Washington State University plans to seek a refund for the millions of dollars in management fees the state Department of Natural Resources has collected on sales of timber from WSU trust lands.
Since the fee was authorized by the Legislature in 1961, DNR has kept 25 cents of every dollar earned from such sales.
But an Aug. 1 opinion from the state attorney general said the fee, collected from all beneficiaries of trust lands, is likely illegal.
The federal statute that granted Washington land in trust for the upkeep of an agricultural college specifically stated all revenue must go to the school. Any management fees for the WSU trust must come from state general fund revenues, the attorney general wrote.
WSU will now try to get that money back, said Sallie Giffen, the university’s vice president of business affairs.
“Once it has been determined it was not a proper charge, it is our obligation to request that money,” she said.
DNR estimates it has collected between $15 million and $20 million in WSU management fees over the 36 years.
WSU says that estimate sounds low. From 1984 to 1995 alone, WSU estimates $10.3 million, or $860,000 a year in revenue, was turned over to a DNR management account.
WSU’s concern over the 25 percent management fee extends beyond the issue of a refund, according to Larry Ganders, the university’s chief state lobbyist. The university has a second trust managed by DNR, known as the scientific trust. That trust does not specifically prohibit collection of a management fee.
WSU intends to “look hard at the whole concept of fees,” Ganders said. “If they are more than needs to be charged then where is that money going? Is our revenue being used to pay for other things in state government?” The Legislature gave the Board of Natural Resources the authority to collect a fee up to 25 percent of revenues. With a few exceptions, the DNR has collected 25 percent from every trust every year, according to Jim Smego, a risk manager at DNR.
When the department finds it has more money than it needs to manage lands, it returns money to beneficiaries. WSU received a $3 million rebate in 1990 and another $3 million in 1993.
Jennifer Belcher, who heads the DNR as state lands commissioner, is meeting with key legislators to discuss the implications of the attorney general’s opinion.
For the time being, DNR will continue to collect the 25 percent fee. The department must abide by the state statute until it is changed, DNR spokesman Dave Workman said.
The department is preparing information for lawmakers that will include calculations on what WSU received for its 25 percent.
The fee is spent on thinning forests, planting new trees, complying with environmental laws and holding timber sales. DNR contends its active management has made WSU timber stands more valuable.
Every dollar invested in managing lands for trust beneficiaries produces $3 for beneficiaries, said Workman. Less than 5 percent of the management fee is used to support the DNR work force or administration, the agency says.
Art Stearns, a DNR employee since the 1960s, who spent 10 years as supervisor of the DNR, calls the management account “the single best thing to happen to the trust and the trust revenue.”
“It takes money to make money,” he said. The fee system “allows you to have constant revenue to reinvest in the land, like a private company. Before that, you had to go to the Legislature and compete with all the other needs of the state.”
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