State Lands 2013 Annual Portfolio Report

State Lands 2013 Annual Portfolio Report

Real Estate Portfolio - State Lands Portfolio

Greg Nyland, CalSTRS Portfolio Manager, Real Estate

Kevin Bassi, CalSTRS Investment Officer, Real Estate

General Information

Program Background

In 1853, with the passage of the Act of March 3, 1853 (10 Stat. 244), the Federal Government gifted 5.5 million acres to the State of California to be used for the support of public education. Between 1855 and 1984, nearly 90 percent of the “school lands” (all of the high quality land) was sold, leaving behind mostly desert land, most of which falls within the boundaries of the lands protected by the California Desert Protection Act.

Since 1984, the remaining lands have been under the trusteeship of the State Lands Commission with the proceeds from land sales reinvested into the trust and only the lease income flows to the Teacher Retirement System’s Supplemental Benefit Maintenance Account. The School Land Bank Fund currently holds 469,000± acres of land and another 790,000± acres of mineral rights where the surface rights have been previously sold.

General Information William Yee

Financial Review

In fiscal year 2012-13, school lands generated revenues of $10.6 million for CalSTRS, an increase of 52 percent from the previous year. Net revenue to CalSTRS from solid mineral leases increased substantially from $328,756 the previous year to $3.5 million, over a 900 percent increase from the previous year. Oil and gas lease revenue decreased to $1.98 million.