September 2017 Committee on School Finance Permanent School Fund Item 12
Discussion of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools
September 14, 2017
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION
SUMMARY: This item provides an opportunity for the committee to discuss legislative changes that impact 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools.
STATUTORY AUTHORITY: Texas Education Code (TEC), §§45.053; 45.0532, as amended by Senate Bill (SB) 1480, 85th Texas Legislature, Regular Session, 2017; 45.063; and the Texas Constitution, Article VII, Education, §5(d).
TEC, §45.053(d), grants the SBOE the authority to increase by rule the multiplier used in calculating the capacity of the fund.
TEC, §45.0532, as amended by SB 1480, 85th Texas Legislature, Regular Session, 2017, limits the amount of charter district bond guarantees.
TEC, §45.063, authorizes the SBOE to adopt rules necessary for the administration of the bond guarantee program.
Texas Constitution, Article VII, §5(d), authorizes the legislature to use the permanent school fund (PSF) to establish a bond guarantee program that has been enacted under the TEC, Chapter 45, Subchapter C.
BOARD RESPONSE: This item is presented for review and comment.
PREVIOUS BOARD ACTION: The SBOE last amended §33.65 effective March 1, 2017, and §33.67 effective October 19, 2015.
FUTURE ACTION EXPECTED: Proposed amendments to 19 TAC §33.65 and §33.67 will be presented for first reading and filing authorization at the November 2017 SBOE meeting.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: In accordance with statute, the rules in 19 TAC Chapter 33 establish investment objectives, policies, and guidelines for the PSF. Specifically, §33.65 and §33.67 establish the bond guarantee program for school districts and charter districts in accordance with the constitution and statutory directives.
Legislation from the 85th Texas Legislature, Regular Session, 2017, made changes to the TEC that impact the bond guarantee program for school districts and charter districts. This item provides an opportunity for the committee to discuss the legislation and any necessary changes to §33.65 and §33.67.
FISCAL IMPACT: The distribution of the PSF is projected to be $2.5 billion during the 2018-2019 biennium. Fiscal implications will be assessed after the committee gives direction regarding the proposed amendments to bring forward for first reading and filing authorization.
PUBLIC AND STUDENT BENEFIT: The distribution of the PSF will flow to the school districts and reduce the tax burden to the public and the State of Texas. Any proposed amendments would update and clarify provisions supporting the management and investment of the PSF.
PROCEDURAL AND REPORTING IMPLICATIONS: Procedural and reporting implications will be assessed after the committee gives direction regarding the proposed amendments to bring forward for first reading and filing authorization.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: Locally maintained paperwork requirements will be assessed after the committee gives direction regarding the proposed amendments to bring forward for first reading and filing authorization.
PUBLIC COMMENTS: The official public comment period will begin when the proposal, approved for first reading and filing authorization, is published in the Texas Register.
ALTERNATIVES: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund
Attachments:
I. Statutory Citations (PDF, 28KB)
II. Text of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools (PDF, 130KB)