
exploration purposes.                                                                                                           
                                                                                                                                
9:27:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FANSLER asked  if there  is a  timeline that  the                                                               
university is hoping  for in accomplishing action  at the federal                                                               
level  action,  and  whether  the  university  has  targeted  any                                                               
specific lands.                                                                                                                 
                                                                                                                                
PRESIDENT JOHNSON stated  hope for positive movement  in the next                                                               
two years at the federal level,  which will open doors for action                                                               
at the state level.                                                                                                             
                                                                                                                                
9:29:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH  referred to the national  parks inholdings                                                               
(NPS) and asked what revenue these holdings generate.                                                                           
                                                                                                                                
MS. DUKE responded that access  issues have prevented issuance of                                                               
leases, thus, no revenues are being  earned at this time. One NPS                                                               
parcel was traded for a useable  property in the Seward area, she                                                               
reported.                                                                                                                       
                                                                                                                                
9:30:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FANSLER  asked  about  the use  of  the  reported                                                               
96,813 acres remaining; shown on the handout, page 11.                                                                          
                                                                                                                                
MS. DUKE explained  that the remaining acreage is  land which has                                                               
yet to have its optimum potential determined.                                                                                   
                                                                                                                                
9:33:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOPP asked  whether the  university has  analyzed                                                               
the value for converting its property to cash.                                                                                  
                                                                                                                                
PRESIDENT JOHNSON said no, and deferred further comment.                                                                        
                                                                                                                                
MS.  DUKE  responded  that  some  analyses  has  been  performed,                                                               
especially on  properties that have natural  resource development                                                               
possibilities.   Whenever allocation  hearings occur,  lands will                                                               
be  considered for  development potential,  during the  selection                                                               
process.                                                                                                                        
                                                                                                                                
9:36:52 AM                                                                                                                    
                                                                                                                                
CHAIR DRUMMOND  asked what  would prevent  the introduction  of a                                                               
new  bill  to  grant  the  lands,  is  it  at  the  will  of  the                                                               
legislature.                                                                                                                    
                                                                                                                                
PRESIDENT JOHNSON responded that the 2009 court decision                                                                        
currently holds sway.  However, should a federal plan come forth                                                                
and override the decision, the legislature would be able to act.                                                                
                                                                                                                                
9:38:05 AM                                                                                                                    
                                                                                                                                
CHAIR DRUMMOND thanked everyone and announced the next meeting.                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Education Standing Committee meeting was adjourned at 9:38 a.m.                                                                 

Document Name Date/Time Subjects
List of Unviversity Land Grants by State.pdf HEDC 2/20/2017 9:00:00 AM
University of Alaska Land Grants
2017 02 20 UA Lands HEduc FINAL.pdf HEDC 2/20/2017 9:00:00 AM
University of Alaska Land Grants