Consideration of Texas Attorney General Opinion GA-0707 Regarding Transfers from the Permanent School Fund to the Available School Fund and Determination as to Whether Transfers May be Made from the Permanent School Fund to the Available School Fund
November 20, 2009
COMMITTEE OF THE FULL BOARD: ACTION
STATE BOARD OF EDUCATION: ACTION
SUMMARY: This item provides the opportunity for the board to consider Attorney General Opinion No. GA-0707. The board will receive an analysis of the opinion from legal counsel regarding the board’s duties and authority regarding the requirement in Article VII, section 5(a)(2) that the total amount distributed over ten years cannot exceed the total return on all investment assets of the PSF over the same ten year period. The board will determine whether transfers may be made from the Permanent School Fund to the Available School Fund in FY2010.
STATUTORY AUTHORITY: Texas Constitution, Article VII, Section 5.
PREVIOUS BOARD ACTION: At the November 2008 meeting, the board voted to set the percentage distribution rate to the Available School Fund from the Permanent School Fund at 2.5% for fiscal years beginning September 1, 2009, and September 1, 2010, for funding of instructional materials. At the special called meeting in January 2009, the board amended its November 2008 action to provide that to the extent that the limitation in Article VII, Section 5(a)(2), does not allow full payment of that amount as scheduled either during FY 2010 or FY 2011, and to the extent authorized under the Texas Constitution, the amount of payments during the biennium shall be increased to an amount that makes up any shortfall.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: On November 4, 2008, the chair of the State Board of Education (SBOE) sought an opinion from the Attorney General regarding the implementation of Texas Constitution, Article VII, subsection 5(a)(2) in limiting transfers from the Permanent School Fund (PSF) to the Available School Fund (ASF). A supplementary request was made on January 14, 2009. On April 13, 2009, the Attorney General responded to the requests, noting that Article VII, subsections 5(a)(1) and 5(a)(2) require distinct calculations using different methodologies and covering different time periods.
The Attorney General stated that the SBOE is the entity authorized to apply the limits of Article VII, subsection 5(a)(2) in the first instance to the amount distributed from the PSF to the ASF.
Article VII, Section 5(a)(2) requires an annual determination by the SBOE of whether a transfer can be made from the PSF to the ASF based on the preceding nine (9) state fiscal years and the current fiscal year. The SBOE may decide on a procedure for making that annual determination.
FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $1.4 billion during the 2008-2009 biennium. The SBOE may determine whether any additional distribution may be made during the 2010 state fiscal year at some time during that fiscal year.
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: None.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: None.
PUBLIC COMMENTS: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Respectfully submitted,
Robert Scott
Commissioner of Education
Staff Members Responsible: David Anderson, General Counsel
Legal Services
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund
Attachments: I. Statutory Reference
II. Opinion of the Attorney General No. GA-0707