EDUCATION CODE
CHAPTER 43. PERMANENT SCHOOL FUND AND AVAILABLE SCHOOL FUND
§ 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,
§ 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,
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 2003, 78th Leg., ch. 201, § 36, eff. June 10,
2003; Acts 2003, 78th Leg., ch. 328, § 2.
§ 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.
Text of subsec. (a-1) effective until September 1, 2004
(a-1) Notwithstanding Subsection (a), for the fiscal year
beginning September 1, 2003, the comptroller shall transfer from
the permanent school fund to the available school fund:
(1) on January 2, 2004, an amount equal to
five-twelfths of the annual distribution from the permanent school
fund to the available school fund for that fiscal year as provided
by Section 5(g), Article VII, Texas Constitution; and
(2) on the first working day of each month after
January 2004, an amount equal to one-twelfth of the annual
distribution from the permanent school fund to the available school
fund for that fiscal year as provided by Section 5(g), Article VII,
Texas Constitution.
Text of subsec. (a-2) effective until September 1, 2004
(a-2) Subsection (a-1) and this subsection expire September
1, 2004.
(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, § 1, eff. May 30, 1995.
Amended by Acts 2003, 78th Leg., ch. 328, § 3, eff. Jan. 1, 2004.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. Sept. 1, 1999.
§ 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, § 1, eff. Sept. 1, 1999.
§ 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, § 1, eff. Sept. 1, 1999.
§ 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, § 1, eff. Sept. 1, 1999.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
§ 43.006. INVESTMENT MANAGEMENT. (a) The State Board
of Education may delegate investment authority and contract for the
investment of the permanent school fund to the same extent as the
governing board of an institution of higher education 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:
(1) "Governing board" and "institutional fund" have
the meanings assigned by Chapter 163, Property Code.
(2) "Institution of higher education" has the meaning
assigned by Section 61.003.
Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995.
Amended by Acts 2003, 78th Leg., ch. 785, § 58, eff. Sept. 1,
2003.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.02, eff. Sept. 1,
1997.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.03, eff. Sept. 1,
1997.
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.04, eff. Sept. 1,
1997.
§ 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, § 1, eff. May 30, 1995.
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.05, eff. Sept. 1,
1997.
§ 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, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.06, eff. Sept. 1,
1997.
§ 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, § 1, eff. May 30, 1995.
§ 43.020. TREATMENT OF ACCRUED INCOME.
Text of section as added by Acts 2003, 78th Leg., ch. 201, § 37
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, § 37, eff. June 10, 2003.
For text of section as added by Acts 2003, 78th Leg., ch. 1270, §
2, see § 43.020, post.
§ 43.020. LOANS FOR HIGHWAY RIGHTS-OF-WAY.
Text of section as added by Acts 2003, 78th Leg., ch.
1270, § 2
As provided by Section 5a, Article VII, Texas Constitution,
the State Board of Education may make loans from the permanent
school fund to the Texas Department of Transportation for the
purpose of acquiring rights-of-way for the state highway system.
Added by Acts 2003, 78th Leg., ch. 1270, § 2.
For text of section as added by Acts 2003, 78th Leg., ch. 201, §
37, see § 43.020, ante.
