Audit recommends state trust land agency ‘improve how it handles risks’

The Capitol in Salt Lake City is pictured on Monday, May 6, 2024. (Photo by Spenser Heaps for Utah News Dispatch)

The School and Institutional Trust Lands Administration, which manages about 3.3 million acres of land in Utah, made at least one recent, risky investment and doesn’t have a “comprehensive inventory” of the value of the land it holds, state auditors told lawmakers this week.

The agency, called SITLA, was the subject of a recent legislative audit and on Tuesday auditors presented those findings.

SITLA was created in 1994 to improve the management of the state’s trust lands — it generates  revenue through real estate planning, grazing, resource use, and energy and mineral leasing, the latter being the most profitable, according to the agency’s website.

Those funds are then passed off to the Utah School and Institutional Trust Funds Office, or SITFO, before they’re distributed to the state’s beneficiaries, which can be sorted into two groups — K-12 public schools and non-public education beneficiaries.

Non-public education beneficiaries include colleges and other institutions, like the Utah State Hospital or the Utah Division of Water Resources, which uses funds for new water construction projects or repairs.

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Last year, according to the audit, K-12 schools received about $102 million from SITLA, while the non-public education beneficiaries got about $5 million.

Despite receiving far less money than public schools, the non-public education funds are harder to track, auditors found. That’s because the beneficiaries don’t have the same guidelines on how to use the funds, with some of the funds not being spent at all. Funds have also been combined with other revenue sources, which makes the SITLA money harder to track, auditors told lawmakers.

The report also highlighted at least one recent, risky acquisition by SITLA — the North Temple Landfill, a 770 acre site near the city’s airport. The report said the parcel had “major financial and environmental risks,” with remediation costs between $100 million and $150 million.

To avoid future risky acquisitions, the report suggested SITLA “create and implement a policy for items to consider before accepting donations similar to the North Temple Landfill development.”

The audit also found SITLA has “limited review” of staff decisions, which can lead to “inadequate or unfollowed policies”; doesn’t have a “comprehensive inventory of the value and characteristics of its land,” making it difficult to track changes in property values over time; and could improve “accountability of its decision making,” because many of the agency’s decisions take place without a “public accountability mechanism” in place.

“We take very seriously our mission to manage Utah’s trust lands as prudently and profitable as possible,” SITLA director Michelle McConkie said when responding to the audit Tuesday, acknowledging that an outdated software system may have contributed to some of the inconsistencies found in the report.

“These kinds of reviews are helpful,” added SITLA board chair Warren Peterson, telling lawmakers the recommendations listed in the report are workable.

“There are a lot of best practices going on in trust lands. And to see those tuned up and audited and advice given, it’s useful,” he said.

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