To: Board of Regents

From: Richard A. Crofts, Commissioner

Date: June 24, 2002

Subject: Item 116-102-R0702 - - Administrative Assessments Against University Land Grant Income

The material included for this meeting's agenda includes a detailed legal analysis by LeRoy Schramm of the issues related to various administrative assessments by the State of Montana against permanent trusts established for campuses of the university system or revenue from those trusts. You will recall that this issue first came to our attention when we had under consideration a policy to make income from timber sales on university system lands immediately distributable instead of continuing to deposit them into the specific trust. In January, we were all surprised to learn the magnitude of the administrative expenses that were to be imposed upon our distributable revenue. LeRoy Schramm was instructed to review this situation and come back to the Regents in July with a report and recommendations.

You now have LeRoy's recommendation before you including his typically careful and reasoned analysis. I concur with his analysis and recommendation and hope that you will pass a resolution to approve the language of the "directive to legal counsel" with which his memo concludes. You will subsequently have the opportunity to review the legal and practical considerations before approving a final course of appropriate legal action.