PORTLAND (AP) - State auditors say the State Land Board could have raised up to $4.2 million for public schools in recent years through better use of state rangelands.

Instead, between 1998 and 2002 the state lost a small amount of money managing the lands, the Audits Division reported this week.

The Land Board consists of the governor, the secretary of state and the state treasurer. It is responsible for managing state lands to benefit the school fund.

The board could have sold all or part of the rangelands or kept the lands and charged the market rate for grazing, auditors said.

Investing sale proceeds could have earned the Common School Fund at least $3 million to $4.2 million, while charging the market rate for grazing could have earned $1.45 million during the five years audited. The state currently charges roughly half that rate.

A slice of earnings from the $700 million reserve fund is distributed twice a year to districts; the amount was about $31 million in the 2001-03 budget period. The fund earnings are on top of the state's school budget, which stands at $5.2 billion for 2003-05.

"The board has for a long time been of the mind that we should sell some lands and reinvest," said John Lilly, assistant director of the Department of State Lands, which carries out policies set by the board.

Lilly also said the board needs "to take another look at the grazing fee and see if we are in line with what the market will bear."

Until now, the agency has not had the staff to work on land sales, department officials said. The 2003 Legislature added a staff position, which will allow the department to handle land-sale applications beginning this fall, according to Ann Hanus, department director.

She also said the agency intends to form a grazing fee advisory committee to review the audit findings.

Spokesmen for the governor's and treasurer's offices said their staffs had not had time to discuss the audit for comment.

When admitting Oregon to the Union, Congress granted the state certain lands that must be used for the benefit of public schools. The state established the Common School Fund to hold the proceeds from those lands. It includes money from other sources, including unclaimed property.

The lands department manages 144 leases covering about 613,000 acres of rangeland for the fund. Auditors said a conservative estimate of the rangelands' value is $22.7 million to $32.5 million.