Utah School and Institutional Trust Lands 2012 Report

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Table of Contents

Vision/Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Director’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Map of Trust Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Fiscal Year 2012 - Financial Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2012 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9FY 2012 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Trust Revenues from Energy Storage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 More Protection For The Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Future USU Moab Campus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Building Bridges with the OHV Community in the La Sal Mountains . . . . . 19 Wild Horse Roundup Helps Curb Growing Problem on Trust Lands . . . . . . 22 Potash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Family Dollar Distribution Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Unusual Uses of Trust Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Trust Lands Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 What Is The Trust Lands Administration? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 What Are Trust Lands?? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Where Does the Trust Lands Money Come From? . . . . . . . . . . . . . . . . . . . . . . . . . . 31 The Bendficiaries of Trust Lands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 How Do Trust Lands Benefit Utah’s Schoolchildren? . . . . . . . . . . . . . . . . . . . . . . . 34 Conservation of Trust Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Senior Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Photo Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Promise Rock near Cannonville

The financial results of the Trust Lands Administration for FY 2012 were very good. We had revenues of $129,342,000 which was $7,570,000 more than FY 2011 revenues. The agency is fortunate to have significant assets in natural gas that continue earning revenues for our public schools and other Trust beneficiaries. Coal and other minerals also significantly contributed to our revenues.

We have benefited from sustained improvement from our surface activities during the past decade. This includes things like the leasing of telecommunication sites, rights of way for oil and gas pipelines, providing locations for wind farms, grazing, and many more.

While real estate market conditions have significantly curtailed development activities, our internal work has resulted in a profitable development operation that is readying SITLA lands for the time the real estate market improves.

My staff and I continue to work to build Utah’s Permanent School Fund – providing perpetual revenues for our public schools. We also endeavor to be good citizens in the counties where trust lands are located and good stewards of the lands.

Kevin S. Carter

Message from the Director

Vision:

MissionThe Trust is an increasingly significant source of funding for Utah’s schools.

To administer the trust lands prudently and profitably for Utah’s Schoolchildren and other Trust beneficiaries.

3Boulder, Utah

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State Ownership Map

Trust Lands

Forest Service

Private Land

Indian Reservation

Bureau of Land Management

Military

Range Creek located in the Book Cliffs near Wellington

Fiscal Year 2012 – Financial Summaries

Winchester Hills, in St. George

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Trust Lands’ revenue increased again in FY 2012 from the prior fiscal year by about $7,570,000 to a total of more than $129,342,00. Oil and Gas production led the way with almost 50 percent of the money.Chart #1 shows the total revenue produced by the various types of activities of the Trust.

There are 12 different trust land beneficiary institutions. Each beneficiary receives the revenue derived from the use of its own land. Chart #2 shows the institutions in Utah that own trust lands, the approximate surface acreage owned by each, and the approximate percentage of the total trust acreage owned by each institution.

Chart #1: Total Revenues by Type Oil & Gas $59,129,505 Coal & Other Minerals 16,784,842 Surface Sales 1,470,191 Surface Leases & Easements 7,171,057 Development Sales 3,537,236 Development Leases, Permitting, & Easements 922,064 Interest on Agency Operations 7,639,973 Interest/Dividends/Gains on Permanent Funds 32,683,461 Miscellaneous 3,473 Total Revenues for FY 2012 $129,341,802

Chart #2: Beneficiary Ownership of Surface Land in AcresInstitution Acres Owned % of TotalPublic Schools (K-12) 3,290,488 96.72 Reservoirs 42,355 1.23 Utah State University 28,174 <1 University of Utah 16,445 <1 School of Mines 7,226 <1 Normal Schools (Teacher’s Colleges) 5,850 <1 School for the Deaf 5,595 <1 Miners’ Hospital 5,537 <1 School for the Blind 456 <1 State Hospital 104 <1 Youth Development Center 19 <1 Public Buildings 1 <1 Total Acres 3,402,250

Financial Summaries

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Because most of Utah trust lands are public school lands (and have been since statehood in 1896), the largest share of revenues is earned for public schools. Of the $129,342,000 total earnings in FY 2012, more than $123,465,334 is from public school lands.

The law says that all of the net revenues for the public schools are put into the State Permanent School Fund. The other 11 beneficiaries put only land sale revenues into their permanent funds. The rest of their yearly earnings are distributed directly to them. This means that the Permanent State School Fund grows rapidly while the permanent funds of the other beneficiaries do not grow as fast.

SITLA, along with the state treasurer, has been working at building the Permanent State School Fund for 18 years – since FY 1994. In 1994, after almost 100 years of statehood, the Permanent School Fund stood at only about 50 million dollars. In the 18 years since SITLA was created, the Permanent School Fund has grown to 27 times the amount it was in 1994. At the End of FY 2012, the Permanent State School Fund topped $1,383,000,000!

The monetary assets in each of the permanent funds are invested by the state treasurer. The Permanent State School Fund (public schools - K-12) is more than 90 percent of all permanent funds combined. For public schools, the investment earnings on their permanent fund were more than $31,000,000. Someday those earnings will be the largest source of Trust revenue.

Because the funds are permanent, the earnings of those funds will continue to benefit Utah’s schools and institutions – forever. That is why SITLA puts so much emphasis on building the permanent funds.

Beneficiary RevenuesChart #3 shows the FY 2012 revenues and distributions for each beneficiary. Most of the public schools’ revenues are saved in the State Permanent School Fund. Only the earnings on that fund are distributed to public schools. The 11 other beneficiaries receive most of their revenues in the same year they are earned.

Chart #3: Total Revenues and Distributions for Each Beneficiary Total Revenues Distributions to BeneficiaryPublic Schools (K-12) 123,465.334 $29,263,119 Miners’ Hospital 1,344,278 $1,700,000 University of Utah 1,473,439 1,356,385 Reservoirs 463,768 502,754 School for the Blind 426,410 425,415 School for the Deaf 79,195 74,314 State Hospital 493,610 476,199 Utah State University 697,999 312,058 Normal Schools 483,465 320,868 School of Mines 430,036 352,878 Youth Development Center 278,527 213,606 Public Buildings 5,741 5,702

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Beneficiary AssetsChart #4 shows the success that SITLA and the state treasurer have achieved in total trust assets since FY 2000. The chart also shows how the assets of public schools have grown as a part of total assets.

Chart #4 - Total Trust Assets Total Trust Assets

Total Public School Assets

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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For additional financial information, visit the Trust Lands website at www.trustlands.com. Follow these links: Homepage > Financial Statements and Statistics > FY 2012 (or any year listed). These financial reports are not audited. For audited financial information, contact the Assistant Director/Finance at 801-538-5100

Potash Ponds Moab

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FY 2012 – Highlights

Kodachrome Basin State Park

Trust Revenues from Energy Storage

Magnum Energy is developing the Western Energy Hub (WEH) 10 miles north of Delta, Utah, on School and Institutional Trust Lands. The WEH is an energy storage project that will construct huge underground storage caverns in a rare salt body that measures one mile thick, three miles wide, and is located 3000 feet below the surface. Once constructed, these caverns will store a number of different energy products such as natural gas, natural gas liquids, compressed air, petroleum and other refined products, and sequestered carbon.

Storage caverns will be created using a process known as solution mining. Solution mining involves drilling deep into the salt body, injecting fresh water into the hole, and circulating the water until a void is dissolved. Solution mining is continued until the void becomes the size and shape wanted for each individual energy product. For instance, caverns that will store natural gas are designed to be 300 feet wide and 1200 feet tall. This is about the size of the Empire State Building.

Magnum will begin development of the WEH with the construction of two caverns to hold three million barrels of natural gas liquids (propane and butane). Constructing storage caverns of this size is significant due to all the recent shale gas development that is happening in the United States and Canada. This development has created a wave of natural gas liquids in the marketplace, however, there are not enough storage facilities to hold it all. Opening a new large-scale storage facility will be a major step toward providing much needed infrastructure while capturing significant value for Utah from this growing energy market.

Magnum hopes to quickly follow up the construction of natural gas liquids storage with the construction of high-deliverability natural gas storage and compressed air energy storage (CAES). Initial plans are to construct four 10-million barrel caverns to store 54 billion cubic feet of high-deliverability natural gas and one five-million barrel cavern that can store up to 16 hours of captured renewable energy daily. Caverns that hold high-deliverability natural gas and compressed air can be used to integrate intermittent renewable energy by firming and shaping the power before it is delivered onto the regional electric grid. Integrating renewables in this way will make the grid more efficient, greener, and keep energy costs down.

The rare nature of the salt body and the different energy products that can be stored in these caverns make the Western Energy Hub a valuable asset for the state of Utah. Not only is the project being developed on school trust lands to generate revenue for Utah’s schoolchildren, the project will also generate significant economic development for rural Utah. In addition to lease and royalty payments, tax revenue, and job generation, Magnum believes the WEH represents an estimated 3.5 billion dollar investment platform that will provide a solid foundation for continued energy development and economic growth.

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More Protection For The Environment

SITLA’s Oil and Gas Group works to protect the surface lands used by the oil and gas industry from irreparable damage. This task is taken very seriously. While we are a multiple use agency, we want to be sure that future generations of schoolchildren will be able to use and enjoy these lands as we do now.

Based upon geologic studies, an operator drills where the company believes the resource to be. The best location could be on the side of a hill. Hillside locations may require large fills or cuts in order to level a site large enough to accommodate a drilling rig and all the necessary equipment. This could be an area of three to five acres depending on the company’s requirements. For SITLA to be able to benefit from the development of the resource, sometimes these disturbances are unavoidable.

During the life of an oil and gas well, the operator could change. The company charged with the responsibility to plug the well may not be the company that originally drilled the well. In order to ensure that there will be money available for reclamation when it is needed, oil and gas operators must post a bond with SITLA. The bond will be in force until the well has been officially recognized as plugged and abandoned by the Utah Division of Oil, Gas, and Mining – a separate agency charged with regulating mineral development in the state of Utah. The well site must be reclaimed to SITLA’s satisfaction before the bond will be released.

To protect the schoolchildren’s interest, the agency now requires a separate bond on well locations that will likely be expensive to reclaim. These well locations are unique and do not occur often, but SITLA wants to ensure that all impacts are remediated.

Oil and gas companies understand the situation and are complying with the agency’s requirement. It is in the interest, not only of the beneficiaries, but also the operator to be certain that there are funds available under any circumstances to return trust lands to their pre-disturbance condition.

Site Before Restoration Site After Restoration

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Artist Conception

Future USU Moab Campus

Utah State University intends to build an extension campus in Moab. The site is located on 366 acres of land at the southern end of the city. Additionally, a private development firm has 30 commercial acres along highway 191 adjacent to the proposed university development.

SITLA, Utah State University, and the adjacent private property owners are planning the project together to create a seamlessly integrated development. Construction on the project is expected to begin within the next five years.

The proposed development will include:

• USUCampusandParking• StudentHousing• Multi-familyResidential• Single-familyResidential• CommercialandRetail

The facility will eventually accommodate 3,500 students involved in core university studies and academic fields such as geology, health and social work, digital media and film, education, and tourism management.

In addition to bringing USU to Moab, the facility will be a beautiful addition to the Moab community, create economic opportunities for the area, and also generate revenues for Utah’s schoolchildren.

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Building Bridges with the OHV Community in the La Sal Mountains

For the past two years the School and Institutional Trust Lands Administration has been working to develop and implement an off-highway vehicle (OHV) trail management plan on the 27,500 acres of trust land it administers in southeastern Utah’s La Sal Mountains. SITLA has worked closely with many public and private stakeholders as the management plan has been developed and implemented. The plan bridges many historic gaps with the OHV community and ushers in a new era of understanding, collaboration, and trust.

The management plan consists of a designated trail system which provides a variety of OHV opportunities to the public including four-wheel drive routes, ATV trails, and some of the only designated single-track routes in the state. Motorized recreation opportunities have been preserved for the public. SITLA fulfills its responsibility to protect the lands for its beneficiaries by rehabilitating and restoring those areas damaged by irresponsible or illegal OHV and camping uses and preventing future degradation of the resource.

Information kiosks, directional signs, and trail markers have been installed. A travel map guides users through the trail system. Many miles of old logging roads, redundant routes, and spur trails have been deconstructed and rehabilitated. Collaboration with diverse stakeholder groups shaped the project and continues to improve the plan.

Part of the plan implementation (depicted in the accompanying photo) included a volunteer group that assisted in the installation of a new bridge over a tributary to Two-Mile Creek on the ATV loop located between Dark Canyon Road and the Sheepherder’s Haven trail. The project was a collaborative effort between SITLA and local OHV enthusiasts, particularly members of the San Juan Public Entry and Access Rights Association (SPEAR). In recognition of their efforts, the bridge has been named “SPEAR Bridge.”

SITLA is grateful for the support it receives from groups like SPEAR, Ride with Respect, local government, and other members of the public, allowing it to continue building bridges with the OHV community and fulfilling its mandate to the trust beneficiaries.

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Wild Horse Roundup Helps Curb Growing Problem on Trust Lands

The Trust Lands Administration participated in a Bureau of Land Management roundup and relocation of 109 wild horses on the Winter Ridge area south of Vernal. The horses roamed a range of about 46,500 acres, of which more than 10,800 acres are trust lands – approximately 25 percent of the total.

The horses were relocated from the Winter Ridge area primarily because it is not suited for the management of wild horses:

• Extremewinterconditionscanthreatenthesurvivabilityoftheanimals.Forexample,duringthewinterof1983-84morethan100 horses – about 90 percent of the herd – died of starvation.

• TheareahashistoricoutbreaksofdeadlyEquineInfectiousAnemiawhichcanspreadtodomesticanimals.

• Thehorseshavecausedseriousdamagetotherange,renderingitunsuitableforusebydomesticlivestockandwildlife.

The BLM has legal authority to manage wild horses and determined that the situation at Winter Ridge had become dangerous and the herd needed to be relocated.

The roundup was conducted by a professional herding group using helicopters and riders on horseback. The horses have been transferred to the Delta Wild Horse and Burro facility. There the horses are held until they are adopted. Those not adopted are cared for in long-term grazing pastures, where they retain their wild status.

The horses in this roundup were domestic horses that had escaped from ranches and tribal lands. None of the horses were the Mustangs of western legend.

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Potash

Potash is mainly used as an agricultural fertilizer. It is one of eight essential nutrients for vitality of crops. Because of the worldwide increasing demand for food and plant products, there is an associated growth in the necessity for fertilizers. This can be seen in the prices for the commodity; growing from about $150 per ton 10 years ago to more than $450 per ton in 2012. The price increase for this year alone has improved revenue for the School Trust from $1,152,000 to more than $2,004,000.

This price increase has resulted in more interest for developing the mineral on Utah’s trust lands. Currently, only one company is mining potash on trust lands. Now that company is seeking additional resources near its operations in Grand County. Additionally, other companies are exploring more areas on school trust lands in Utah:

• ParadoxBasininGrandandSanJuanCounties • HatchRockareainSanJuanCounty • CrescentJunctioninGrandCounty • SevierLakeBedinMillardCounty • BlawnMountaininBeaverCounty

Testing of these areas is positive, indicating significant potash resources available.

Further interest is shown by additional exploratory leases just issued for the Pilot Mountain area of Box Elder County.

As the worldwide demand for agricultural production increases, so will the demand for these fertilizer minerals. This bodes a bright future for potash revenues for Utah’s schoolchildren.

Potash production line

Chart #5: Potash Revenue per Year2003. . . . . . . . . . . . . . . . $320,000 2004. . . . . . . . . . . . . . . . . 321,000 2005. . . . . . . . . . . . . . . . . 426,000 2006. . . . . . . . . . . . . . . . . 404,000 2007. . . . . . . . . . . . . . . . . 502,000 2008. . . . . . . . . . . . . . . . . 526,000 2009. . . . . . . . . . . . . . . . 1,376,000 2010 . . . . . . . . . . . . . . . . 1,517,000 2011 . . . . . . . . . . . . . . . . 1,152,000 2012 . . . . . . . . . . . . . . . .2,004,000

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Family Dollar store in Salt Lake City

Family Dollar Distribution Center

The announcement that Family Dollar Stores, Inc. is locating their new distribution center at the Fort Pierce Industrial Park in St. George is good news for Utah’s public schools. The Fort Pierce Industrial Park is located on school trust land being sold to businesses locating there. With the sale to Family Dollar Stores, the 1,200-acre park is approximately 50-percent sold and developed.

The new Family Dollar facility is equally good news for Washington County, the city of St. George, and the state. The anticipated advantages include:

•Thedevelopmentofan800,000squarefootdistributionfacility •Theinvestmentof$80,000,000byFamilyDollarStoresinthesite •Theeventualcreationof450jobs

Family Dollar operates a chain of more than 7,100 stores in 45 states, generating more than 8-billion dollars in annual revenues.

The facility’s location in the Fort Pierce Industrial Park is adjacent to a much larger Trust Lands planned community currently called the South Block. The community consists of about 6,500 acres on the south side of St. George. That community plan includes:

•2,000acresofcommercial,school,office,andlightindustrialdevelopment •2,200acresofresidentialconstruction •2,300acresofopenspace,parks,andconservationareas

Unusual Uses of Trust Lands

The majority of revenues earned from trust lands come from well-known resources such as oil, natural gas, mining, commercial leasing, grazing, etc. However, there are a number of more obscure sources of lease revenues that are worth noting.

Hurricane Mesa rocket sled test track near St. GeorgeThis facility is mainly used to test aircraft components at great velocities – for example, ejection seat systems. The facility provides a rocket-sled track and instrumentation that can evaluate the performance of various components at high velocities and under various conditions. It has not only been used to test aircraft components, but also automobiles and other products at high speeds.

West Desert cosmic ray detectors near DeltaThere are more than 50 cosmic ray detectors scattered over nearly 2,000 acres of trust lands. The detectors are each about the size of a pool table. Most are powered by solar cells. The project studies cosmic rays and is operated by the University of Utah in conjunction with the University of Tokyo.

UNAVCO GPS monitoring sitesUNAVCO is a university-governed consortium of scientific organizations that study geodynamical phenomena such as crustal motion, tides, and polar motion. The organization has several locations on trust lands in Utah that utilize high-precision GPS technology to study occurrences in this area.

Salt dome gas storage near DeltaThere is a rare salt body that is being hollowed out to create huge caverns (about the size of the Empire State Building) for the storage of natural gas, other refined petroleum products, and even compressed air. The salt formation is about 3,000 feet below the surface and is approximately one mile thick and three miles wide. The project is being developed by Magnum Energy. Full story on page 15.

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Hurricane Mesa Test Track Cosmic Ray Laboratory

Unusual Uses of Trust Lands

Mars Analog Research Station near Hanksville The research station is a field facility used by a group of private scientists to learn how to live and work on Mars.

Trilobite Mine in the desert 50 miles west of DeltaThe U-Dig trilobite mine is a rich source of trilobite fossils. The public is welcome to visit the mine where, for a fee, people can search for their own piece of prehistoric nature. The mine is also a commercial venture that provides Utah trilobite fossils to rock shops all over America.

Motocross track leasing near PriceThe track is adjacent to the Price Fairgrounds about two miles west of Price. The track is used almost every year for a Utah Sportsman’s Riders Association sanctioned event. Most recently the race has been named “The Drunkards Wash Grand Prix.” The events are held on an 18-mile loop that is located on about 7 square miles of trust lands. There are races held for all age groups and skill levels. Participants mostly come from Utah and surrounding states.

Cowboy Dinner Theatre north of MoabThe Cowboy Dinner Theatre serves old west style food with a reenactment of a western shootout. This is done among the Southeastern Utah red rocks in an old-west setting. The facility serves about 200 customers at a time.

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Cowboy Dinner Theater Price Motocross Track

Trust Lands Fundamentals

Porcupine Rim near Moab

What Is The Trust Lands Administration?The School and Institutional Trust Lands Administration (SITLA) is an independent agency of state government. It was created in 1994 by the Utah state legislature to manage lands granted to the state of Utah by the United States for the support of public schools and other beneficiary institutions. Prudent and profitable trust lands management has put needed dollars to work in Utah’s schools. As a result, SITLA helps to create a better-educated workforce throughout the state.

What Are Trust Lands?When Utah was granted statehood on January 4, 1896, the federal government gave the new state parcels of land to be managed in trust to provide financial support for public education and 11 other public institutions. The institutions that benefit from these lands are called beneficiaries. The lands are called trust lands and are scattered throughout the state.

From time to time, trust lands are sold. In fact, more than one-half of the original land grant has been sold, much of it during the first 35 years following statehood. Interestingly, about 30 percent of all private lands in Utah were originally trust lands.

Now, more than 100 years since statehood, the trust of each beneficiary consists of two portfolios: (1) the real estate portfolio which is its remaining trust land, managed by SITLA; and (2) the financial portfolio, which is the money from the management and sales of that land, managed by the State Treasurer.

The objective is to successfully manage both portfolios to provide financial support for the beneficiaries. Successful management of Utah’s trust lands means working as partners with our beneficiaries, the governor and the legislature, other state agencies, local communities, and the public at large.

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Bow Tie and Corona Arches in Moab

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Where Does the Trust Lands Money Come From?Money from the management of trust lands comes from a variety of different sources:

•MineralRevenues

The largest source of revenues from trust lands is from the leasing of minerals properties and royalties from the production of minerals. Mineral production comes from many sources, including gas and oil, coal, sand and gravel, and gold.

•LeasingSurfaceResources

Real Estate owned by SITLA is leased by a wide variety of users. Leased trust lands are currently used for telecommunication sites, governmental uses, commercial sites, industrial sites, recreational cabin sites, farm land, timber harvesting and forestry sites, and grazing lands for livestock. It is also used for rights of entry and easements.

•TrustLandSales

There are times when the best way to make money for the beneficiaries is through the sale of trust lands. SITLA land is generally sold in one of two ways: at public auction or through a development project.

Public auction sales are generally held twice a year making more land available for private ownership in Utah.

Development sales occur when it is determined that profits for the beneficiaries could be optimized by adding value to parcels of trust land before selling them. Usually, SITLA participates with experienced private real estate developers to provide land for residential, commercial, and industrial uses to help Utah’s growing communities get where they want to be.

The revenues generated by SITLA have an increasingly significant impact on Utah public education and other Trust beneficiaries while building their permanent funds. The primary goal of SITLA is to make the schools’ trust lands a major source of public school funding.

It should be noted that SITLA is entirely self-funded. A portion of the money generated from managing the trust lands’ activity is used to operate SITLA. All expenses and capital costs are paid from these revenues. No tax money is required.

Pump Jack near Huntington

The Beneficiaries of Trust LandsAt the time of statehood, Congress designated trust land beneficiaries in Utah. By far, the largest percentage of trust lands was granted to public schools for the benefit of Utah schoolchildren.

The other beneficiaries now include:

• Reservoirs

• UtahStateUniversity

• UniversityofUtah

• SchoolofMines

• MinersHospital

• NormalSchools(Educationdepartmentsatstatecollegesofferingteachingdegrees).

• SchoolfortheDeaf

• SchoolfortheBlind

• PublicBuildings

• StateHospital

• YouthDevelopmentCenter

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Fruita School in Capitol Reef National Park

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How Do Trust Lands Benefit Utah’s Schoolchildren?SITLA works closely with local communities to build value for Utah’s schoolchildren. Cash generated by both trust land operations and trust land sales is transferred to the Permanent State School Fund. By doing so, the endowment for the public schools grows each year. Investment income (interest and dividends) from the Permanent Fund is distributed to the schools each year for local academic needs. The distribution is primarily based on the number of students at each school.

Conservation of Trust LandsAs a cautious and far-sighted steward of the land, SITLA recognizes that certain trust lands have unique scenic, recreational, or environmental characteristics. In these situations, the organization works to sell the land for conservation purposes or exchange it for other real estate more suitable for development.

Our MissionIt is the mission of the School and Institutional Trust Lands Administration to administer school trust lands prudently and profitably for Utah’s schoolchildren and other Trust beneficiaries.

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Chairman Michael Brown Vice-President, Graymont Western US, Inc. Background: Environmental safety and geology Kaysville, Utah Term: expires 6/30/2012

Vice-chairmanDaniel C. Lofgren President, Cowboy Partners, Cowboy Properties Background: Commercial real estate development Salt Lake City, Utah Term: expires 6/30/2013

Board Member Steven B. Ostler Chief Executive Officer, The Boyer Company Background: Business operations, asset management, and strategic planning Salt Lake City, Utah Term: expires 6/30/2014

Board MemberDavid Ure Vice-president, URE Ranches, Inc. Background: Legislative and agriculture Kamas, Utah Term: expires 6/30/2015

Board MemberLouie Cononelos Chief Advisor, Government & Corporate Relations – Americas, Rio Tinto Background: Mining – government and corporate relations, public teaching Salt Lake City, Utah Term expires: 6/30/2016

Board MemberJames M. Lekas President, LEXCO, Inc. Background: Gilsonite mining and oil-shale research and development Vernal, Utah Term: Expires June 30, 2017

Board MemberMichael Mower Governor’s Office, Deputy Chief of Staff/State Planning Coordinator Background: Staff and policy advisor to state and federal elected officials Term: Serves at the pleasure of the Governor

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Board Member NomineeThomas W. Bachtell CEO of Wind River Resources Corporation Background: Resource development and law Salt Lake City, Utah Term: Expires June 30, 2018

Board of Trustees – Fiscal Year 2012

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Kevin Carter Director

Nannette Johnson Assistant to the Director and the Board

John Andrews Associate Director and Chief Legal Counsel

Lisa Schneider Assistant Director/Finance

Kim Christy Assistant Director/Surface

Douglas O. Buchi Assistant Director/Planning and Development

LaVonne Garrison Assistant Director/Oil and Gas

Tom Faddies Assistant Director/Mining

Jeff Roe ITS Manager

Ron Carlson Audit Manager

Dave Hebertson Public Relations Manager

Senior Staff Photo Credits

Page 16 Magnum salt storage graphic courtesy of Magnum Energy

Page 17 Oil pad restoration by Ron Torgerson of SITLA

Page 18 USU Moab Campus artist rendering courtesy of Design Workshop

Page 20 La Sal bridge build by Tami Colyar of SITLA

Page 21 Horse roundup courtesy of the Bureau of Land Management

Page 26 Motocross rider courtesy of Maddox Photography

Page 25 Rocket Sled Testing Track courtesy of United Technology Systems

Page 25 Cosmic Ray Laboratory courtesy of Benjamin Stokes of Telescope Array

Page 31 Pump Jack by Jim Davis of SITLA

All other photos by NormaLee McMichael of SITLA

State of UtahSchool & InstitutionalTrust Lands Administration

Southwestern Area 2303 North Coral Canyon Boulevard, Suite 100-A, Washington, Utah 84780, Phone: 435-652-2950, Fax: 435-652-2952

Southeastern Area 217 East Center Street, Suite 230, Moab, Utah 84532, Phone: 435-259-7417, Fax: 435-259-7473

Main Office 675 East 500 South, Suite 500, Salt Lake City, Utah 84102, Phone: 801-538-5100, Fax: 801-355-0922

Central Area 130 North Main, Richfield, Utah 84701, Phone: 435-896-6494, Fax: 435-896-6158

For more information contact:Dave Hebertson [email protected] McMichael [email protected]