Mackenzie Shuman, Harrison Mantas, Yael Grauer, Molly Duerig and Grayson Schmidt

Howard Center for Investigative Journalism

It was more than a century ago that the federal government gave the new state of Arizona over 10 million acres of land — with the stipulation that revenue from the sale or lease of the land be earmarked to support public education.

But for at least two decades — and perhaps much longer — the leasing of more than 8 million acres of that land for cattle grazing appears to have benefited cattle ranchers more than public education:

Ranchers this year pay just $2.76 a month to graze each cow on state land.

It costs almost four times as much to graze a cow on privately owned land in Arizona — roughly $10 per cow a month last year. (It also would cost more than twice as much to feed a household cat.)

Most other western states charge ranchers four or five times as much as Arizona for grazing cows on state-owned land:

New Mexico charges ranchers twice what Arizona does, at $5.60 per cow per month.

Other states charge much more. In Montana, $13.10 per month; in Nevada, $15; and in Colorado, $14.51.

Last year, for example, Montana took in grazing revenue of $11.4 million for leasing 4.1 million acres — half the land that Arizona leases. The Arizona State Land Department earned just $2.9 million from grazing leases in the fiscal year that ended June 30, 2018.

In Arizona, 87% of the grazing fees are funneled into K-12 public education, where advocates say higher grazing fees would be a needed boost to anemic education spending, which is among the lowest in the nation.

In 1997, the state Auditor General made recommendations for closing loopholes that had kept the rates too low. Few were implemented. The 1997 report noted that the law says the governor shall appoint a commission periodically to reevaluate the rates. No such commission has since been appointed.

James R. Baca, a former New Mexico Land Commissioner who was the commissioner of the U.S. Bureau of Land Management in the 1990s, said he believes Arizona’s bargain price for grazing may violate the state’s fiduciary responsibility to maximize revenue for public education.

“I guess I would call it a sort of a legacy corruption that nobody ever wants to do anything about,” Baca said in an interview. “Essentially, your kids in the classroom in Arizona are getting screwed by a few greedy livestock outfits’’ — and also, he added, by legislators who have long looked out for the interests of cattle ranchers, who represent a $1 billion annual industry in Arizona.

Fred Breedlove, who oversees grazing leases as natural resources director for the Land Department, acknowledged that Arizona’s grazing fees are low, but said his department is hampered in what it can charge the ranchers legally.

“We do value trying to maximize the amount of revenue that we get from state trust lands, so we really do value what our beneficiaries are getting,” Breedlove said. “But we also have to operate within the statutory framework and the regulations that we have. We do the best we can.”

State law says animal grazing rates should be set by the land commissioner, based on recommendations of a five-person panel convened by the governor. Such a panel has not been convened to set rates since 1996.

“I know our (rates) have been historically less expensive,” Breedlove said.

To be sure, the $2.9 million in grazing fees was dwarfed by the $174.5 million in revenue the department took in from selling land for commercial and residential development. But 87% of the grazing fees go directly to education. The $174.5 million is invested by Arizona’s Permanent Fund. Only the interest is funneled to education.

Revenue from grazing fees goes to 13 different beneficiaries. Of the last fiscal year’s $2.9 million, 87% went to K-12 education, about 10% to state universities and the remainder was divided among such institutions as prisons, state hospitals and rest homes.

When the 1997 audit was done, the previous year’s monthly charge per cow was $2.18. Twenty-three years later, it is now $2.76. Back then, the auditor general noted that Montana was charging $4.53 per cow each month. The rate in Montana is now $13.10.

If Arizona were to look at how other states evaluate their grazing fees, Montana’s experience might be instructive. In 2008, Montana was charging $6.94 monthly for each cow. The state hired an outside consulting firm, which determined that Montana was substantially undercharging ranchers for grazing. The state decided to increase the rate to between 70 and 80% of the lease rate for private land, where fencing maintenance and water improvement are typically included. And the rate is adjusted annually based upon the price per pound of beef at market.

Even as Arizona’s grazing fees have remained low, the price of beef at market has more than doubled since 1999, according to the U.S. Department of Agriculture. The price per 100 pounds of beef was $59 in January 1999. This January, it was $121.

Among Arizona ranchers, some readily acknowledge the state has been underpricing what they pay to grow and fatten their cows.

“I think they’re way down on their numbers,’’ Laine Malouff, a rancher with cattle in Flagstaff and Arcosanti, said of the grazing fees. But Malouff said the fees are not as low as they appear when you factor in other land-related costs ranchers are responsible for.

"Some people think it's too cheap, but try and tackle 12 miles of fence," Malouff said. "It's labor intensive."

Ranchers who graze on state trust land must provide their own fencing, water tanks and all other infrastructure and materials necessary to maintain the land and their cattle. But they also own any investments they put into state trust land. In many other states, that is also the case. In Oregon, the state does help fund range improvement projects. But Oregon’s grazing fees are four times those in Arizona.

To some ranchers, the low fees are an incentive. Mike Magoffin, a detective in the Cochise County Sheriff’s office who works on the Sheriff’s Ranch Patrol, is a rancher himself. To him, the lower cost of raising cattle keeps the "little guy" in the game.

One of the biggest benefits from the current fees, Magoffin said, "is that you don’t have to be one of the Rockefellers to be able to afford to grow cows."

Jim Webb, a rancher who is chairman of the Arizona Beef Council, defended the grazing fees as “adequate’’ for Arizona. The state’s ranchers, Webb said, face challenges, from the desert and the climate, that are more extreme than other states.

If the state raised grazing fees, Webb warned, “we just couldn’t sustain ourselves.’’ Higher grazing fees, he added, would force ranchers to raise fewer cattle.

If state officials look into the grazing program, they’re likely to draw fire from another quarter — environmentalists who believe cattle ranchers have done serious damage over time to sensitive ecosystems.

While many ranchers say aspects of grazing can be beneficial to the environment, some environmentalists believe that cattle grazing shouldn't be allowed on state or federal land in Arizona at all.

“Southwestern desert ecosystems did not evolve with large, slow-moving herbivorous grazers like livestock,” said Joe Trudeau, Southwest Advocate at the Center for Biological Diversity, a nonprofit environmental organization. Trudeau said indigenous wildlife, like deer and pronghorn, move more quickly across the landscape and don’t denude it in the way cows do.

According to Trudeau and surveys done by his center, livestock grazing on public land in Arizona harms threatened or endangered species that are dependent on a healthy riparian habitat. And it also lowers the water table, impacts stream water, displaces native plants while introducing invasive grasses, and increases the risk of fire.

Trudeau added that there have been no environmental impact studies of the effects of livestock grazing on state trust land because the state is not obligated to conduct them.

Other environmental groups propose ways ranchers can work with land agencies to maintain their herds while minimizing damage to the ecosystem. One model from the Nature Conservancy lets ranchers pay progressively lower fees in exchange for implementing other efforts in their operations: weed control, for example, or preservation of habitat for endangered species.

Advocates for increased spending for education, including Chris Kotterman, the director of governmental relations for the Arizona School Board Association, are hoping the state will find a way to bring grazing fees up to the levels charged in other states.

“You could make the argument that money that should be going to the schools is instead sitting in Yavapai County somewhere with a cow eating grass off of it,” Kotterman said. “There are probably ways the state could charge the ranching industry more of a fair share for the use of a state asset and pass that through to the schools.”

This article was prepared for an investigative reporting course at the Walter Cronkite School of Journalism and Mass Communication at Arizona State University. Database analysis was done by Professor Sarah Cohen, the Knight Chair in data journalism. The work was overseen by Walter V. Robinson, the Edith Kinney Gaylord visiting professor in Investigative Journalism. His email is water.v.robinson@asu.edu.