HELENA - Tom Schultz's paycheck raises eyebrows.
It's not so much the amount that Schultz, the administrator of the Trust Land Division at the Department of Natural Resources and Conservation, brings home. Rather, it's where the money comes from.
But that, said Rep. Paul Clark, D-Trout Creek, is unconstitutional. Others, like Board of Regents Chairman Richard Roehm of Bozeman, say the agency takes too much money for administration, at the expense of public education.
Greg Petesch, the Legislature's top lawyer, agrees. Petesch thinks the state constitution places strict limits on how school trust revenue must be spent, limits that don't include paying for agency administration.
But Bud Clinch, director of the Department of Natural Resources and Conservation, counters that there's nothing wrong with the funding mechanism and that it is far from unusual as trusts go. What's more, he said, the scheme was not something hatched by his department, but sanctioned by a law approved in the 1999 Legislature.
None of that dissuades Clark, the wilderness school teacher who led a persistent but unsuccessful effort during the 2003 Legislature to make at least some of the revenue DNRC brings in exempt from paying for agency administration.
"They're skimming off the top," Clark said.
The law that made Montana a state back in 1889 - a law known as the Enabling Act - also stipulated that more than 5 million acres of the state be put in trust to pay for public schools. Today, DNRC statistics show, the state manages 5.1 million surface acres and 6.3 million acres of mineral rights.
The Montana Constitution spells out how revenue from those lands must be spent. To paraphrase: 95 percent of all the interest earned on a special school trust fund and 95 percent of all the rent coming in for rent of school trust lands must be equally distributed to the state's public schools. The remainder must be put in the school trust fund to remain "forever inseparable and inviolate" to pay for education.
Petesch wrote an opinion back in December 1990 concluding that although it is common for some trusts to be administered with proceeds from the trust itself, public lands held in trust for schools in Montana are no ordinary trust.
"It is my opinion that (the Montana Constitution) contains an express restriction on the use of school land income and interest," his opinion read.
And Petesch hasn't changed his mind since. That means, he said, the state could be on the line to repay the trust the money currently spent on administration if someone ever pushed the issue.
"If we lose a lawsuit on this, we're going to have to find a way to repay (the money)," he said. "I don't know why you'd take the risk."
As it turns out, someone is pushing the issue - the Board of Regents, which oversees the state's university system. While most of the land held in trust is to benefit K-12, a small portion is held in trust for the university system.
Roehm said he thinks DNRC is taking more money than necessary to merely administer the lands.
"We don't begrudge a proper administrative fee," he said. "But they're taking way too much and calling it an administrative fee."
In a way, Roehm said, pushing the issue may prove to be a wash for the universities. Right now, the Legislature gives the university system a lump sum of money and the university system decides how to spend it. Roehm said he figured lawmakers would simply subtract the $500,000 in DNRC administrative fees from the university system's lump sum. So, in the short term, colleges and universities wouldn't actually get any more money.
But that could prove to be an important victory in the long run. For one thing, Roehm said, it would place DNRC in the position of trying to squeeze more money out of the ever-stressed general fund instead of the Board of Regents.
"Looking five or 10 years down the road, there will be less and less allocated to education," he said. If the university system got the half a million dollars now going to DNRC administration, it would be half a million dollars the system wouldn't have to fight for in tough budget years like this one.
Leroy Schramm, the university system's chief lawyer, said the board has looked into the idea of going to court to resolve the issue, but Roehm said he'd like to settle the matter in a more friendly fashion.
However, Petesch said the legal case isn't as cut and dried for the university system as it is for K-12 schools.
Roehm said the board has called on the Legislature to ask Petesch for an opinion on the issue and proceed from there.
Petesch said that as of last week he has not yet received the request. But, he added, his opinion of the situation hasn't changed since 1990.
Part of the problem, said Senate Minority Leader Jon Tester, D-Big Sandy, is that the money DNRC spends on trust land administration doesn't get the same scrutiny as money the Legislature itself divvies out.
"The general fund monies are looked at much more closely," Tester said, adding that because DNRC is an executive agency, Gov. Judy Martz should be going over its budget more aggressively.
But Clinch said there's nothing wrong with the way DNRC pays for managing trust lands.
It is not something the agency just decided by itself to do, he said, rather the Legislature approved it in a 1999 bill requested by then-Gov. Marc Racicot.
Petesch said DNRC was the impetus behind the bill.
Nonetheless, Montana is hardly the only state in the country to adopt such a funding scheme, Clinch said. Most other Western states pay for either a portion - if not all - of the administration of trust lands with revenue from the land.
Montana has been paying for at least some administrative duties with revenue for decades.
"The first time was in 1963," Clinch said.
Four years later, then-Attorney General Forrest H. Anderson wrote an opinion saying that a law allowing 2.5 percent of the revenues off the lands to pay for improvement of the land was perfectly OK under the state constitution.
Clinch cites numerous court cases, both in Montana and other Western states with similar constitutions, and states created by similar enabling acts, which uphold the notion of paying for the management of trust lands with money from the trust itself.
Finally, he said, Montana's own law allows trustees of trusts to be paid with interest or revenue from the trust.
"Clearly, there's evidence that this is appropriate," he said. "It seems like a simple concept. You pay your bills before you put money in savings."
Clinch said everyone seems to be arguing over the same basic problem: Dollars from the state's general fund are getting more and more precious. But in the case of caring for public lands, it doesn't make sense to short DNRC. Wise management of the lands will result in more profitable lands, which means more money for schools.
"For us, if we lose one dollar of management, that's six dollars of revenue," he said.
And here's where this complicated story gets yet more complicated.
Public lands held in trust for K-12 education aren't exactly the same as the public land trust for higher education. Petesch said he was most concerned about the constitutionality of spending trust money from the K-12 trust on administration.
As for the university system trust, Petesch said he would have to do more legal analysis.
So far, no one associated with K-12 education, which Petesch said has the best case against the practice, seems to have any problems with it.
"I don't have any concern about it," said Roy Andes of Helena, a lawyer for Montanans for the Responsible Use of the School Trust, a watchdog group concerned with the management of public lands held in trust for education. "Trustees throughout history have always been able to pay for their administration."
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