Bill Text: TX HB4388 | 2019-2020 | 86th Legislature | Enrolled
Bill Title: Relating to the management of the permanent school fund by the School Land Board and the State Board of Education and a study regarding distributions from the permanent school fund to the available school fund.
Spectrum: Slight Partisan Bill (Republican 13-7)
Status: (Passed) 2019-06-07 - Effective on 9/1/19 [HB4388 Detail]
Download: Texas-2019-HB4388-Enrolled.html
H.B. No. 4388 |
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relating to the management of the permanent school fund by the | ||
School Land Board and the State Board of Education and a study | ||
regarding distributions from the permanent school fund to the | ||
available school fund. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 43, Education Code, is amended by adding | ||
Section 43.0052 to read as follows: | ||
Sec. 43.0052. QUARTERLY REPORTS. Each quarter, the State | ||
Board of Education shall provide to the School Land Board a | ||
financial report on the portion of the permanent school fund assets | ||
and funds for which the State Board of Education is responsible. | ||
The report must include: | ||
(1) target and actual asset allocations, by asset | ||
type, based on fair market value or net asset value; | ||
(2) investment performance by asset type; | ||
(3) benchmarks and benchmark performances; and | ||
(4) costs of implementing and administering the | ||
permanent school fund liquid account under Section 51.414, Natural | ||
Resources Code, including costs associated with contracts for: | ||
(A) professional investment management; | ||
(B) investment advisory services; and | ||
(C) custodial services for the account. | ||
SECTION 2. Subchapter C, Chapter 32, Natural Resources | ||
Code, is amended by adding Section 32.068 to read as follows: | ||
Sec. 32.068. QUARTERLY REPORTS. Each quarter, the board | ||
shall provide to the State Board of Education a financial report on | ||
the portion of the permanent school fund assets and funds for which | ||
the board is responsible. The report must include: | ||
(1) target and actual asset allocations, by asset | ||
type, based on fair market value or net asset value; | ||
(2) investment performance by asset type; and | ||
(3) benchmarks and benchmark performances. | ||
SECTION 3. Section 51.402(c), Natural Resources Code, is | ||
amended to read as follows: | ||
(c) Notwithstanding Subsection (a), on January 1 of each | ||
even-numbered year, the market value of the investments [ |
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to 15 percent of the market value of the permanent school fund on | ||
that date. | ||
SECTION 4. Subchapter I, Chapter 51, Natural Resources | ||
Code, is amended by adding Section 51.414 to read as follows: | ||
Sec. 51.414. PERMANENT SCHOOL FUND LIQUID ACCOUNT. (a) The | ||
permanent school fund liquid account is established as an account | ||
in the permanent school fund in the State Treasury to be used by the | ||
board and the State Board of Education as provided by this section. | ||
(b) Each quarter, the board shall hold a meeting and adopt a | ||
resolution to release from the real estate special fund account | ||
funds designated under Section 51.401 that are not being used for a | ||
purpose listed in Section 51.402(a) and are not required for the | ||
board's anticipated cash needs for the 90-day period following the | ||
date of the meeting, to be deposited to the credit of the permanent | ||
school fund liquid account in the State Treasury. | ||
(c) The State Board of Education may invest funds in the | ||
permanent school fund liquid account. The investments may be made | ||
only in liquid assets, in the same manner that the permanent school | ||
fund is managed by the State Board of Education. | ||
(d) Investment income and realized capital gains derived | ||
from funds in the permanent school fund liquid account shall be | ||
deposited in the State Treasury to the credit of the State Board of | ||
Education for investment in the permanent school fund. This | ||
subsection does not require a deposit if the market value of the | ||
assets held in the permanent school fund liquid account is below | ||
cost. | ||
(e) The State Board of Education may use funds in the | ||
permanent school fund liquid account to pay for administrative | ||
costs associated with implementing this section, including costs | ||
associated with contracts for professional investment management, | ||
investment advisory services, or custodial services. | ||
(f) The board shall provide to the State Board of Education | ||
in each quarterly report required by Section 32.068 the board's | ||
anticipated cash needs for the six-month period following the date | ||
of the report, to allow the State Board of Education to ensure that | ||
the board's cash needs may be met as provided by Subsection (g). | ||
(g) Not later than the fifth business day after the date of a | ||
request of the board, the State Board of Education shall release | ||
from the permanent school fund liquid account funds to be deposited | ||
to the credit of the real estate special fund account in the State | ||
Treasury in an amount requested by the board. | ||
SECTION 5. (a) The legislature finds that the periodic | ||
examination of distributions made from the permanent school fund to | ||
the available school fund is necessary for the effective management | ||
of permanent school fund investments. | ||
(b) The Texas Education Agency, in consultation with the | ||
General Land Office, shall conduct a study regarding distributions | ||
from the permanent school fund to the available school fund. The | ||
study must: | ||
(1) examine historical patterns in the real value of | ||
distributions made from all assets and revenues of the permanent | ||
school fund and historical patterns in the real value of permanent | ||
school fund assets relative to the number of students enrolled in | ||
the public education system; | ||
(2) analyze the impact of underlying data and | ||
methodological assumptions on actual and projected distributions | ||
from the permanent school fund; | ||
(3) seek input from state government officials | ||
involved in public education policy or in the appropriation of | ||
state funds to support the public education system; | ||
(4) examine current and alternative approaches to | ||
balance the needs and interests of present and future beneficiaries | ||
of the permanent school fund and the available school fund; | ||
(5) develop options to maximize available revenue | ||
distributions for the education of students enrolled in the public | ||
education system while preserving the permanent school fund for | ||
future generations; and | ||
(6) consider any other subjects relevant to the | ||
purpose of the study. | ||
(c) The Texas Education Agency may contract for investment | ||
management expertise for the purpose of implementing this section. | ||
(d) Not later than June 1, 2020, the Texas Education Agency | ||
shall prepare and submit a report regarding the results of the study | ||
to the governor, the State Board of Education, the Legislative | ||
Budget Board, the lieutenant governor, the speaker of the house of | ||
representatives, and each legislative standing committee with | ||
primary jurisdiction over public education. | ||
(e) This section expires January 1, 2021. | ||
SECTION 6. This Act takes effect September 1, 2019. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 4388 was passed by the House on May 7, | ||
2019, by the following vote: Yeas 142, Nays 4, 1 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 4388 on May 24, 2019, by the following vote: Yeas 141, Nays 0, | ||
1 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 4388 was passed by the Senate, with | ||
amendments, on May 22, 2019, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |