The Texas House passed HJR 77 yesterday. Led by Representative Donna Howard (D-Austin) HJR 77 will amend the Texas Constitution to create a Permanent School Fund Management Council. This council will manage the Permanent School Fund which is currently managed by the State Board of Education.
The Permanent School Fund has a market value of $17.5 billion which has fallen 24 percent since last fall. The profits from this fund are used to purchase books and materials for classrooms in public schools across the state.
Though supporters cite the poor performance of the fund as the reason for this legislation many believe the recent SBOE evolution controversy was the true inspiration behind this legislation.
Representative Wayne Christian President of the Texas Conservative Coalition said in an interview with the Dallas Morning News that all state pension and investment funds have swooned after last falls stock market plunge...Im wondering why were targeting the State Board of Education on this."
The Texas State Board of Education has been charged with managing the Permanent Education Fund for over 125 years.
Opponents of Howards resolution argue that the Texas Legislature demanded increased returns on the investments forcing the boards investments to become riskier as well.
Were talking about creating a body whose only only purpose would be to manage funds. They would not be in the business of education"
said Rep. Howard in an interview with the Dallas Morning News.
The State Board of Education has historically managed the fund by spending conservatively adjusting for inflation and considering the real cost of education.
The measure proposed by Rep. Howard would remove power from citizens to elect State Board of Education members to control the fund and would politicize the process by allowing the Governor to select two members one member appointed by the Governor from a list of candidates prepared by the Speaker of the House and House of Representatives one member appointed by the Lt. Gov One member appointed by the Commissioner of the General Land Office and one member appointed by the Comptroller.
Personal financial knowledge is not a prerequisite to sound financial management. Many members of the Legislature have no financial or investment experience and yet they determine the budget for the State of Texas a budget far larger than the assets of the PSF. It is doubtful that anyone would argue to reduce the budgetary authority of the Legislature in order to give more power to an advisory committee" argued State Board of Education Chairman Don McLeroy.
