Grazing & Recreation on South Dakota School & Public Lands

At a recent meeting of the South Dakota Grassland Coalition, Ryan Brunner Commissioner of State School and Public Lands, provided excellent information for those interested in understanding more about grazing and hunting on South Dakota School and Public Lands. For additional information on the South Dakota office of School and Public lands, including annual reports and education allocations and various application forms, visit the South Dakota School & Public Lands website.

 

In 1889, the federal government of the United States granted the state of South Dakota over 3.5 million acres. These lands, generally, were represented as sections 16 and 36 of each township to be used for funding schools and other public purposes. These, along with other lands, were divided among the state’s universities, specialty schools, and general school districts. To create revenue, these ‘School Lands’ could either be sold or leased and the proceeds held in a permanent trust fund with the interest used for education. On average, revenue is generated from grazing, mineral, gas, and cropping leases. One hundred percent of the income generated from these lands is allocated to education. The operating budget for the office is based on legislative allocation. Annually, the office returns approximately $12 million to school districts and endowed institutions from approximately 760,000 acres, and annual funding for education has increased roughly 10% on average over recent years.

 

Every year, some portion of state School Lands leases are opened for public auction. These leases are managed as a 5-year base lease, with an additional 5-year renewal option. Prior to auction, a minimum bid rate is set based on the current cattle market. During the initial 5-year term, the lease payment is based on the actual competitive auction bid. However, during the second 5-year period, the lease rate is based on a set formula that depends on the cattle market and is non-competitive. Therefore, the rental rate for the second 5-year period can fluctuate from that of the first 5-years, and can be potentially less expensive. As an example, in recent years high crop prices have increased competition at these auctions, driving the initial bid price much higher than the required minimum for the first 5-years of the contact. The lease price then declines during the second 5-year period as competition is eliminated and the lease is based on the cattle market.

 

Lease auctions must be announced at least four weeks in advance and are posted on the School and Public Lands website and in the official newspaper for each county. Auction announcements are published annually, generally in mid-March.

 

Lessees are responsible for paying the annual property taxes on state School Lands.

 

Because the office of School Lands has a limited budget, they rarely invest in infrastructural improvements. Often any infrastructural improvements such as fences and water development are the current lessee’s responsibility. Lessees apply for an infrastructural improvement permit with the office. The state does allow lessees to cooperate with outside agencies willing to cost share or otherwise fund infrastructural improvement projects. In all cases, the lessee essentially ‘owns’ the infrastructure and its value unless or until the lease changes hands.

 

In most instances, when state School Land goes to auction, the successful bidder will also incur a one-time payment, often to the previous lessee, for the value of the infrastructure associated with the lease. The land auctioneer discloses this value, so the bidders are fully aware of the valuation. This valuation is based only on the permitted infrastructure, thus former lessees are not reimbursed for non-permitted investments. If the successful bidder and the previous lessee do not agree on the terms of the infrastructural value, a third-party Board of Appraisal is appointed consisting of a representative of the former lessee, the new lessee, and a neutral person. If land goes unleased for 6 months, the office of School Lands then assumes ownership of all infrastructure and new lessees are not subject to the infrastructural improvement expenses.

 

Stocking rates are suggested by the state School Lands office at the time of auction on a price per animal unit month ($/AUM) basis. However, leases are structured to reflect a price per acre cost.

 

Generally, it is not legal to sublease state School Land to a third party. However, state law does allow for ‘pasturing agreements’ where additional livestock may be brought in under the total allowable stocking rate. In these agreements, responsibility for lease payments and property taxes remain solely with the listed lessee.

 

No. The office of School and Public Land has placed a moratorium on any conversion of School Land grasslands for crop production or other uses.