Policy Expert Argues Arizona has Failed at Trust Land Management over the Last 100 Years

Article originally posted on HERE on December 29, 2025

More than 9 million acres in Arizona are held in trust; when Arizona became a state in 1912, the federal government set aside nearly 11 million acres of state trust land. That land was to be held in perpetual trust, and money raised from the sale or lease of it was to go to 13 beneficiaries — mostly public schools.

More than half of the states were granted land to help fund education at statehood; according to a new report, Arizona has by far the most left. And Glenn Farley argues the state can — and should — be doing more with the land it still has.

Farley is director of policy and research at the Common Sense Institute. He argues the state has failed in its trust management mission and responsibility over the last 100 or so years.

Full conversation

GLENN FARLEY: What sets Arizona apart compared to most of these states is the volume of land it received — we received about two to three times the average state’s land trust grant — and how much of that original land trust grant we’ve retained as physical land today. About 80 to 90% of it remains physical land in the state today, 120 years later.

MARK BRODIE: And in general, this land, from time to time there are auctions to sell it. The state basically takes the highest bidder. That money gets put into an account that goes to mostly, as you say, public schools, some other beneficiaries in there as well. It sounds as though your group is saying that maybe the state could be doing more with this land.

FARLEY: Right. And so you bring up a good point. We call that the PLETF, the Permanent Land Endowment Trust Fund. That’s a financial account which holds also in trust on behalf of about the dozen beneficiaries — as you alluded to, most of them the public schools — all permanent revenues derived by these lands. So a sale is a good and easy example of a permanent revenue.

We sell the physical land. The proceeds of that get deposited in what we call the PLETF. Then the PLETF distributes earnings to the beneficiaries. That’s relatively unusual among states. But it’s useful because now we can compare over time the performance of these two structures.

And what’s interesting about the PLETF in particular is it does a lot more with a lot less. Since about the 90s, when it really got started to today, we’ve seen its distributions grow about 8 to 9% per year. I said we have 80 to 90% of the original land still is land. That means the PLETF is achieving this growth with just 10% of the asset base. And today it distributes on an average year, three to five times as much to the beneficiaries as the Land Department distributes using the physical land.

So again, to summarize, that was a lot. Ten percent of the asset base, three times the annual distributions. The physical land: 90% of the asset base, a third the annual distribution. So the land yields a lot less for beneficiaries compared to that PLETF.

Mark Brodie/KJZZ

BRODIE: So are you advocating then that the state land department should be more aggressive in selling more land more quickly?

FARLEY: I wouldn’t use the term advocating. I think what we’re pointing out is giving the historical performance of both the PLETF and the land to date, the state clearly could have done much better had it shifted more of the asset base into the PLETF much, much sooner.

BRODIE: An investment fund as opposed to potential money later on.

FARLEY: Correct. And so there’s a myriad of possible solutions here. One of the possible solutions that I don’t want to just dismiss outright is simply do a better job of managing and taking productive advantage of the physical land. But I think 120 years is a long time and a lot of opportunity to do that.

So it is a question: Why in 30 years, has the state managed to do so much with the financial account, the PLETF, and in 120 years, so little with the physical land? That may at this point be an irreconcilable, irresolvable issue. And perhaps it is strictly better, as you said, to sort of shift it entirely into the PLETF.

BRODIE: And we should point out that land that is still in the state’s possession isn’t just sitting there idly in large numbers, right? There are grazing leases, there are mineral leases. The state still is earning some amount of money from land that it still owns, right?

FARLEY: Yeah. No, that is fair. I mentioned that the state distributes about a third as much annually, but it’s not zero. It depends year to year, varies year to year. But let’s say $75 million or $100 million is the value of the annual distributions from that land.

Most of the land use, according to data released by the Land Department, is exactly what you said: grazing rights or what they would call sort of miscellaneous open access rights, which effectively is like traversing the land with animals or people and grazing it as you do so and stuff like that.

But how much is actually being used for that on a given day in terms of actual acreage? Tough for me to say. Is it millions of acres? Probably not. I think most of it, most of the time is in fact sitting idle. And the revenues bear that out.

BRODIE: One of the things that your report points out is the amount of land that is reasonably close to urban areas, especially here in the Phoenix metro area. And you point out that we have a housing shortage, we have this land where houses could be built. It would maybe make sense to use some of that land to build houses.

I’m curious how you see the balance of selling land and getting that one time money into the fund, which of course will continue to generate money because it’s an investment fund. But obviously once you sell that land, it’s gone. And if, for example, land prices double in the next three years and you’ve already sold the land, you’re out of luck.

FARLEY: No. Yes. And I think you just got to what I think is the cause of this issue, which is that concern of what could happen and the foregone or opportunity cost of choosing to sell that land. The result though of that has been effective paralysis, and the state has gotten nothing for that original investment or bequeathment that it was given by the federal government 120 years ago.

But you also made another point that I want to also touch on, which is, as we point out in the report, it is not true, as many folks believe, that all of this land is in the middle of nowhere. That’s part of the problem is there is a belief out there amongst policymakers and Arizonans that yeah, OK, there’s a lot of land, but it’s in the middle of the desert and it’s effectively worthless to us.

As we point out in the report, a significant amount of it is within five or 10 miles of a city. And we specifically limit our analysis or productive analysis, the potential economic return from this land to just those parcels that are close to a city and potentially developable.

But circling back to your core question, is that a risk? Yes. But the nice thing about the existence of both the financial fund, the PLETF, particularly since the ’90s, and the land itself for the 120 years is we don’t have to speculate too much on a forward looking basis. We can just look backwards. What actually happened? What has the state actually gotten for its conservative retention of all this land in terms of returns to beneficiaries?

And the answer is very, very little. And compare that to what the state has actually gotten — not hypotheticals, not speculation — what the state has actually managed to do with what little it has sold and deposit in the PLETF and distributions from the PLETF. And the answer is a whole lot more with a whole lot less.

BRODIE: So it sounds like you’re saying, yes, there is a risk, but it’s a risk worth taking in this case.

FARLEY: Precisely. Hundred percent.

BRODIE: Legislative Republicans have been critical recently of the Hobbs administration over their approach to state trust land and the amount of money, especially on leases that the administration is bringing in. Do you think that this is going to be something that lawmakers are discussing in their upcoming session?

FARLEY: I think yes. I think at this point, between this report; the sunset review of the Land Department; what you alluded to, which is ongoing; and increasingly vocal commentary from the members; and just general interest in finding a revenue source given the struggles the general fund is likely to have over the next couple of years — all of that is going to combine to mean that folks will be looking at and talking about this, yes.

And while I think there is some fairness to the perspective of criticizing recent actions by the Hobbs administration, one crux of this report is this is not an administrative problem. This is not a Hobbs administration problem. This is a 100-year problem. No administration in this state has really taken full advantage of this asset.

So I think this is something that requires sort of a foundational reevaluation of what our timeline looks like and what our priorities look like. Instead of thinking on a four- to eight-year schedule — which our reform doesn’t posit magically changing the state’s fiscal condition in four to eight years. We sell the land over a period of 10 years, and then we allow that sale, that pot of money to appreciate over a period of 20-50 years.

Right. So it’s a completely different timeline than we’re used to thinking. Is this a solution to the problems for the fiscal ’27 or ’28 budget? Probably not.