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Salem, OR—On February 14, the sale of the Elliott State Forest (The Elliott) was again the hot topic before the State Land Board. The sale was first proposed more than a year and a half ago by Governor Kate Brown and the other members of the previous Land Board, former Secretary of State Jeanne Atkins and former State Treasurer Ted Wheeler, as the Board worked to ensure the Common School Fund (CSF) received adequate funding to hire more teachers, reduce class sizes, and add back school days.

The Elliott is 82,500 acres of steep and mostly inaccessible timberland placed in trust to generate funding for Oregon public schools. In 1859, when Oregon was granted statehood, the entire state was divided into six-mile-square townships with 36 sections in each township. Two sections of land in every township were granted by the federal government to be held in trust solely for the purpose of supporting public education. In the 1930's, most of those trust sections were consolidated into what became known as The Elliott. Thus, The Elliott is in a land trust dedicated to generating money for the CSF. The CSF provides local funding for Oregon's 197 school districts and the three members of the State Land Board serve as the Trustees of this constitutional land trust for public education.

In August 2015, in response to low financial returns from The Elliott to the CSF, the members of the previous Land Board decided that it was in the best interest of the CSF to sell The Elliott. The Board offered to sell The Elliott by creating what is referred to as the “Protocol”, which included a maximum sales price of $220.8 million along with other provisions.

The Land Board's offer was accepted by the only qualified buyer (a consortium composed of Lone Rock Timber Management Company, the Cow Creek Band of Umpqua Tribe of Indians, and the Confederated Tribes of Coos, Lower Umpqua, and Siuslaw Indians). For the past 18 months, the consortium has spent more than $500,000 to comply with The Elliott sale Protocol, and the State has spent more than $3.5 million. Although I believe it was a mistake to set such a low asking price, when a seller offers something for sale and the offer is accepted, a deal is made. There may be details to work out, but if the offer is advertised and accepted, the seller can't just back out. In my opinion, that is unethical.

In addition, the opportunity for the tribes consortium to buy The Elliott gave the tribes the chance to regain permanently some of their ancestral homelands “for as long as the river flows and the grass grows.” Were we to revoke the sale, after the sale protocols were offered and complied with, we would, yet again, be breaking another promise to our Native American tribes.

So today, the two new members of the Land Board, State Treasurer Tobias Read and I, were true to our fiduciary duties as Trustees of The Elliott. By voting to complete the deal made by Governor Brown and the previous Land Board, we are maximizing the financial benefits for Oregon's 197 school districts. We voted to complete the sale of The Elliott for $220.8 million with three amendments:
1.The Protocol will allow the state to buy back up to $25 million worth of acreage devoted to conservation;
2.The Protocol will incorporate Forest Stewardship Council principles into the agreement; and
3.The Protocol will give rights of first refusal to the five federally recognized tribes in western Oregon on any lands that are put up for sale after the transfer to Elliott Forest, LLC.

The agreement to sell The Elliott contains provisions to protect old growth timber, the Spotted Owl, and the Marbled Murrelet. It provides access to the few hundred hunters, anglers, and hikers who visit The Elliott annually and it guarantees well-paying jobs for families living in nearby rural communities. The agreement also requires timber management to include sustainable harvesting with replanting of those sections when new-growth timber is harvested.

The money from the sale of The Elliott would be invested as part of the Common School Fund. The average Rate Of Return for the CSF for the past three years has been 8.11%. So, if the $220.8 million would have been invested for the past three years with the CSF, it would have generated approximately $54 million. Instead, since 2013, The Elliott has cost the CSF nearly $3 million more than it has brought in.

In conclusion, as Trustees of the CSF and managers of the Elliott State Forest trust, we have the fiduciary responsibility to maximize revenue for our K-12 schools. Unfortunately, instead of generating funds, the State's inability to manage the Elliott productively has cost us money. I did not want to sell The Elliott, but my fiduciary duty as a Trustee is to support the CSF and my ethical duty is to complete a bargain struck in 2015 by Governor Brown and the previous Land Board with Lone Rock and the Native American tribes.

Dennis Richardson
Oregon Secretary of State

Communications Office 503-986-2368



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