By: Taylor S.J.R. No. 78
A JOINT RESOLUTION
proposing a constitutional amendment relating to the permanent
school fund.
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2, Article VII, Texas Constitution, is
amended to read as follows:
Sec. 2. PERMANENT SCHOOL FUND. (a) All funds, lands and
other property heretofore set apart and appropriated for the
support of public schools; all the alternate sections of land
reserved by the State out of grants heretofore made or that may
hereafter be made to railroads or other corporations of any nature
whatsoever; one half of the public domain of the State; and all sums
of money that may come to the State from the sale of any portion of
the same, shall constitute a permanent school fund.
(b) The purpose of the permanent school fund is to maximize
available revenue distributions for the education of students
enrolled in the state's public education system.
SECTION 2. Section 4, Article VII, Texas Constitution, is
amended to read as follows:
Sec. 4. SALE OF PERMANENT SCHOOL FUND LANDS; INVESTMENT OF
PROCEEDS. The lands herein set apart to the Permanent School fund,
shall be sold under such regulations, at such times, and on such
terms as may be prescribed by law; and the Legislature shall not
have power to grant any relief to purchasers thereof. The proceeds
of such sales must be used to acquire other land for the Permanent
School fund as provided by law or the proceeds shall be invested by
the comptroller of public accounts, as [may be] directed by the
entity designated by the Legislature to manage the assets of the
Permanent School fund [Board of Education herein provided for], in
the bonds of the United States, the State of Texas, or counties in
said State, or in such other securities, and under such
restrictions as may be prescribed by law; and the State shall be
responsible for all investments.
SECTION 3. Section 5, Article VII, Texas Constitution, is
amended to read as follows:
Sec. 5. PERMANENT SCHOOL FUND, [AND] AVAILABLE SCHOOL FUND,
AND BICENTENNIAL EDUCATION FUND: COMPOSITION, MANAGEMENT, USE, AND
DISTRIBUTION. (a) The permanent school fund consists of all land
appropriated for public schools by this constitution or the other
laws of this state, other properties belonging to the permanent
school fund, [and] all revenue derived from the land or other
properties, and all revenue otherwise deposited into the fund.
(a-1) The available school fund consists of the
distributions made to it from the total return on select [all]
investment assets of and net revenue deposits into the permanent
school fund as directed by the entity designated by the legislature
to manage the assets of the permanent school fund, the taxes
authorized by this constitution or general law to be part of the
available school fund, and appropriations made to the available
school fund by the legislature. The total amount distributed from
the permanent school fund to the available school fund:
(1) in each year of a state fiscal biennium must be an
amount that is not more than six percent of the average of the
market value of the permanent school fund, excluding real property
belonging to the fund that is managed, sold, or acquired under
Section 4 of this article, but including discretionary real assets
investments and cash in the state treasury derived from property
belonging to the fund, on the last day of each of the 16 state fiscal
quarters preceding the regular session of the legislature that
begins before that state fiscal biennium, in accordance with the
rate adopted by:
(A) a vote of two-thirds of the total membership
of the entity designated by the legislature to manage the assets of
the permanent school fund [State Board of Education], taken before
the regular session of the legislature convenes; or
(B) the legislature by general law or
appropriation, if the entity designated by the legislature to
manage the assets of the permanent school fund [State Board of
Education] does not adopt a rate as provided by Paragraph (A) of
this subdivision; and
(2) over the 10-year period consisting of the current
state fiscal year and the nine preceding state fiscal years may not
exceed the total return on all investment assets of the permanent
school fund over the same 10-year period.
(a-2) The bicentennial education fund consists of the
distributions made to it from the total return on select investment
assets of and net revenue deposits into the permanent school fund as
directed by the entity designated by the legislature to manage the
assets of the permanent school fund, the taxes authorized by this
constitution or general law to be part of the bicentennial
education fund, and appropriations made to the bicentennial
education fund by the legislature.
(a-3) The entity designated by the legislature to manage the
assets of the permanent school fund shall coordinate distributions
under subsections (a-1) and (a-2) as necessary to ensure
sufficient funding is available to guarantee bonds issued under
subsection (d).
(b) The expenses of managing permanent school fund land and
investments shall be paid by appropriation from the permanent
school fund.
(c) The available school fund and bicentennial education
fund shall be applied annually to the support of the public free
schools. Except as provided by this section, the legislature may
not enact a law appropriating any part of the permanent school fund,
[or] available school fund, or bicentennial education fund to any
other purpose. The permanent school fund, [and] the available
school fund, and the bicentennial education fund may not be
appropriated to or used for the support of any sectarian school. The
available school fund shall be distributed to the several counties
according to their scholastic population and applied in the manner
provided by law. The bicentennial education fund shall be
distributed to school districts for the purposes of providing
funding for merit-based teacher pay and for incentivizing
scholastic achievement among historically underperforming student
groups in the manner provided by law.
(d) The legislature by law may provide for using the
permanent school fund to guarantee bonds issued by school districts
or by the state for the purpose of making loans to or purchasing the
bonds of school districts for the purpose of acquisition,
construction, or improvement of instructional facilities including
all furnishings thereto. If any payment is required to be made by
the permanent school fund as a result of its guarantee of bonds
issued by the state, an amount equal to this payment shall be
immediately paid by the state from the treasury to the permanent
school fund. An amount owed by the state to the permanent school
fund under this section shall be a general obligation of the state
until paid. The amount of bonds authorized hereunder shall not
exceed $750 million or a higher amount authorized by a two-thirds
record vote of both houses of the legislature. If the proceeds of
bonds issued by the state are used to provide a loan to a school
district and the district becomes delinquent on the loan payments,
the amount of the delinquent payments shall be offset against state
aid to which the district is otherwise entitled.
(e) The legislature may appropriate part of the available
school fund for administration of a bond guarantee program
established under this section.
(f) Notwithstanding any other provision of this
constitution, in managing the assets of the permanent school fund,
the entity designated by the legislature to manage the assets of the
permanent school fund [State Board of Education] may acquire,
exchange, sell, supervise, manage, or retain, through procedures
and subject to restrictions it establishes and in amounts it
considers appropriate, any kind of investment [, including
investments in the Texas growth fund created by Article XVI,
Section 70, of this constitution,] that persons of ordinary
prudence, discretion, and intelligence, exercising the judgment
and care under the circumstances then prevailing, acquire or retain
for their own account in the management of their affairs, not in
regard to speculation but in regard to the permanent disposition of
their funds, considering the probable income as well as the
probable safety of their capital.
[(g) Notwithstanding any other provision of this
constitution or of a statute, the General Land Office or an entity
other than the State Board of Education that has responsibility for
the management of permanent school fund land or other properties
may in its sole discretion distribute to the available school fund
each year revenue derived during that year from the land or
properties, not to exceed $300 million each year.]
SECTION 4. This proposed constitutional amendment shall be
submitted to the voters at an election to be held November 5, 2019.
The ballot shall be printed to permit voting for or against the
proposition: "The constitutional amendment relating to the
creation of the Bicentennial Education Fund, the dedication of
funds for teacher pay and historically underperforming student
groups, and the transfer of the management and investment of the
permanent school fund to an entity designated by the legislature."