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The Lakeland Times | Minocqua, Wisc.

Jim Tait 02/01-02/28/17

home : news : state news July 22, 2017

5/19/2017 7:20:00 AM
State treasurer is on another constitutional mission
BCPL land sale, elimination of his job on Adamczyk's docket

Richard Moore
Investigative Reporter

Say what you will about Wisconsin state treasurer Matt Adamczyk, but the man thrives on undertaking tough and often controversial constitutional missions.

For example, next spring voters will decide whether to abolish his position through a constitutional amendment, a vote that has made its way on the ballot largely because of his insistence - he campaigned by promising to abolish the treasurer's post if he won, saying it had become largely superfluous.

Now, he and two lawmakers have offered another and perhaps even more controversial proposal, specifically, for the state Board of Commissioners of Public Lands to sell all its 76,506 acres of land to the Wisconsin Department of Natural Resources, which would purchase the properties using Stewardship dollars.

For decades, the BCPL has managed the lands, much of it for timber harvesting, and in recent years it has even bought new lands, but Adamczyk says it's clear the state constitution directs the BCPL commissioners - of which he is one of three, along with attorney general Brad Schimel and secretary of state Doug La Follette - to sell the lands.

"I have been on this board for over two years now, and we have not bought a single parcel of land since I have been a commissioner, and I will not support any land purchases," Adamczyk told The Lakeland Times in an interview this week. "I think we're told to sell the land. I think it is pretty clear what the constitution says."

Indeed, Article X, Section 8, of the Constitution states: "Provision shall be made by law for the sale of all school and university lands after they shall have been appraised ...."

The bill drafted by Assembly speaker pro tempore Tyler August (R-Lake Geneva) and Sen. Steve Nass (R-Whitewater) would do just that, with most of the proceeds going to the BCPL's Normal School Fund, the return on investment from which must be distributed to the UW System.

Merit-based scholarships of $5,000 each would be created for annual distribution to in-state residents attending college in the UW System. The annual scholarship would be the largest ever created in the state, Adamczyk says, valued at $5 million a year when fully implemented.

A better use of money

For Adamczyk, the sale of the lands is not only constitutionally mandated but makes sense for a number of reasons.

"I've been working with two offices, Sen. Nass's and Rep. August's offices, frankly for quite a while," Adamczyk told The Times. "It's been an issue for me, the fact that we have all this land up in northern Wisconsin, that year to year, the management of BCPL loses money on it because they basically spend more to manage it than they bring in in timber revenue."

Losing money on an asset worth so much money - anywhere from $70 million to $80 million, according to Adamczyk - is wrong, he said.

"An asset that is worth quite a bit of money like that, losing money just wouldn't work in the private sector, and I have a fiduciary duty as a trustee of the Board of Commissioners of Public Lands, along with Brad (Schimel) and Doug (La Follette), to make as much money as we can for our beneficiaries," he said.

The bulk of the land holdings, about 70,000 acres, is tied to the Normal School Fund, Adamczyk says, so the money from the sale of those properties must constitutionally go to the UW System.

"And on that land that the Normal School Fund has, we're just not making any money," he said. "It's timberland up there in northern Wisconsin and everybody I know says private companies and county forestry people do the best work, and DNR and BCPL are further down."

Adamczyk pointed to a 2004 task force that concluded the state would benefit if BCPL divested itself of those properties, in part because the BCPL's management capabilities were suspect.

"The BCPL has demonstrated a lower return rate that the Division of Forestry has shown," the final report stated. "By empowering the division over these lands and requiring BCPL focus on trust fund maintenance, costs will be reduced and revenues increased for both agencies."

Adamczyk says that report's findings could not be any clearer.

"They said that it is in the interest of the state to require the BCPL to divest itself of its property," he said. "And that's where this bill comes from."

But there's a practicality to consider in selling the lands, Adamczyk told The Times.

"The only way we can actually get rid of it probably is to sell it in one swoop," he said. "And that's how the bill is set up, to sell it to Stewardship because there's really no other buyer that would buy all of it, probably, and we do have some limitations in our ability to sell the land, that we have to do appraisals first."

That's problematic in one way, Adamczyk said.

"We have a bunch of 40-acre parcels littered throughout the area, especially Oneida County," he said. "They might be worth $30, $40, $50 grand, who knows. The problem is, if we have to do an appraisal first and spend a grand or so, and then put it up for sale, we don't know if anyone is going to buy it, and then we have lost that $1,000 (if no one does buy it) because the appraisal is only good for a certain number of years."

The DNR can approach it from the opposite side of the equation, he said.

"If the DNR does it, they can actively pursue it using real-estate people and get a gauge of what the land is worth and then get the appraisal and sell it," he said.

A good deal

Adamczyk says one of his biggest concerns is the number of government players in the state's land-management game.

"You've got the state of Wisconsin DNR, you've got the counties, which are a subchapter - and they have more land than the DNR does, and I think that's like 2.5-million acres for the counties - and the state has like 1.5-million acres, and then there's this little BCPL, which has 75,000 acres," Adamczyk said. "Why are we doing this work when DNR could be doing it? So there's the extra services, and we are not using consolidation. It just doesn't make any sense."

Adamczyk said he would rather have the counties and the DNR manage the land because they are already doing it, and he said they are aiming to use the Stewardship Fund because that is pretty much the only pot of money out there that could be used. But everyone will be a winner, he said.

"The real kicker to the bill is that at some point we will monetize this timberland, and if we get $80 million - we have $26 million in the Normal School Fund already - so we have about $100 million, and if we can get a rate of return of conservatively 5 percent, that's $5 million a year, and we are saying $5,000 scholarships, so that's 1,000 scholarships a year, and that's a good deal for the state," he said.

Naturally, Adamczyk says, people want to know why the money couldn't be used elsewhere for more pressing needs.

"One other thing people are asking me is, why don't we give it to other things, like roads," he said. "But, as you know, the constitution tells us where it has to go. In this fund, it has to go to the UW, so we figured, rather than give them a check for $5 million, we would just earmark it for scholarship aid for merit based."

Adamczyk says all the land will be sold at once, not just the 70,000 acres in the Normal School Fund but the 6,000 acres in the Common School Fund.

"That way the board of commissioners will be out of the land game completely," he said. "We wouldn't need a little office up north, and we wouldn't need that staff. It doesn't make sense that two agencies, the DNR and the little BCPL, are doing the same work."

Adamczyk says he doesn't know if the governor is supporting the legislation, but he also said he sees no reason why Scott Walker would not.

"I'm not going to say I'm at the level where he and I meet daily," he said. "I briefed his staff. His office has had some positive comments out there that I've read. If the Legislature is able to do this, I don't see any reason he wouldn't support it. This is a big win for Wisconsin, the largest scholarship in state history."

And it would be a win for Walker, too, Adamczyk said.

"It goes hand-in-hand with other things that he has talked about since he first ran, such as consolidating services and making government more efficient," he said. "We have to do all kinds of things that are duplicative because other agencies are already doing the same type of work."

Adamczyk says he hasn't been able to speak with the other BCPL commissioners because to do so outside of a meeting would violate the open-meetings law, but he said he expected the full commission to take up the matter soon, probably in June.

Adamczyk said he would hope the two commissioners would support the plan.

"The gist of it is, we are trustees of this fund, and we have a fiduciary duty to make the most money for the fund to benefit our beneficiary," he said. "Right now one of my biggest concerns is that all we give to the UW through these holdings - $80 million in land and $26 million in assets, so about $100 million in assets - all we are giving is $300,000, that's .003 percent. That's ridiculous. We have to fix that."

Adamczyk also said the BCPL's Land Bank Authority, granted in 2006, hadn't worked out well for the trust funds. That authority allowed the BCPL to use the proceeds of land sales to begin buying other land rather than simply disposing of it.

The bill authorized the BCPL to procure working forests for timber management to generate revenue for schools. Toward that end, the state earmarked $2 million a year in Stewardship funds for BCPL purchases. In sum, the BCPL began selling naturally sensitive non-timber lands to the DNR for preservation, and used the money to acquire timberland it could manage and harvest.

"I don't know that it (the land bank authority) was necessarily unconstitutional because the Legislature has given us a directive to make some investments through it, but it certainly goes against the will of the constitution that we are to sell the land," Adamczyk said. "It's pretty clear. Sell the land, make money and run a trust fund. Since Land Bank, we have sold 16 million acres in land but then they turned around and bought 14.6 million acres. That is completely wrong. We should have had that 16 million (in sale proceeds) that could have been in those funds making money. And that's unfortunate because we would have made much better rates of return. Instead we just bought more timber. It doesn't make any sense."

Adamczyk said he was aware of one such purchase in Iron County, a parcel of land he says was not connected to anything else the BCPL owned.

"It was in the middle of nowhere," he said. "A completely silly purchase. That is not what we are supposed to be doing."

Addressing concerns

In the interview Adamczyk addressed some of the concerns over the proposed bill expressed by conservation groups, such as the state essentially buying land from itself.

"Well, I would argue .... to people working against the bill that at least the land will stay in state hands, unless the DNR decides to sell it, and this is a way to do that because we are told to sell it, and the Stewardship Fund is a separate type of program," he said. "We should be selling this land, so I could say that it will stay in Stewardship's hands then."

Some conservation groups say the land being sold is not of high recreational value, which is the purpose of purchases with Stewardship dollars, but Adamczyk said that was an overly broad characterization.

"There is a lot of land," he said. "I have been told by people I know that some of the land is not maybe great timberland, maybe low land and swampy, but they may be great hunting lands. I don't think they can speak to every single parcel that we own with one big generalization. Maybe some aren't as good and some are better, but it is what it is. It is what we own currently and so I think this is the best avenue for us to fulfill our constitutional mission."

Adamczyk said the Stewardship Fund, once it acquired the BCPL lands, could keep those lands that help it fulfill its mission and sell those that did not.

"It's a great way for us to fulfill our mission and get us out of the land game, and let the focus be on being a trust fund, and have one and not two state agencies manage land," he said. "Having the bigger agency be the overarching leader of it, that makes more sense for the consolidation of services. And the real kicker is, we get money into the fund for our principal so we'll get an infusion of about $80 million."

Adamczyk also addressed concerns that revenues which flow into the principal of the much larger Common School Fund - this bill would affect that fund very little because most lands are tied to the Normal School Fund - add up to more dollars than the interest on that fund, which goes to school libraries, and so the libraries are getting fewer dollars than if the revenues went directly to those institutions.

Adamczyk said the understood the logic of that argument, but the state constitution would not allow it. The constitution specifically directs that revenues generated for the Common School Fund - such as portions of unclaimed property and various fines and forfeitures - be deposited in the principal. So the constitution would have to be changed.

"I'm working within the constitution as it is," he said. "If a constitutional amendment is to be proposed, that's a whole separate issue. Constitutional amendments seem very difficult to pass, and I don't know what the interest would be in doing it."

What is important, he said, is for the commission to get a better rate of return on the investment of that fund so that the monies given to libraries would be larger.

"Unfortunately, for about the last 10 years or so, we've been making about 4 percent, and maybe less, so if you did 4 percent, that's $40 million," he said. "Obviously, other investment groups run by the state do better, like 7 percent. We need to find better ways to make money. We need to make a higher rate of return to fix that, so that we're giving out more money. But the bigger question is a constitutional question that I can't change, and I am not a legislator so I am not proposing any language on that."

Finally, Adamczyk addressed the proposed elimination of the treasurer's position, a constitutional amendment that goes to the voters in April 2018. He said he was confident it would be approved by a wide margin.

"I think this office, the duties have been stripped over the years," he said. "Most people will be looking at the opportunity to make government smaller. I think it will be supported by high numbers, and it is not a partisan issue. It was supported in the Legislature on a bipartisan vote. I feel a ton of support behind it, and I am confident we will get it done."

Richard Moore is the author of The New Bossism of the American Left and can be reached at www.rmmoore1.com.

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