The $11,000,000 Hole in Washington's School Fund
A legislative investigating committee charges that land cruisers and timber buyers colluded for decades to strip the state's school trust — and that the loss to Washington's schoolchildren may already be beyond recovery.
SEATTLE. — That the school fund of the state has been filched of at least $11,000,000 through the State Land Department, and that the pilfering of the timber tracts has been in progress ever since Washington was admitted to the Union, was the startling statement of State Senator Allen, chairman of the legislative investigating committee.
"The magnitude of the loss to the school children of the state does not appear in our report to the Governor," said Senator Allen. "The committee, lacking time, had no opportunity to go into the records of sales of agricultural and tide lands, but I have no doubt that the same conditions prevail there as we found in the state's timber land business.
"There is now in the permanent school fund about $9,000,000. This fund is irreducible and only the interest is used for the maintenance of the schools. At the rate of 3½ per cent the state gets annually from that fund about $337,500.
"Had this fund received all that was due it, the schools of the state would now be receiving interest on $20,000,000 at the rate of 3½ per cent, or $750,000 a year, instead of $337,500."
HERITAGE GONE IRREVOCABLY.
"That heritage of the school children which has been pilfered has gone irrevocably, unless the state, through legal process, can set aside some of the sales.
"The information in the hands of the committee shows conclusively that there was collusion between the state's cruisers and the purchasers. We have looked into approximately 200 cases where cruisers returned erroneous reports of the timber on state lands. Whether this proof is sufficient to secure conviction in case criminal proceedings are brought is a question up to the Attorney-General.
"The present Land Commissioner, E. W. Ross, will undoubtedly say that if the cruisers were dishonest he knew nothing about it and is not to blame. The investigation shows, however, that the Land Commissioners for years have been lax and negligent."
LAWS NEED CHANGING.
OLYMPIA. — Governor Hay has made public the report of the legislative investigating committee, appointed by the legislature of 1909.
The committee charges state land cruisers with incompetency or dishonesty resulting in a loss to the state of millions of dollars; it declares that the land department has shown poor judgment in the selection of state lands; it finds no evidence that the Land Commissioner has collected interest on state deposits. The state oil inspector is exonerated of charges, and the committee declares that the present oil inspection law is useless; it accuses the ex-state fair commissioners of extravagance in horse race expenditures and the secretaries of incompetency; it holds the state dental board guilty of arbitrary and unwarranted action, but not of fraud or collusion; it deprecates the jealousy existing between the state college and the state university.
The committee also makes many recommendations, among which are the revision of state land laws, the creation of two appointive members of the land board, and provision for a cruise of all state timber lands; the continuation of the investigation of the land department; the passage of a law providing for payment to the state of interest on land commissioners' bank deposits; the elimination of one or more normal schools; numerous improvements at the state training school; and the repeal or amendment of the oil inspection law.
“That heritage of the school children which has been pilfered has gone irrevocably, unless the state, through legal process, can set aside some of the sales.”
Washington's school trust lands were meant to fund public schools forever — instead, a 1909–10 investigation found collusive timber cruises had shorted the fund by millions, and the state is still litigating the legacy of its land-trust timber sales a century later. Substitute 'school trust' for any modern public fund and the mechanism is familiar: insiders appraise the asset, insiders buy the asset, the public eats the shortfall. The committee's own chairman admitted the stolen principal was likely gone for good.
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