September 2019 Committee on School Finance/Permanent School Fund Item 8

Review of the Permanent School Fund Liquid Account

September 13, 2019

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: ACTION
STATE BOARD OF EDUCATION: CONSENT

SUMMARY:
This item provides an opportunity for the committee and board to review the bill requirements contained in House Bill (HB) 4388, 86th Texas Legislature, 2019. The committee will discuss implementation of the liquid account.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §2 and §5; House Bill 4388, 86th Legislature, 2019; and 19 Texas Administrative Code (TAC) Chapter 33.

The Texas Constitution, Article VII, §2 and §5 establish the permanent school fund, the assets that comprise the permanent school fund, the bond guarantee program, the available school fund, and authorize the State Board of Education (SBOE) to manage and invest the permanent school fund in accordance with the prudent person standard.

HB 4388, 86th Texas Legislature, 2019 relating to the management of the permanent school fund by the School Land Board and the State Board of Education was signed into law on June 7, 2019 and was effective on September 1, 2019. HB 4388 amends various sections of the Education Code and Natural Resources Code. Section 4 of HB 4388 creates the Permanent School Fund Liquid Account and provides for its investment and management by the State Board of Education.

Administrative rules found in 19 TAC Chapter 33 provide a statement of investment objectives, policies, and guidelines of the Texas Permanent School Fund and Bond Guarantee Program as adopted by the SBOE.

The full text of statutory citations can be found in the statutory authority section of this agenda.

PREVIOUS BOARD ACTION: None.

BACKGROUND INFORMATION AND JUSTIFICATION: None.

PUBLIC 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.

PUBLIC COMMENTS:
None

Staff Members Responsible:

Holland Timmins, Executive Administrator and Chief Investment Officer, Texas Permanent School Fund