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November 2016 Committee of the Full Board Tuesday Item 1

Decision on the Percentage Distribution of the Permanent School Fund

November 18, 2016

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 2018-2019.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §5.

PREVIOUS BOARD ACTION: At the July 2016 meeting, the board determined that the percentage distribution rate to the Available School Fund from the Permanent School Fund for the 2018-2019 biennium shall be between 2.50% and 3.72%. At the September 2016 meeting, the board determined that the percentage distribution rate from the Permanent School Fund to the Available School fund for 2018-2019 biennium shall be 3.7%.

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 $2.1 billion during the 2016-2017 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.

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, 21KB)