Reported by Bill Kelly, STATEWIDE Correspondent

Dick LeBlanc is probably the state's largest landlord. After all, he's got a million and a half acres to watch over.

[Dick LeBlanc] The annual rent on this particular property is $6,310.70.

And that's coming in every year?

[LeBlanc] Well, that came in for that particular year that it sold.

Add it all up and the acreages under the LeBlanc State Agency is nearly $55 million in income from the ranchers, farmers, and others who rent this property.

[LeBlanc] Each year we evaluate the cash rental market in the private sector, and we set new rent each year so that the school trust is getting what the private sector is each year.

The money goes into a fund maintained by the Nebraska Board of Educational Land and Funds. They hand out money to state's school districts, even if it is only about 2% of their budgets.

[LeBlanc] Statewide the amount of money that the school trust provides, which is a little over 20 million a year total for school financing, that's probably less than 2% of the total so it's not a big issue except that 20 million is $20 million.

The rent on the area where the pivot is going to go currently is $5,545. So then they're going to increase that another nearly $5,000.

One of the state's most obscure public board oversees management of the land set aside for the state before Nebraska ever became a state.

This is a track located in Polk County.

When the west became part of America as the western states entered the union, two sections of every township were set aside and put in a land trust. The idea is a ready source of real estate and revenue for new schools that would follow the pioneers. Even though Nebraska made a wholesale sell of millions of acres early in the century, a million and a half acres remain. It's on that land that earns a sizable rent check for the State a century later.

[LeBlanc] I think it was visionary from the standpoint in that it provided that the land west of the Missouri River would have an education financing source. Otherwise without that vision, who knows what may have happened to the western United States from funding education. It may not have happened the way they would have liked it.

But the Nebraska legislature wondered if holding millions of acres of land in a trust was really the best way to make extra money for public schools. Last year the senators voted to require the Educational Land Trust sell off three-fourths of its acreage within 10 years. There was a sense that this was an agency that might have run its course.

[Sen. Curt Bromm] It's perpetuated by tradition more than by necessity.

Senator Curt Bromm sponsored the legislation.

[Sen. Bromm] We can realize greater returns, I think, from the proceeds by investing it in other ways.

The State could make more money.

[Sen. Bromm] Correct.

Certainly clear these days that the far flung lands can only rarely be of use in locating schools. The primary purpose was always as a source of revenue. Senator Bromm and critics of the Educational Land Trust believe the State can earn as much or even more by selling the land and investing the money wisely.

[Sen. Bromm] Some who have opposed it I think have opposed it on the grounds it's going to be harmful to schools to sell this land, but there's no data to back that position up that I've seen.

The legislators required the staff for the land trust to put together a plan to sell the land and to start the sale by this summer. In Cherry County we found understandable interest even before the report was issued. With a quarter million acres set aside for school trust in this county alone, the sale could have a significant impact.

[Dave Armstrong, Maverick Land & Cattle] Some places we don't even have it fenced off as school land because we had the lease ever since we've been here or ever since we've owned the land.

Dave Armstrong's ranch includes over 1,000 acres of school trust land. It's impossible to tell which is his and which is the State's. Last year he paid the State thousands of dollars to run his cattle on it. They've put his spread up for sale last year, and he and his realtor have mixed feelings about the State's plan to sell off the land.

[Steve Wolf, realtor] When you have your school land lease, you purchase the improvements on it, and they've probably put quite a bit of money into some of that ground in fencing, trees, watering systems.

At the same time they were paying rent.

[Wolf] Correct. And they would like to probably recoup that and get the benefits of using it.

[Armstrong] Well, there's two ways to look at it. If they sell it, it goes back on the tax roles. If they keep it, why it's not on the tax roles, and the money goes to the coffers for the rent. But I don't think they can sell -- I would say they would use a policy of selling when the lease is up.

At the Cherry County Courthouse, there's interest in that tax revenue. For one thing, the county commissioners note that the school land here earns much more money than the local schools get back.

[Jim Van Winkle, Cherry County Commissioner] I'm going to speak in real round numbers, but the land generates a $1.5 million a year for the trust fund and about 300,000 of that flows back into the Cherry County School System. People perceive that as negative and well, they should.

Also while school districts are paid by the State for these lands kept off the property tax roles, every other local unit of government from fire districts to the county don't get a dime. And it's the western counties with most of the land.

[Van Winkle] Well, I hope, you know, we will just see some fairness I guess. I think it's probably generally been that the perception here in Cherry County that the eastern part of the county -- or eastern part of Nebraska sold all their school land years ago, and they've had the benefits in those eastern counties of having that on the tax roles.

Some school districts are more ambivalent about the land held in their name than you might think. The superintendent of the Wahoo Public Schools likes the theory of an education trust.

[John Brennen] It also shows a value system that the State has, too. There is a value to having a trust for a very important institution which is an education for our children in the future.

Superintendent John Brennen also thinks selling the land could be in his district's best interest.

[Brennen] I think it is a benefit to us. If they sell the land, the proceeds of that land could go into a certain coffer that the State has, and they could invest that land.

Dr. Brennen is able to add another $54 per student to his operating budget this year because of money provided by the income from the school land.

[Brennen] $54 a child helps.

If the trust is going to stay there, you would like to see it get more bang for its buck.

[Brennen] Yes. Yes. I don't think it's a liability to anybody to sell that land, especially when they want to keep it into a trust.

That's what would happen if the land sale takes. This winter the Educational Land Trust issued its report, and now says it can't be done, at least not this year. The land trust staff claims three issues would prevent the massive sale from taking place. They claim the State's bid rigging law is too weak when it comes to sale of state-owned real estate. The new regulations need to make clear that those who buy a piece of school land surrounded by someone else's land may have access to their property. And finally, it's not only the land that has value. It's the natural resources -- the water, minerals, sand and gravel, even substantial timber resources in the panhandle.

[LeBlanc] If the land sells for what the land has sold for in past which is just land value, they could come in and harvest the timber completely and get all their money back and own the land almost free. And so that's something that as a fiduciary trustee for the school trust, we have to take that into consideration, or we may be selling an asset that has got a lot of revenue potential that we didn't consider.

Despite the legislature's mandate to get the process started, those three issues will likely stall the school land sale for at least a year. Senator Bromm is willing to help clear up the issues, but he nonetheless had problems with the tone of the report.

[Sen. Bromm] I think the report comes a little bit short in terms of specifics that we were looking for. I was hoping that there would be a little bit more of a course of sale charted than I see.

Bromm saw lots of reasons in the report not to sell the land but not much of a plan to make it happen.

You might get the impression that this is an agency that isn't real anxious to carry out this land sale.

[Sen. Bromm] Oh, I think you're right.

[LeBlanc] There seems to be an opinion out there in the legislature as well as maybe in some of the other folks that this agency is dragging its feet.

It's a false impression according to Dick LeBlanc. In his view he's been a sound and cautious steward to school land funds.

[LeBlanc] The issue becomes from a State standpoint, do we want to do what the individual voters in the state want done, or do we want to do what's best for the school trust? That answers that question. If it's what's best for the school trust, the facts, the figures, the history all indicate that land has treated the school kids better than the fund has.

Despite Dick LeBlanc's insistence that land management can earn more money than investing, the legislature made clear that his corner of state government will get smaller. In light of that mandate, it seemed surprising in the closing section of the land sale report, lobbies for the legislature to give the trust more authority to buy land, to actually expand its holdings.

[Sen. Bromm] I thought that was an interesting way to end the report. A little bit of lobbying perhaps for a different approach to solving the problem.

At the same time you're asking them to sell land, they're looking for opportunities to acquire more land.

[Sen. Bromm] That seems to be the case, yes.

Buying more land for the school land trust does not seem to be of much interest to the legislature. It's been proposed and dropped before. As for completing the multi-million dollar selloff of the trust's current holdings, the law requires that the auction start this year. For Statewide, I'm Bill Kelly.