Idaho Loses Money On Idaho State School Endowment Land Grazing Leases

Online Messenger #115

Readers of WWP's Online Messenger know that WWP has been involved from its inception in 1993 in bringing competition to the leasing of state school endowments lands for livestock grazing. WWP currently holds state school endowment grazing leases in Idaho and formerly held several in Utah and has successfully raised the price for these leases in Wyoming by competing for them there.

The State of Idaho's Department of Lands has finally publicly admitted that it has lost money on leasing 1,900,000 acres of endowment land for livestock use even though the State charges ranchers four times what the federal grazing fee is on BLM and Forest service lands ($6.03 per AUM as compared with $1.56 per AUM). Here is a front page story from the Saturday July 8, 2006 Idaho Statesman about the issue:

Grazing program costs Idaho more than it earns Critics say state is failing public schools, while ranchers blame shortfall on red tape

Rocky Barker
The Idaho Statesman | Edition Date: 07-08-20060

For the past two years, the Idaho Department of Lands' grazing program has cost more than it has made.

The proceeds from the program help pay for Idaho schools and under the state constitution must be managed for "maximum long-term financial return.'' The 1.8 million acres of state grazing land have long been identified by financial experts and economists as an under-performing asset among the state's 2.4 million acres of endowment lands.

But the two-year shortfall has prompted the Department of Lands to embark on a financial assessment of all of its parcels to see which to keep or sell. It also plans to propose to the five-member Idaho Land Board a comprehensive statewide land exchange program to increase the return on its land investment.

"The idea is to focus on an aggressive but carefully designed program of pruning the under-performing elements," said Winston Wiggins, Idaho Department of Lands director.

Falling revenues

But revenues of the grazing program have been a political and legal battleground for more than a decade, pitting anti-public lands grazing activist Jon Marvel against the ranchers who depend on state lands to feed their cattle part of the year. Marvel and Mike Webster, president of the Idaho Cattle Association, will address the Land Board on the issue at its monthly meeting Tuesday.

The grazing program lost $159,591 on revenues of $1.7 million in 2005. It lost $185,600 on revenues of $1.8 million in 2004, according to Department of Lands records obtained by the Idaho Statesman. A 1995 law required the Land Board to consider the needs of the cattle industry along with the schools it is entrusted to serve. In 1999, the Idaho Supreme Court ruled that law unconstitutional in response to a Marvel lawsuit.

The state grazing fee is $6.03 per animal unit month, enough grass to feed a cow and a calf for a month. The fee does not reflect market value, private lands charge up to $15 an animal unit month and the state fee has declined more than 80 percent (considering inflation) over the last three decades, Marvel said. The mismanagement of the program comes at the expense of the schools, Marvel contends.

"The Land Board is failing to meet its fiduciary responsibility." Marvel said.

Ranchers blame administrative costs

Ranchers counter that the costs of grazing on state lands are far higher than on private lands because they have to build fences, keep track of cattle at long distances and put up with Marvel's lawsuits. They continue to depend on public lands, state and federal, because there's not enough private grazing land in Idaho.

Ranchers blame the current shortfall on rising costs to administer the program in part because of requirements such as building cattle guards forced on the department by Marvel and the litigation costs from Marvel's Western Watersheds Project.

"Just the red tape the department is going through is bleeding us dry," Mike Webster, of Roberts said.

Raising the grazing fee, especially now that energy costs are rising, would force ranchers out of business, Webster said. These ranchers pay taxes that support local schools and buy goods and services that keep rural Idaho communities alive.

Webster said ranchers will sell off their base property to developers, replacing open space and wildlife habitat with subdivisions.

"They'll sell those off and then they'll be condos," Webster said.

And while some of the grazing lands could bring higher fees on the market, other lands will be worth less than the current fee, said Sen. Brad Little, R-Emmett, a rancher. Setting individual market-based fees would probably cost the department more than it would get back, he said.

Rancher Frank Shirts of Wilder, who grazes sheep on state lands in the Foothills said the price he pays is high for the feed he gets when he trails his sheep through the area in the spring. Were he to quit, he doubts another rancher would follow him.

"The fire danger will go up, and they will end up paying someone to bring their sheep or goats in to reduce the fuel," Shirts said.

The Land Board can't take into account the impact on ranchers, open space, school taxes or local communities, said Wiggins, Department of Lands director. It must run the program to meet its constitutional responsibility. But he believes there will always be a place for grazing in the state land portfolio.

Land exchanges can spread out grazing lands into larger contiguous blocks that are easier to manage.

Already the state is trading grazing lands in the Foothills and last year sold a 57-acre parcel near Ketchum for more than $2 million.

"Jon isn't revealing anything to us we didn't know," Wiggins said.

State to consider alternatives

In August, the department will begin bidding on an appraisal of all of its properties. It also will hold public meetings later this summer or in the fall about a statewide land exchange program.

It can't come soon enough for Marvel, who has been calling for a comprehensive assessment of the value of state lands for years. In 2001, a citizens committee organized by then-Gov. Dirk Kempthorne called for such an assessment and urged the board to require the department to place performance objectives for all state lands.

The challenge for the Land Board is that much of the grazing land is dry and would not bring a high price if placed for auction, said Secretary of State Ben Ysursa, a Land Board member.

"Unfortunately these acres of land are not real disposable like stocks and bonds," Ysursa said.

Selling off the lands also would close off access to hunters, fishermen and others who are able to use the state lands for free. Some states have leased the lands to hunters and fishermen for exclusive access.

Still other states, like Colorado, have changed their constitutions to allow preservation of some lands without having to maximize financial return.

Wiggins believes he can protect wildlife habitat, keep ranchers on the land and preserve open space with the current system.

"I don't think it takes any more constitutional amendments to get us where we want to be," Wiggins said.

To offer story ideas or comments, contact reporter Rocky Barker at or 377-6484.

Idaho Department of Lands
About Idaho's land endowment

What is the Department of Lands?

The Department of Lands is the state agency that manages the state's endowment lands for the Board of Land Commissioners. It also administers the Forest Practices Act that regulates logging and mining reclamation laws. And it staffs the Oil and Gas Commission. The agency has 264 employees and a $39 million annual budget.

What is the Board of Land Commissioners?

When Idaho became a state in 1890, the federal government gave the state more than 3.6 million acres. That land was put in an endowment to raise money for schools. Over the years, about 1 million acres have been sold and other parcels have been picked up in trades, leaving the state with 2.4 million acres. That land comes under the control of the Board of Land Commissioners, also known as the Idaho Land Board.

Who makes up the Idaho Land Board?

Gov. Jim Risch
Secretary of State Ben Ysursa
Attorney General Lawrence Wasden
Superintendent of Public Instruction Marilyn Howard
State Controller Keith Johnson