S.C. Forester Wants School Payments Cut

August 24, 2011

Investigative Reports

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The NervePayments to local school districts from primarily the sale of timber and pine straw on land owned by the S.C. Forestry Commission in those districts would dramatically drop over three years under a proposal by the state’s chief forester.

Assuming total timber-harvest and other commission revenue remained at current levels for all school districts, the reduction would equal as much as 76 percent by the end of the three-year period, a review by The Nerve found.

In an interview last week with The Nerve, Forester Gene Kodama said his agency is working on a state bill, to be introduced by the start of the next legislative session in January, that would lower the percentage of commission revenues remitted to local school districts to 6 percent from 25 percent over a three-year period.

The rate would drop to 18 percent in the first year, then to 12 percent and 6 percent in the successive years, he said.

Since fiscal year 2000, the state has remitted a total of $7.1 million, including more than $750,000 last fiscal year, to 17 counties for school operations, according to Forestry Commission figures provided toThe Nerve.

Kodama said the current state law, which originated in 1957, is unfair to his agency, pointing out that the average per-acre payment to school districts typically is higher – in some years much higher – than what the land would be valued for property taxes if it were privately owned.

A 2007 study by the Washington Forest Protection Association found that South Carolina ranked in the middle of states for taxes paid on privately owned timber ($2.22 per acre), according to literature provided by Kodama.

“We agree with providing the revenue sharing to counties because that accommodates them for the loss of property taxes … but not at the 25 percent (rate),” Kodama said about South Carolina’s law.

The school district payments are made up primarily of the sale of timber and pine straw, though by law, the payments also include land lease and other revenue generated from commission-owned property.

The payments typically are made to county councils, which divvy up the money among school districts in their respective counties, said Deputy State Forester Joel Felder.  In some cases, the payments are made directly to school districts if there is only one district in a county, he said.

Kodama said reducing the payment rate would help offset large cuts that have occurred in his department’s budget since the start of the Great Recession. The agency’s final adjusted general fund budget from fiscal year 2009 through last fiscal year dropped by nearly 30 percent to about $9.9 million from $14 million, according to year-end reports by the S.C. Comptroller General’s Office.

The agency’s general fund budget for this fiscal year is about $12.9 million, but that includes a $3 million appropriation to replace forestry equipment.

The Forestry Commission’s adjusted total budget, which includes federal and other funds, was cut by about 24 percent from fiscal 2009 through last fiscal year, to about $23.1 million from approximately $30.2 million, according to the S.C. General Assembly’s budget website.

“We’re down 80 people from three years ago – mostly firefighters,” Kodama said.  “We need the money for salaries here.  … We should be paying for our own mission, which is to protect and develop the forest resources in the state.”

As an example, if the agency were to save $750,000 a year by reducing payments to school districts, that would pay salary and benefits of about $37,000 for 20 firefighters to fight forest fires, Kodama said.

On average, South Carolina has about 3,000 wild fires every year covering a total of about 20,000 acres; in heavy fires seasons, the average annual number of blazes can reach 8,000 to 10,000, Kodama said.

Contacted last week, Debbie Elmore, spokeswoman for the South Carolina School Boards Association, said while her organization is “sympathetic” to the Forestry Commission’s budget problems, it would oppose any proposal to reduce payments to local school districts.

“We don’t want to not recognize the fact that our state agencies are taking huge hits,” Elmore said. “But any time you’re taking away revenues that districts have received, that’s not good. … We don’t like seeing revenues – especially now – decreasing while we’re getting hit.”

Elmore said a finance official in the Chesterfield County School District told her that a reduction of $400,000 in Forestry Commission revenue to his district – roughly the amount the district received last fiscal year – would equate to the loss of about 10 teachers.

Chesterfield County Schools Superintendent John Williams did not respond last week to phone and written messages from The Nerve.

Chesterfield County schools easily have led all school districts since fiscal year 2000 with a total of about $4 million in payments from the Forestry Commission, records show.

Of the approximate 94,000 acres statewide owned by the commission, half of it is located in Sand Hills State Forest in Chesterfield and Darlington counties. Besides Sand Hills, the commission manages four other state forests.

Following are the top-five payments by the commission to county school districts from fiscal year 2000 through last fiscal year, which ended June 30, according to agency records:

  • Chesterfield County (Sand Hills State Forest) – $3.97 million;
  • Sumter County (Manchester State Forest) – $1.97 million;
  • Richland County (Harbison State Forest ) – $305,617;
  • Williamsburg County (Wee Tee State Forest) – $305,337; and
  • Clarendon County – (Manchester State Forest) $212,667

The other counties receiving payments in all or at least one of the years during the 12-year period include Abbeville, Aiken, Darlington, Dillon, Edgefield, Georgetown, Horry, Jasper, Kershaw,  Oconee, Orangeburg and Pickens.

Last fiscal year, the Forestry Commission generated a total of a little more than $3 million in gross revenue from timber sales to private timber companies and from other income sources, of which $754,472, or 25 percent, went to school districts, according to agency records.

Under Kodama’s proposal, the total annual payment to school districts would drop by 76 percent in the third year to $181,073 under a 6 percent rate, based on last fiscal year’s payments and assuming the overall amount of revenue generated on commission-owned land remained constant.

On average, about 4,000 acres, or about 4 percent, of the Forestry Commission’s approximate 94,000 acres are sold annually to private timber companies, Kodama said. About half the affected acreage is thinned; the other half is totally harvested and regenerated, he said.

In comparison, the state Department of Natural Resources owns about 254,000 acres statewide, according to agency figures. Like the Forestry Commission, DNR also allows for commercial timber harvesting on its land, though for different purposes; over the last six years, gross annual revenues have averaged $577,000, agency records show.

But none of that money goes to school districts. DNR Deputy Director Breck Carmichael, who oversees the department’s wildlife and freshwater fisheries division, and Tim Ivey, the agency’s chief of wildlife regional operations, told The Nerve last week that federal law requires that the proceeds of timber harvest sales be used for wildlife management or other specific programs within their department. Other Southeastern state wildlife agencies are under the same restrictions, they said.

Carmichael said about two years ago, state lawmakers attempted to commit a portion of DNR timber-harvest revenues to school districts. But Carmichael said the proposal died after he told a House Ways and Means subcommittee that federal law prohibited it.

In April, S.C. Rep Ted Vick, D-Chesterfield, introduced a bill (H. 4082) that would have earmarked 7 percent of insurance premium taxes to the Forestry Commission for firefighting programs and “forest industry economic enhancement.” The bill, which had two co-sponsors, never made it out of the Ways and Means Committee, though it could be considered next year without reintroducing it.

Citing industry literature, Kodama said South Carolina’s forestry industry, with more than 90,000 jobs and an annual payroll of $4 billion, has ranked in recent years as either the state’s largest manufacturing industry or has been among the state’s largest.

“We’re very active in economic development,” Kodama said about his agency. “We don’t produce the deals, but we grease the wheels.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.