Decision on the Percentage Distribution of the Permanent School Fund
July 20, 2012
COMMITTEE OF THE FULL BOARD: ACTION
STATE BOARD OF EDUCATION: ACTION
SUMMARY: This item provides an opportunity for the committee and board to evaluate and determine the percentage distribution of the Permanent School Fund for fiscal years 2013 and 2014.
STATUTORY AUTHORITY: Texas Constitution, Article 7, Section 5.
PREVIOUS BOARD ACTION: At the April 2012 meeting, the board determined that the percentage distribution rate to the Available School Fund from the Permanent School Fund for fiscal years 2014 and 2015 shall be between 3.0% and 3.5% subject to, and based upon, the assumption that the Permanent School Fund (PSF) receives $130 million per year, or $260 million for the biennium, from the General Land Office (GLO). The distribution is intended to satisfy our constitutional duty to set aside a sufficient amount of funds to provide free textbooks. The State Board of Education shall consider the spending rate at the July meeting and consider any additional cash inflows and any other financial information in finalizing its decision.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: The amendment to Article 7 of the Constitution changed the Permanent School Fund distribution from an income-based policy to a total return policy. This distribution rate is to be determined by a vote of two-thirds of the total membership of the State Board of Education taken before the regular session of the legislature convenes. If the State Board of Education does not adopt a rate, then the legislature will adopt a rate by general law or appropriation.
FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.0 billion during the 2012-2013 biennium.
PUBLIC AND STUDENT BENEFIT: The distribution of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.
PROCEDURAL AND REPORTING IMPLICATIONS: Not applicable.
PUBLIC COMMENTS: None.
ALTERNATIVES: No alternative actions are proposed regarding this item.
OTHER COMMENTS AND RELATED ISSUES: None.
Respectfully submitted,
Robert Scott
Commissioner of Education
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund
Attachment:
The Texas Constitution, Article 7, Section 5 - Permanent School Fund; Available School Fund; Use of Funds; Distribution of Available School Fund (PDF, 138KB)