Proposed New 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.2, Distributions to the Available School Fund
(Second Reading and Final Adoption)
March 12, 2010
COMMITTEE OF THE FULL BOARD: ACTION
STATE BOARD OF EDUCATION: ACTION
SUMMARY: This item presents for second reading and final adoption proposed new 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.2, Distributions to the Available School Fund. The proposed new rule would implement Texas Attorney General Opinion No. GA-0707 regarding transfers from the Permanent School Fund to the Available School Fund.
STATUTORY AUTHORITY: Texas Education Code (TEC), §7.102(c)(31) and (33), and the Texas Constitution, Article VII, §5(a)(2) and (f).
EFFECTIVE DATE: The proposed effective date of the proposed new 19 TAC §33.2 would be 20 days after filing as adopted with the Texas Register in order to implement the latest policy in a timely manner. Under TEC, §7.102(f), the State Board of Education (SBOE) must approve the rule action at second reading and final adoption by a vote of two-thirds of its members to specify an effective date earlier than the beginning of the 2010-2011 school year.
PREVIOUS BOARD ACTION: At the November 2009 meeting, the SBOE took action to determine that a distribution of $60.7 million for fiscal year 2010 is permitted under Texas Constitution, Article VII, §5(a)(2). The SBOE approved the proposed new rule presented in this item for first reading and filing authorization at its January 2010 meeting.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: The rules in 19 TAC Chapter 33 establish provisions supporting the management and investment of the Permanent School Fund.
On November 4, 2008, the chair of the SBOE sought an opinion from the Attorney General regarding the implementation of the Texas Constitution, Article VII, §5(a)(2), in limiting transfers from the Permanent School Fund to the Available School Fund. A supplementary request was made on January 14, 2009. On April 13, 2009, the Attorney General responded to the requests, noting that Article VII, §5(a)(1) and §5(a)(2), require distinct calculations using different methodologies and covering different time periods.
The Attorney General Opinion No. GA-0707 stated that the SBOE is the entity authorized to apply the limits of Article VII, §5(a)(2), in the first instance to the amount distributed from the Permanent School Fund to the Available School Fund.
Article VII, §5(a)(2), requires an annual determination by the SBOE of whether a transfer can be made from the Permanent School Fund to the Available School Fund based on the preceding nine state fiscal years and the current fiscal year.
Proposed new 19 TAC §33.2 would establish in rule the procedures and the requirement that the SBOE determine whether a distribution to the Available School Fund shall be made for the current state fiscal year.
FISCAL IMPACT: The TEA has determined that there are no additional costs to the state or persons required to comply with the proposed rule action. In addition, there is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.
PUBLIC AND STUDENT BENEFIT: Chapter 33 establishes provisions supporting the management and investment of the Permanent School Fund. The proposed new rule would establish in rule procedures relating to the distribution of the Permanent School Fund to the school districts, which would reduce the tax burden to the public and the state of Texas.
PROCEDURAL AND REPORTING IMPLICATIONS: The proposed new rule would have no procedural and reporting requirements.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: The proposed new rule would have no locally maintained paperwork requirements.
PUBLIC COMMENTS: Following the January 2010 SBOE meeting, notice of proposed new 19 TAC §33.2 was filed with the Texas Register initiating the official public comment period. No comments had been received at the time this item was prepared. A summary of any public comments received and corresponding agency responses regarding the proposal will be provided to the SBOE during the March 2010 meeting.
ALTERNATIVES: None.
OTHER COMMENTS AND RELATED ISSUES: None.
COMMISSIONER'S RECOMMENDATION: I recommend that the State Board of Education:
By an affirmative vote of two-thirds of the members of the board, approve for second reading and final adoption proposed new 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.2, Distributions to the Available School Fund, with an effective date of 20 days after filing as adopted with the Texas Register.
Respectfully submitted,
Robert Scott
Commissioner of Education
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund
Attachments:
I. Statutory Citations
II. Text of Proposed New 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.2, Distributions to the Available School Fund
III. Texas Attorney General Opinion No. GA-0707