Financial Review

General Information

In fiscal year 2013–14, school lands generated gross revenues of $9.9 million for CalSTRS, a decrease of six percent from the previous year. Net revenue to CalSTRS from solid mineral leases decreased substantially from $3,575,009 the previous year to $1,673,233 million, which is over a 53 percent decrease from the previous year. The decline in production at the Mesquite Gold Mine is the primary reason for the marked decrease in royalty revenue. Oil and gas lease revenue increased to $2.42 million this year compared to $1.98 million last year. 

As shown in the table below, the revenue distribution from geothermal leases contributed 56 percent of revenue (versus 46 percent the previous year) solid minerals and surface rentals combined to contribute 19 percent of revenue (versus 36 percent the previous year). Oil and gas contributed 25 percent this year (versus 19 percent the previous year).

Revenue Distribution by Source

Expenses for the program have averaged $1.17 million per year over the last 10 years and in fiscal year 2013-14, the expenses for the program were $1.2 million.  Program expenses as a percentage of revenue increased from 9.7 percent last year to 12.2 percent this fiscal year.  The increase in expenses is due primarily to more staff hours being spent processing and reviewing mining applications, prospecting permits, lease amendments and terminations, etc. State Lands Commission staff anticipates increasing expenses for the 2014-15 fiscal year. CalSTRS Real Estate investment staff is actively discussing expense containment with SLC staff.

Net revenue to CalSTRS decreased this year by 8 percent to $8.7 million from $9.5 million last year due to the decrease in revenue from solid minerals from the previous year. As of June 30, 2014, the School Land Bank Fund had a balance of $730,000. The balance reflects a $59 million loan to the California General Fund in 2008. The loan, including interest, is due to be repaid on June 30, 2016. Interest on the loan accrues at a rate set by the Pooled Money Investment Board. The annual yield for fiscal year 201314 was 0.261 percent and accrued $2,742 in earned interest.