An economic analysis of the Mississippi School Trust Program
Bonds, Matthew Harrison
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The process of statehood, as outlined by the General Land Ordinance of 1785 and the Northwest Ordinance, required western territories to set aside substantial stocks of land for the benefit of public schools. These lands are now managed under the trust doctrine in 31 states, and are accordingly referred to as school trust lands or state trust lands. The history of Mississippi’s school lands begins over 200 years ago, and is laden with struggles over proper management. Local school boards became the trustees as a result of the Sixteenth Section and Liu Lands Act of 1978 and have since supervised substantial increases in surface lease rents and timber receipts. Surface leases are managed by the local Superintendents of Education, and the majority of the timber management services are contracted to the Mississippi Forestry Commission (MFC). The school districts and the MFC are legally required to maximize revenue from these lands. However, school districts are also legally permitted to outsource forestry services to private vendors and do so on a regular basis by recommendation from the MFC. This dissertation examines the legal precursors of the school trust lands and the obligations of their managers, as well as conducts ordinary least square regressions and stochastic frontier analyses of surface lease rents and timber production. Average technical efficiency of timber production on the sixteenth section lands is 44%, and about 50% on surface rents. The impact of the 1978 Reform is estimated to have increased receipts between 30% and 40%. And there is a positive and statistically significant increase in total timber receipts when a higher proportion of management services are outsourced to private vendors.