Rock Bottom Timber Prices Hurt Northwest School Budgets

07/24/2009

Here's one more casualty of the recession: timber prices. They're down as much as 60 percent. That means loggers are out of work and mills are closing. But the rock–bottom prices are also having a trickle–down effect on school kids. That's because logging is still an important source of funding for schools in the Northwest.

To understand the fallout for school kids, it makes sense to start in the woods with a logger — like Jerry DeBriae. Actually we're in his truck headed out to the woods. The CB radio squawks, DeBriae's black lab Chip rests his head on the center console. DeBriae is telling me about market conditions earlier this year.

DeBriae: "You couldn't sell a log, you couldn't sell nothing, there was no demand."

DeBriae says it was as bad as he's ever seen — and he's been logging since the 1950s. In fact, DeBriae shut down operations for four months. That was a big deal. His company is the largest private employer in Wahkiakum County in Southwest Washington. He had to lay off nearly 90 guys. DeBriae's logging again, but he says it's hard just to break even.

DeBriae: "There's so many people out of work they bid the jobs down to nothing — bad. I mean it's, I don't know if someone can even pay the bills as cheap as they're logging them."

After a bumpy ride on logging roads, we arrive at one of DeBriae's work sites. Two prehistoric–looking machines are fast at work loading log trucks bound for the mill. This is where the school kids come in. Logging on private land in Washington state generates taxes that go to counties. Counties then spend at least some of that money on schools. Timber tax revenues in Washington are down 50 percent since 2007. Public schools in Washington also benefit from logging on public trust lands. These dollars are dedicated to school construction and other public infrastructure in rural counties. Jed Herman with the Washington State Department of Natural Resources runs the numbers on trust lands.

Herman: "In 2006 we generated $203 million in timber revenue and 2010 we estimate that we will generate $107."

That means half as much money from state trust lands for rural Washington schools, roads, hospitals and fire districts. And it doesn't end there. Timber prices are so low there's not much interest in logging state lands. That's a problem in Oregon too. Louise Solliday directs the Oregon Department of State Lands.

Solliday: "Some of our sales, which normally we don't have problems having bidders at, are not being bid on at this point."

Over the next two years, Oregon expects to take in less than $20 million in timber revenue from school trust lands. Historically that number would have been closer to 30 million. In Oregon, timber dollars go into the state's common school fund. It's an $800 million nest egg — or corpus — for school operating expenses. Solliday says the interest gets spent, but the principle remains untouched.

Solliday: "Anytime you have harvest levels dropping and prices dropping, it certainly limits how much you're going to grow the corpus by each year and that affects future earnings and the ability to fund future generations of education."

It's not just timber prices that are hurting Oregon's Common School Fund. The fund has taken a $200 million beating in the stock market. The result: this year Oregon schools will get nearly 30 percent less money from the fund for operating costs than they did last year.

Some in the environmental movement see this economic crisis is an opportunity to rethink the connection between logging and education in the Northwest. Peter Goldman heads the Washington Forest Law Center — an environmental group that has sued the Washington Department of Natural Resources over how it manages state lands.

Goldman: "We are fooling ourselves if we think this is going to be a reliable source of funding for schools in the future. The sooner we wean ourselves from this the better."

The question is how would you replace those lost timber dollars? Goldman offers some funding alternatives, but so far his ideas haven't gotten much traction. There is an outlier in all of this. In Idaho, timber funding for schools is actually on the rise. George Bacon heads the Idaho Department of Lands. He says the state's endowment has taken hit, but remains healthy. And he is getting bids for state timber sales.

Bacon: "Not to the price level that we had a couple of years ago but there is competition and right now the market seems to have stabilized so we're looking forward to a better future."

Back in Washington's Wahkiakum County, logger Jerry DeBriae is not so optimistic.

DeBriae: "I don't see nothing good for another year, to be honest with you. I think we're going to have a real bad winter."

And the longer the timber industry remains in the tank, the bigger the impact to school funding in the Northwest.

I'm Austin Jenkins in Olympia.

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