Howard's Latest Bill
SBOE can't manage their Permanent School Fund
By Jillian Richardson, 8:30AM, Tue. Jul. 27, 2010
Rep. Donna Howard, D-Austin, has announced that she will re-introduce a measure from last session, creating an independent body with financial and investment expertise to manage the Permanent School Fund (PSF).
The fund, which currently stands at $20 billion, is used to support public education in Texas. In the 1854, the Texas Constitution established that the PSF would be managed by the State Board of Education (SBOE). One of the problems with having the SBOE managing this fund is that the makeup of the board has been changed significantly over the years. Originally, it consisted of three people: the governor, the comptroller and the elected superintendent of state schools. Howard explained, "Today's State Board of Education is composed of 15 people who are elected but without any requirement that they have any kind of financial or investment expertise."
This lack of expertise has led the SBOE to make some questionable financial decisions concerning the fund. Howard said, "The most recent example of mismanagement is what just happened with the State Board of Education's decision to take $100 million out of the fund to help pay for charter facilities." Howard said that this is a clear case of the SBOE moving away from their constitutional mandate to maximize returns.
The SBOE's management of the PSF have undergone two studies , one in 200o by the House Committee on General Investigation and Ethics, followed in 2003 when the State Auditor's Office hired Cortex Applied Research, Inc. Both reports recommended that it would be better to have an independent body with financial and investment expertise managing the fund.
Because the new bill requires a constitutional amendment, a two thirds majority is necessary in both the House and the Senate in addition to a ballot approval by voters. House Bill 2037, Howard's attempt last session to create a Permanent School Fund Management Council, passed in the House 104-42, but it never garnered a hearing in the Senate. "So I'm hoping there will be more support this time as people from across the ideological spectrum see how this is not conservative management of a very important fund," said Howard. "It's really a safeguarding for current and future students."