CHAPTER 43. PERMANENT SCHOOL FUND AND AVAILABLE SCHOOL FUND
EDUCATION CODE
TITLE 2. PUBLIC EDUCATION
SUBTITLE I. SCHOOL FINANCE AND FISCAL MANAGEMENT
CHAPTER 43. PERMANENT SCHOOL FUND AND AVAILABLE SCHOOL FUND
Sec. 43.001. COMPOSITION OF PERMANENT SCHOOL FUND AND AVAILABLE
SCHOOL FUND. (a) Except as provided by Subsection (b), the
permanent school fund, which is a perpetual endowment for the
public schools of this state, consists of:
(1) all land appropriated for the public schools by the
constitution and laws of this state;
(2) all of the unappropriated public domain remaining in this
state, including all land recovered by the state by suit or
otherwise except pine forest land as defined by Section 88.111;
(3) all proceeds from the authorized sale of permanent school
fund land;
(4) all proceeds from the lawful sale of any other properties
belonging to the permanent school fund;
(5) all investments authorized by Section 43.003 of properties
belonging to the permanent school fund; and
(6) all income from the mineral development of permanent school
fund land, including income from mineral development of riverbeds
and other submerged land.
Text of subsec. (b) as amended by Acts 2003, 78th Leg., ch. 201,
Sec. 36
(b) The available school fund, which shall be apportioned
annually to each county according to its scholastic population,
consists of:
(1) the interest and dividends arising from any securities or
funds belonging to the permanent school fund, as determined in
accordance with the accrual basis of accounting;
(2) all interest derivable from the proceeds of the sale of land
set apart for the permanent school fund;
(3) all money derived from the lease of land belonging to the
permanent school fund;
(4) one-fourth of all revenue derived from all state occupation
taxes, exclusive of delinquencies and cost of collection;
(5) one-fourth of revenue derived from state gasoline and
special fuels excise taxes as provided by law; and
(6) all other appropriations to the available school fund made
by the legislature for public school purposes.
Text of subsec. (b) as amended by Acts 2003, 78th Leg., ch. 328,
Sec. 2
(b) The available school fund, which shall be apportioned
annually to each county according to its scholastic population,
consists of:
(1) the distributions to the fund from the permanent school fund
as provided by Section 5(a), Article VII, Texas Constitution;
(2) one-fourth of all revenue derived from all state occupation
taxes, exclusive of delinquencies and cost of collection;
(3) one-fourth of revenue derived from state gasoline and
special fuels excise taxes as provided by law; and
(4) all other appropriations to the available school fund made
by the legislature for public school purposes.
(c) The term "scholastic population" in Subsection (b) or any
other law governing the apportionment, distribution, and transfer
of the available school fund means all students of school age
enrolled in average daily attendance the preceding school year in
the public elementary and high school grades of school districts
within or under the jurisdiction of a county of this state.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 2003, 78th Leg., ch. 201, Sec. 36, eff.
June 10, 2003; Acts 2003, 78th Leg., ch. 328, Sec. 2.
Sec. 43.002. TRANSFERS FROM PERMANENT SCHOOL FUND AND GENERAL
REVENUE FUND TO AVAILABLE SCHOOL FUND. (a) On the first working
day of each month in a state fiscal year, the comptroller shall
transfer from the permanent school fund to the available school
fund an amount equal to one-twelfth of the annual distribution
from the permanent school fund to the available school fund as
provided by Section 5(a), Article VII, Texas Constitution, for
the fiscal year.
(b) Of the amounts available for transfer from the general
revenue fund to the available school fund for the months of
January and February of each fiscal year, no more than the amount
necessary to enable the comptroller to distribute from the
available school fund an amount equal to 9-1/2 percent of the
estimated annual available school fund apportionment to category
1 school districts, as defined by Section 42.259, and 3-1/2
percent of the estimated annual available school fund
apportionment to category 2 school districts, as defined by
Section 42.259, may be transferred from the general revenue fund
to the available school fund. Any remaining amount that would
otherwise be available for transfer for the months of January and
February shall be transferred from the general revenue fund to
the available school fund in equal amounts in June and in August
of the same fiscal year.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 2003, 78th Leg., ch. 328, Sec. 3, eff. Jan.
1, 2004.
Sec. 43.003. INVESTMENT OF PERMANENT SCHOOL FUND. In compliance
with this section, the State Board of Education may invest the
permanent school fund in the types of securities, which must be
carefully examined by the State Board of Education and be found
to be safe and proper investments for the fund as specified
below:
(1) securities, bonds, or other obligations issued, insured, or
guaranteed in any manner by the United States Government or any
of its agencies and in bonds issued by this state;
(2) obligations and pledges of The University of Texas;
(3) corporate bonds, debentures, or obligations of United States
corporations of at least "A" rating;
(4) obligations of United States corporations that mature in
less than one year and are of the highest rating available at the
time of investment;
(5) bonds issued, assumed, or guaranteed by the Inter-American
Development Bank, the International Bank of Reconstruction and
Development (the World Bank), the African Development Bank, the
Asian Development Bank, and the International Finance
Corporation;
(6) bonds of counties, school districts, municipalities, road
precincts, drainage, irrigation, navigation, and levee districts
in this state, subject to the following requirements:
(A) the securities, before purchase, must have been diligently
investigated by the attorney general both as to form and as to
legal compliance with applicable laws;
(B) the attorney general's certificate of validity procured by
the party offering the bonds, obligations, or pledges must
accompany the securities when they are submitted for registration
to the comptroller, who must preserve the certificates;
(C) the public securities, if purchased, and when certified and
registered as specified under Paragraph (B), are incontestable
unless issued fraudulently or in violation of a constitutional
limitation, and the certificates of the attorney general are
prima facie evidence of the validity of the bonds and bond
coupons; and
(D) after the issuing political subdivision has received the
proceeds from the sales of the securities, the issuing agency is
estopped to deny their validity, and the securities are valid and
binding obligations;
(7) preferred stocks and common stocks that the State Board of
Education considers proper investments for the permanent school
fund, subject to the following requirements:
(A) in making all of those investments, the State Board of
Education shall exercise the judgment and care under the
circumstances then prevailing that persons of ordinary prudence,
discretion, and intelligence exercise in the management of their
own 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;
(B) the company issuing the stock must be incorporated in the
United States, and the stocks must have paid dividends for five
consecutive years or longer immediately before the date of
purchase and the stocks, except for bank stocks and insurance
stocks, must be listed on an exchange registered with the
Securities and Exchange Commission or its successors; and
(C) not more than one percent of the permanent school fund may
be invested in stock issued by one corporation and not more than
five percent of the voting stock of any one corporation will be
owned; and
(8) notwithstanding any other law or provision of this code,
first lien real estate mortgage securities insured by the Federal
Housing Administration under the National Housing Act of the
United States, or in any other first lien real estate mortgage
securities guaranteed in whole or in part by the United States.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.0031. PERMANENT SCHOOL FUND ETHICS POLICY. (a) In
addition to any other requirements provided by law, the State
Board of Education shall adopt and enforce an ethics policy that
provides standards of conduct relating to the management and
investment of the permanent school fund. The ethics policy must
include provisions that address the following issues as they
apply to the management and investment of the permanent school
fund and to persons responsible for managing and investing the
fund:
(1) general ethical standards;
(2) conflicts of interest;
(3) prohibited transactions and interests;
(4) the acceptance of gifts and entertainment;
(5) compliance with applicable professional standards;
(6) ethics training; and
(7) compliance with and enforcement of the ethics policy.
(b) The ethics policy must include provisions applicable to:
(1) members of the State Board of Education;
(2) the commissioner;
(3) employees of the agency; and
(4) any person who provides services to the board relating to
the management or investment of the permanent school fund.
(c) Not later than the 45th day before the date on which the
board intends to adopt a proposed ethics policy or an amendment
to or revision of an adopted ethics policy, the board shall
submit a copy of the proposed policy, amendment, or revision to
the Texas Ethics Commission and the state auditor for review and
comments. The board shall consider any comments from the
commission or state auditor before adopting the proposed policy.
(d) The provisions of the ethics policy that apply to a person
who provides services to the board relating to the management or
investment of the permanent school fund must be based on the Code
of Ethics and the Standards of Professional Conduct prescribed by
the Association for Investment Management and Research or other
ethics standards adopted by another appropriate professionally
recognized entity.
(e) The board shall ensure that applicable provisions of the
ethics policy are included in any contract under which a person
provides services to the board relating to the management and
investment of the permanent school fund.
Added by Acts 1999, 76th Leg., ch. 1488, Sec. 1, eff. Sept. 1,
1999.
Sec. 43.0032. CONFLICTS OF INTEREST. (a) A member of the State
Board of Education, the commissioner, an employee of the agency,
or a person who provides services to the board that relate to the
management or investment of the permanent school fund who has a
business, commercial, or other relationship that could reasonably
be expected to diminish the person's independence of judgment in
the performance of the person's responsibilities relating to the
management or investment of the fund shall disclose the
relationship in writing to the board.
(b) The board or the board's designee shall, in the ethics
policy adopted under Section 43.0031, define the kinds of
relationships that may create a possible conflict of interest.
(c) A person who files a statement under Subsection (a)
disclosing a possible conflict of interest may not give advice or
make decisions about a matter affected by the possible conflict
of interest unless the board, after consultation with the general
counsel of the agency, expressly waives this prohibition. The
board may delegate the authority to waive the prohibition
established by this subsection.
Added by Acts 1999, 76th Leg., ch. 1488, Sec. 1, eff. Sept. 1,
1999.
Sec. 43.0033. REPORTS OF EXPENDITURES. A consultant, advisor,
broker, or other person providing services to the State Board of
Education relating to the management and investment of the
permanent school fund shall file with the board regularly, as
determined by the board, a report that describes in detail any
expenditure of more than $50 made by the person on behalf of:
(1) a member of the board;
(2) the commissioner; or
(3) an employee of the agency or of a nonprofit corporation
created under Section 43.006.
Added by Acts 1999, 76th Leg., ch. 1488, Sec. 1, eff. Sept. 1,
1999.
Sec. 43.0034. FORMS; PUBLIC INFORMATION. (a) The board shall
prescribe forms for:
(1) statements of possible conflicts of interest and waivers of
possible conflicts of interest under Section 43.0032; and
(2) reports of expenditures under Section 43.0033.
(b) A statement, waiver, or report described by Subsection (a)
is public information.
(c) The board shall designate an employee of the agency to act
as custodian of statements, waivers, and reports described by
Subsection (a) for purposes of public disclosure.
Added by Acts 1999, 76th Leg., ch. 1488, Sec. 1, eff. Sept. 1,
1999.
Sec. 43.004. WRITTEN INVESTMENT OBJECTIVES; PERFORMANCE
EVALUATION. (a) The State Board of Education shall develop
written investment objectives concerning the investment of the
permanent school fund. The objectives may address desired rates
of return, risks involved, investment time frames, and any other
relevant considerations.
(b) The board shall employ a well-recognized performance
measurement service to evaluate and analyze the investment
results of the permanent school fund. The service shall compare
investment results with the written investment objectives
developed by the board, and shall also compare the investment of
the permanent school fund with the investment of other public and
private funds.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.005. EXTERNAL INVESTMENT MANAGERS. (a) The State Board
of Education may contract with private professional investment
managers to assist the board in making investments of the
permanent school fund. A contract under this subsection must be
approved by the board or otherwise entered into in accordance
with board rules relating to contracting authority.
(b) The State Board of Education by rule may delegate a power or
duty relating to the investment of the permanent school fund to a
committee, officer, employee, or other agent of the board.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.0051. TRANSFERS TO REAL ESTATE SPECIAL FUND ACCOUNT OF
THE PERMANENT SCHOOL FUND. The State Board of Education may
transfer funds from the portion of the permanent school fund
managed by the State Board of Education to the real estate
special fund account of the permanent school fund if the State
Board of Education determines, using the standard of care set
forth in Subsection (f), Section 5, Article VII, Texas
Constitution, that such transfer is in the best interest of the
permanent school fund.
Added by Acts 2007, 80th Leg., R.S., Ch.
1368, Sec. 9, eff. June 15, 2007.
Sec. 43.006. INVESTMENT MANAGEMENT. (a) The State Board of
Education may delegate investment authority for the investment of
the permanent school fund to the same extent as an institution
with respect to an institutional fund under Chapter 163, Property
Code.
(b) The board may enter into a contract with a nonprofit
corporation for the corporation to invest funds under the control
and management of the board, including the permanent school fund,
as designated by the board. The corporation may not engage in any
business other than investing funds designated by the board under
the contract.
(c) The board must approve the:
(1) articles of incorporation and bylaws of the corporation and
any amendment to the articles of incorporation or bylaws;
(2) investment policies of the corporation, including changes to
those policies;
(3) audit and ethics committee of the corporation; and
(4) code of ethics of the corporation.
(d) The board of directors of the corporation must be members of
the State Board of Education.
(e) If an investment contract entered into under Subsection (b)
includes the permanent school fund within the scope of funds
under the control and management of the State Board of Education
to be invested by the corporation, the board shall provide for an
annual financial audit of the permanent school fund. Subject to
the legislative audit committee's approval of including the audit
in the audit plan under Section 321.013(c), Government Code, the
audit shall be performed by the state auditor.
(f) The corporation shall file quarterly reports with the State
Board of Education concerning matters required by the board.
(g) The corporation is subject to the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes).
(h) The corporation may not enter into an agreement or
transaction with a:
(1) director, officer, or employee of the corporation acting in
other than an official capacity on behalf of the corporation;
(2) business entity in which a director, officer, or employee of
the corporation has an interest;
(3) former director, officer, or employee of the corporation on
or before the second anniversary of the date the person ceased to
be a director, officer, or employee of the corporation; or
(4) business entity in which a former director, officer, or
employee of the corporation has an interest on or before the
second anniversary of the date the person ceased to be a
director, officer, or employee of the corporation.
(i) An agreement or transaction entered into in violation of
Subsection (h) is void.
(j) For purposes of this section, a person has an interest in a
business entity if:
(1) the person owns five percent or more of the voting stock or
shares of the business entity;
(2) the person owns five percent or more of the fair market
value of the business entity; or
(3) money received by the person from the business entity
exceeds five percent of the person's gross income for the
preceding calendar year.
(k) In this section, "institution" and "institutional fund" have
the meanings assigned by Chapter 163, Property Code.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 2003, 78th Leg., ch. 785, Sec. 58, eff.
Sept. 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
834, Sec. 2, eff. September 1, 2007.
Sec. 43.007. PURCHASE AND SALE OR EXCHANGE OF SECURITIES. (a)
The State Board of Education may authorize the purchase of all of
the types of securities in which it is authorized by law to
invest the permanent school fund in either registered or
negotiable form. The board may authorize the reissue of those
securities held at any time for the account of the permanent
school fund in either registered or negotiable form. The State
Board of Education may authorize the sale of any of the
securities held for the account of the permanent school fund and
reinvest the proceeds of sale for the fund and may authorize the
exchange of any of the securities held for the account of the
permanent school fund.
(b) In making purchases, sales, exchanges, and reissues, the
State Board of Education shall exercise the judgment and care
under the circumstances then prevailing that persons of ordinary
prudence, discretion, and intelligence exercise in the management
of their own 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.
(c) When any securities are sold, reissued, or exchanged as
provided by Subsection (a), the custodian of the securities shall
deliver the securities sold, reissued, or exchanged in accordance
with the directions of the State Board of Education.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.009. PREPAYMENT OF CERTAIN BONDS HELD BY THE PERMANENT
SCHOOL FUND. (a) The State Board of Education may authorize the
governing body of any political subdivision in this state to pay
off and discharge, at any interest paying date whether the bonds
are matured or not, all or any part of any outstanding bond
indebtedness owned by the permanent school fund.
(b) The governing body of a political subdivision desiring to
pay off and discharge any bonded indebtedness owned by the fund
shall apply in writing to the State Board of Education, not later
than the 30th day before any interest paying date on the bonds,
describing the bonds or part of the bonds it desires to pay off
and discharge. The application must be accompanied by an
affidavit stating that only tax money collected from a tax levy
made for the specific purpose of providing a sinking fund and
paying interest on the particular bonds to be redeemed will be
spent in redeeming, taking up, or paying off the bonds.
(c) The State Board of Education, on receiving the application
and affidavit, shall take action on them in the manner it
considers best and shall notify the applicant whether the
application is refused or granted in whole or in part.
(d) A person who has a duty under this section may not give or
receive any commission, premium, or compensation for the
performance of that duty.
(e) Only tax money collected from tax levies made for the
specific purpose of providing a sinking fund and paying interest
on the particular bonds to be redeemed may be spent in redeeming,
taking up, or paying off of bonds as provided by this section,
unless the bonds are being redeemed for the purpose of being
refunded.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.010. DEFAULT OF SCHOOL DISTRICT SECURITIES HELD BY THE
PERMANENT SCHOOL FUND. (a) If interest or principal has not
been paid for two years or more on any bonds issued by any school
district and held by the permanent school fund, the State Board
of Education may:
(1) compel the district to levy a tax sufficient to meet the
interest and principal payments then or later due; or
(2) if the district furnishes to the State Board of Education
satisfactory proof that the district's taxing ability is
insufficient, require the district to:
(A) exhaust all legal remedies in collecting delinquent taxes;
and
(B) levy a tax at the maximum lawful rate on the bona fide
valuation of taxable property located in the district.
(b) Revenue collected by either method specified by Subsection
(a) shall be distributed proportionately to all owners of the
defaulted securities in compliance with the following:
(1) the proportionate share for each owner is based on the
interest and principal requirements of the original security
before authorized refunding; and
(2) prior acceptance of refunding securities does not reduce an
owner's proportionate share.
(c) As long as any school district is delinquent in its payments
of principal or interest on any of its bonds owned by the
permanent school fund, the State Board of Education may specify
the method of crediting payments to the state made by the
district as to principal and interest.
(d) The comptroller may not issue any warrant from the
foundation school fund to or for the benefit of any district that
has been for as long as two years in default in the payment of
principal or interest on any security owned by the permanent
school fund until the State Board of Education certifies that the
district has satisfactorily complied with the appropriate
provisions of this section, in which event the comptroller shall
resume making payments to or for the benefit of the district,
including the making of pretermitted payments.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.011. AUTHORIZED REFUNDING OF DEFAULTED SCHOOL BONDS.
(a) In compliance with this section, the State Board of
Education may revise, readjust, modify, refinance, or refund
defaulted bonds issued by any school district in this state and
owned by either the permanent school fund or the available school
fund.
(b) Application must be made to the State Board of Education by
the district that issued the bonds and must show that:
(1) delinquent interest totals at least 50 percent of the
principal amount of the bonds; and
(2) taxable valuation has decreased to such an extent that a
full application of the proceeds of the voted authorized tax
authorized to be levied on the $100 taxable property valuation
will not meet interest and principal annually maturing on the
bonds.
(c) The State Board of Education may effect a refunding of the
debt due and to become due only if the board finds that:
(1) the district is unable to pay the sums already matured and
the sums contracted to be paid as they mature by paying annually
to the State Board of Education the full proceeds of a 50-cent
tax levy on the $100 of all taxable valuation of property in the
district;
(2) the taxable valuation of property in the district has
decreased at least 75 percent since the bonds were issued and
that the decrease was not caused by the district or any of its
officials;
(3) the district for a period of at least five years before
applying to the State Board of Education for refunding has levied
a tax of 50 cents on the $100 of taxable valuation of property in
the district, and that despite such levies, the aggregate amount
due the State Board of Education exceeds the aggregate amount due
at the beginning of the period;
(4) the district has not authorized and sold additional bonds
during the five-year period immediately preceding the
application; and
(5) the district has in good faith endeavored to pay its debt in
accordance with the contract evidenced by the bonds held for the
account of the permanent school fund or the available school
fund.
(d) If the conditions specified by Subsection (c) are found to
exist, the district is, for purposes of this section, insolvent,
and the State Board of Education may exchange the bonds, interest
coupons, and other evidences of indebtedness for new refunding
bonds of the district issued in compliance with the following:
(1) the principal amount of the refunding bonds may not be less
than the total amount of the bonds, matured interest coupons,
accrued interest, and interest on delinquent interest then
actually due to the permanent school fund or the available school
fund; and
(2) the rate of interest to be borne by the refunding bonds may
be lower than that borne by the bonds to be refunded if in
consideration of the interest reduction the district agrees to
levy a tax each year for a period of 40 years at a rate
sufficient to produce annually a sum equal to 90 percent of the
amount that can be calculated by the levy of a tax at the rate of
50 cents on the $100 of taxable valuation of property as
determined by the latest approved tax roll of the district, and
in determining the rate of interest to be borne by the refunding
bonds, the State Board of Education shall be governed by the
following:
(A) the State Board of Education may require the rate to be a
percent per annum as in its judgment will represent the maximum
rate that can be paid by the district and still permit an orderly
and certain retirement of the refunding bonds within 40 years
from their date;
(B) the interest rate of refunding bonds to be received in
exchange for bonds owned by the permanent school fund may not be
less than the minimum rate at which bonds may then be purchased
as investments for the permanent school fund; and
(C) the rate of interest of refunding bonds to be received in
exchange for bonds owned by the available school fund may be set
by the State Board of Education at any rate the board considers
feasible, and the refunding bonds may, at the discretion of the
State Board of Education, be made non-interest bearing to a date
fixed by the board.
(e) The State Board of Education may not make a revision,
readjustment, modification, refinancing, or refunding that will
release or extinguish any debt or obligation then due and payable
to the permanent school fund or to the available school fund.
(f) Except as otherwise provided or permitted by this section,
the refunding of the bonds of school districts authorized by this
section must be in compliance with the general provisions with
regard to the refunding of school district bonds.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.012. REFUNDING OTHER DEFAULTED OBLIGATIONS. (a)
Defaulted obligations, other than bonds of school districts as
provided by Section 43.011, due the available school fund may be
refinanced or refunded with the approval of the State Board of
Education in compliance with this section.
(b) In this section, "defaulted obligations" includes delinquent
interest whether represented by coupons or not, interest on
delinquent interest, and any other form of obligation due the
available school fund.
(c) The obligor must apply to the State Board of Education and
show:
(1) that the obligations due the available school fund have been
in default in whole or in part for a continuous period of at
least 15 years; and
(2) that the obligor is not in default in the payment of the
principal of any bonds owned by the permanent school fund.
(d) If the State Board of Education finds that the requirements
provided by Subsection (c) have been met, it may approve a
refinancing or the issuance of refunding bonds on the conditions:
(1) that the refunding bonds must mature serially in not
exceeding 40 years from the date of issuance;
(2) that the principal amount of the refunding bonds may be not
less than the total amount of the obligations then in default and
due the available school fund; and
(3) that the refunding bonds must bear interest at a rate or
rates determined by the State Board of Education to be for the
best interest of the available school fund.
(e) The State Board of Education may accept refunding bonds in
lieu of either matured or unmatured bonds held for the benefit of
the permanent school fund if the rate of interest on the new
refunding bonds is at least the same rate as that of the bonds
being refunded.
(f) Refunding bonds issued with the approval or pursuant to a
refunding agreement with the State Board of Education in
compliance with either this section or Section 43.011 shall, on
the order of the State Board of Education, be exchanged by the
comptroller for the defaulted obligations they have been issued
to refund.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.02, eff.
Sept. 1, 1997.
Sec. 43.013. JURISDICTION. The district courts of Travis County
have jurisdiction of any suit on bonds or obligations belonging
to the permanent school fund, or purchased therewith, concurrent
with that of any other court having jurisdiction in the case.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.014. DUTIES OF COMPTROLLER. (a) On or before July 1 of
each year, the comptroller shall estimate the amount of the
available school fund receivable from every source during the
following school year and report the estimate to the State Board
of Education.
(b) On or before the meeting of each regular session of the
legislature, the comptroller shall report to the legislature an
estimate of the amount of the available school fund that is to be
received for the following two years, and the sources from which
that amount accrues, and that is subject to appropriation for the
establishment and support of public schools.
(c) On or before the first working day of each month, the
comptroller shall certify to the commissioner the total amount of
money collected from every source during the preceding month and
on hand to the credit of the available school fund.
(d) On receipt of certificates issued to the comptroller by the
commissioner, the comptroller shall draw warrants in favor of the
treasurer of the available school fund of each school district
for the amounts stated in the certificates. All such warrants
shall be registered.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.03, eff.
Sept. 1, 1997.
Sec. 43.015. DUTIES OF COMPTROLLER. (a) Not later than the
30th day before the first day of each regular session of the
legislature and not later than the 10th day before the first day
of any special session at which there can be legislation
respecting the public schools, the comptroller shall report to
the governor the condition of the permanent school fund and the
available school fund, the amount of each fund, and the manner of
its disbursement.
(b) The comptroller shall provide the State Board of Education
with the reports specified by Subsection (a) and with additional
reports concerning those funds requested by the State Board of
Education.
(c) The comptroller shall ensure that no portion of either the
permanent school fund or the available school fund is used to pay
any warrant drawn against any other fund.
(d) The comptroller shall receive and hold in a special deposit
and account for all properties belonging to the available school
fund. All warrants drawn on that fund by the comptroller pursuant
to a certificate of the commissioner must be registered by the
comptroller and then transmitted to the commissioner, and when
properly endorsed shall be paid by the comptroller in the order
of their presentation.
(e) On order of the State Board of Education, the comptroller
shall exchange or accept refunding bonds in lieu of:
(1) either matured or unmatured bonds held for the benefit of
the permanent school fund, which are being refunded under this
chapter;
(2) defaulted obligations held for the benefit of the available
school fund if the refunding bonds are issued in compliance with
Section 43.012;
(3) defaulted obligations of any school district of this state
held for the benefit of the permanent school fund or the
available school fund if the refunding bonds are issued in
compliance with Section 43.011; or
(4) refunding bonds of any school district of this state for
school bonds not matured held by the comptroller for the
permanent school fund if the new refunding bonds are issued by
the school district in compliance with this code.
(f) The comptroller shall be the custodian of all securities
enumerated in Section 43.003(6) and of other securities as
designated by the State Board of Education in which the school
funds of the state are invested. The comptroller shall keep those
securities in the comptroller's custody until paid off,
discharged, delivered as required by the State Board of
Education, or otherwise disposed of by the proper authorities of
the state, and on the proper installment of any interest or
dividend, shall see that the proper credit is given, and the
coupons on bonds, when paid, shall be separated from the bonds
and cancelled by the comptroller.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.04, eff.
Sept. 1, 1997.
Sec. 43.016. USE OF AVAILABLE SCHOOL FUND. All available school
funds shall be appropriated in each county for the education of
its children.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.017. USE OF COMMERCIAL BANKS AS AGENTS FOR COLLECTION OF
INCOME FROM PERMANENT SCHOOL FUND INVESTMENTS. (a) The State
Board of Education may contract with one or more commercial banks
to receive payments of dividends and interest on securities in
which the state permanent school funds are invested and transmit
that money with identification of its source to the comptroller
for the account of the available school fund by the fastest
available means.
(b) In choosing each commercial bank with which to contract as
authorized by Subsection (a), the State Board of Education shall
assure itself of:
(1) the financial stability of the bank;
(2) the location of the bank with respect to its proximity to
the banks on which checks are drawn in payment of dividends and
interest on securities of the permanent school fund;
(3) the experience and reliability of the bank in acting as
agent for others in the similar collection and expeditious
remittance of money; and
(4) the reasonableness of the bank's charges for the services,
both in amount of the charges and in relation to the increased
investment earnings of the available school fund that will result
from speedier receipt by the comptroller of the money.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.05, eff.
Sept. 1, 1997.
Sec. 43.018. PARTICIPATION IN FULLY SECURED SECURITIES LOAN
PROGRAMS. (a) The State Board of Education may contract with a
commercial bank to serve both as a custodian of securities in
which the state permanent school funds are invested and to lend
those securities, under the conditions prescribed by Subsection
(b), to securities brokers and dealers on short-term loan.
(b) The State Board of Education may contract with a commercial
bank pursuant to this section only if:
(1) the bank is located in a city having a major stock exchange;
(2) the bank is experienced in the operation of a fully secured
securities loan program;
(3) the bank has adequate capital in the prudent judgment of the
State Board of Education to assure the safety of the securities
entrusted to it as a custodian;
(4) the bank will require of any securities broker or dealer to
which it lends securities owned by the state permanent school
fund that the broker or dealer deliver to it cash collateral for
the loan of securities, and that the cash collateral will at all
times be not less than 100 percent of the market value of the
securities lent;
(5) the bank executes an indemnification agreement, satisfactory
in form and content to the State Board of Education, fully
indemnifying the permanent and available school funds against
loss resulting from the bank's service as custodian of securities
of the permanent school fund and its operation of a securities
loan program using securities of the permanent school fund;
(6) the bank will speedily collect and remit on the day of
collection by the fastest available means to the comptroller any
dividends and interest collectible by it on securities held by it
as custodian, together with identification as to the source of
the dividends or interest; and
(7) the bank is the bank agreeing to pay to the available school
fund the largest sum or highest percentage of the income derived
by the bank from use of the securities of the permanent school
fund in the operation of a securities loan program.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.06, eff.
Sept. 1, 1997.
Sec. 43.019. ACCOUNTING TREATMENT OF CERTAIN EXCHANGES. The
State Board of Education may account for the exchange of
permanent school fund securities in a closely related sale and
purchase transaction in a manner in which the gain or loss on the
sale is deferred as an adjustment to the book value of the
security purchased, if:
(1) the security sold and the security purchased have a fixed
maturity value;
(2) the board is authorized by law to invest the permanent
school fund in the security purchased;
(3) the sale is made in clear contemplation of reinvesting
substantially all of the proceeds;
(4) substantially all of the proceeds are reinvested;
(5) the transaction is completed within a reasonable time after
the sale, not to exceed 30 business days; and
(6) the transaction results in an improvement in effective
income yield, taking into consideration the deferral of any gain
or loss on the sale.
Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,
1995.
Sec. 43.020. TREATMENT OF ACCRUED INCOME. All interest and
dividends accruing from the investments of the permanent school
fund shall be deposited to the credit of the available school
fund in accordance with the accrual basis of accounting. Funds
recognized under this section are considered part of the
available school fund and may be appropriated as provided by
Section 5, Article VII, Texas Constitution.
Added by Acts 2003, 78th Leg., ch. 201, Sec. 37, eff. June 10,
2003.