The Colorado State Land Board spent two hours January 21 discussing the $1.33 billion Permanent Fund’s future under a new governor and treasurer, with commissioners acknowledging they’ll “play a little defense” on impact investing legislation while preparing for management changes in 2027.
“A year from now, when we have a new governor, a new treasurer,” one commissioner noted during the workshop led by Director Nicole Rosmarino, Deputy Director Nick Massie, and Senior Assistant Attorney General Ed Hamrick. The political transition dominates strategic planning despite being 12 months away.
SB25-167 requires the Permanent Fund’s Community Investment Portfolio reach 20 percent by 2032, allowing below-market returns for investments supporting Colorado communities. The law extends the period to offset portfolio losses from 18 to 24 months, giving fund managers more time to recover from underperforming impact investments.
Commissioners questioned whether impact investing serves beneficiaries’ interests or political agendas. The workshop materials didn’t resolve that tension. Instead, commissioners discussed defensive positioning for the 2026 legislative session while planning longer-term engagement with whoever wins the gubernatorial and treasurer races.
The board passed Resolution 2023-001 urging legislators to broaden allowable investments to include asset classes typically held by endowments—essentially asking permission to invest like university foundations rather than conservative government trusts. The resolution also urged removing the $21 million annual distribution to the School Finance Act.
Those requests reflect frustration with structural problems identified in the 2023 workshop. The Permanent Fund generated an “anemic” 2.8 percent rate of return, failing to keep pace with inflation. Distribution policies cause the trust to shrink because mineral royalties—80-plus percent of revenues and essentially asset sales—flow to beneficiaries rather than back into the Permanent Fund.
Current asset allocation shows the shift underway. The fund holds 41 percent equities and 46 percent fixed income, up from 19 percent and 77 percent respectively in 2019. The target pushes to 50 percent equities (30 percent US, 20 percent non-US), 32 percent core bonds, 10 percent High Income Strategies, and 8 percent short duration fixed income.
Returns demonstrate why the change matters. The fund achieved 10.18 percent one-year, 11.96 percent three-year, but only 4.65 percent five-year returns as of September 30, 2025. The longer timeframe exposes inadequate performance for intergenerational equity.
The 2023 Callan School Trust Asset Allocation and Distribution Study recommended comprehensive reform. Land Board Distribution Policy should deposit SLB revenues into the fund rather than directly to beneficiaries. Asset Allocation should increase equities and real estate while limiting bonds to 30 percent of the fund. Fund Distribution Policy should deposit all revenue into the fund and distribute 4 percent of a three-year rolling average of market value.
None of those recommendations have been implemented. HB24-1448 phases out School Finance distributions by FY27 and increases BEST distributions in commensurate amounts. HB25-1320 caps BEST at $150 million adjusted for inflation plus interest from fund balances above $41 million. But the core structural problem—distributing mineral royalties rather than depositing them into principal—remains unchanged.
Commissioner discussion revealed political constraints. They can urge legislative action but can’t force reforms. The Public School Fund Investment Board, created by the legislature in 2016, directs the State Treasurer’s investment strategy. Before that, the Treasurer held discretion starting in 1973 when the legislature took authority from the Land Board.
Director Rosmarino emphasized the board’s limited authority. “We have to play a little defense” on impact investing questions during the remaining legislative session. Strategic planning focuses on the next treasurer and governor rather than current officials.
The workshop materials noted that distribution changes and asset allocation shifts happened through “a lot of legislation” giving the treasurer’s office “leeway to change how they manage the permanent funding.” More legislation would be needed for Callan’s recommended reforms.
Ed Hamrick walked commissioners through the fund’s legal framework and fiduciary obligations. The presentation emphasized intergenerational equity—balancing current beneficiaries’ needs against future generations’ interests. Distributions favoring current beneficiaries while depleting principal violate that duty.
The math is stark. FY 2023-24 distributed $282 million to public schools. Oil and gas generates roughly 80 percent of land revenues. When mineral resources deplete, revenues decline. But if those revenues get distributed rather than reinvested, the fund can’t generate replacement income through investment returns.
Asset values from June 2022 data in the board packet show the imbalance. Land valued at $2.465 billion generates 1.1 percent cash return. Minerals valued at $830 million generate 21.1 percent cash return. Commercial real estate at $168 million generates 2.8 percent. The Permanent Fund at $1.235 billion generates 2.8 percent.
The fund’s $1.33 billion book value as of March 31, 2023 represents accumulated deposits over 150-plus years minus distributions. At current distribution and reinvestment rates, the fund shrinks in real terms as mineral revenues decline and investment returns underperform inflation.
Commissioners understand the trajectory. They discussed Callan’s recommendations, reviewed performance data, questioned investment strategy, and acknowledged political constraints. But the workshop produced no board action beyond continuing current policies.
The impact investing controversy complicates everything. SB25-167 requires the fund to accept below-market returns for community benefit. Commissioners who believe fiduciary duty demands maximizing financial returns face legal requirements to sacrifice returns for political goals.
One commissioner noted that the working group that produced SB25-167 impact investing legislation emerged from previous reform efforts. “I think we have to be clear what our output is from our efforts here,” they said. “I don’t want to get too far ahead of ourselves.”
Translation: The board’s reform advocacy led to impact investing legislation they now must defend against. Any new reform push risks similar outcomes—well-intentioned recommendations producing politically
-driven mandates that undermine fiduciary performance.
The 2027 political transition offers both opportunity and risk. A new governor and treasurer might support Callan’s reforms—or might push harder on impact investing. The board can’t control which direction new leadership chooses.
So commissioners prepare defensive positions. They’ll protect current investment authority while building relationships with gubernatorial and treasurer candidates. They’ll document structural problems while avoiding controversial reform proposals that could backfire into more impact investing mandates.
The Permanent Fund deserves better. Beneficiaries deserve investment policies that preserve intergenerational equity. Asset allocation should maximize risk-adjusted returns, not political optics. Distribution policies should build principal, not deplete it for current spending.
But the board operates within political constraints. They can educate commissioners about fiduciary duties. They can present data showing structural problems. They can urge legislative reforms through resolutions. What they can’t do is force changes over legislative and executive opposition.
The two-hour workshop ended with commissioners better understanding the fund’s challenges and limitations on their authority to fix them. Staff will publish an RFP for asset allocation analysis “in the next few weeks” with a 30-60 day response window. Third-party experts will address intergenerational equity, asset liquidity, risk management, and benchmarking.
That analysis will inform the next round of legislative advocacy. Whether it produces reform or more impact investing mandates depends on who wins the 2026 gubernatorial and treasurer elections and what they believe Permanent Fund policy should achieve.
For now, State Land Board commissioners “play defense” while preparing for political transition. The $1.33 billion Permanent Fund waits for leadership willing to prioritize long-term fiduciary performance over short-term political goals.
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