January 2022 Committee on School Finance/Permanent School Fund Item 7

Review of the Bond Guarantee Program Capacity

January 27, 2022

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION

SUMMARY: This item provides an opportunity for the committee to receive a presentation on the bond guarantee program’s capacity.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §2 and §5; Texas Education Code (TEC) §45.0532; and 19 Texas Administrative Code (TAC) Chapter 33.

The Texas Constitution, Article VII, §2 and §5 establish the permanent school fund, the assets that comprise the permanent school fund, the bond guarantee program, the available school fund, and authorize the State Board of Education (SBOE) to manage and invest the permanent school fund in accordance with the prudent person standard.

TEC §45.0532 provides limitations on charter district bonds that may be guaranteed under the bond guarantee program.

19 TAC Chapter 33 codifies administrative rules that provide a statement of investment objectives, policies, and guidelines of the Texas Permanent School Fund and Bond Guarantee Program as adopted by the SBOE.

The full text of statutory citations can be found in the statutory authority section of this agenda.

PREVIOUS BOARD ACTION: At the September 2017 meeting, the Board increased the charter guarantee capacity, and began the process to move management of the reserve fund to the SBOE. The SBOE established for fiscal year 2018 the capacity of the bond guarantee program for charter district bonds at the full twenty percent (20%) allowed by law. At the June 2018, June 2019, July 2020, and June 2021 meetings, the SBOE affirmed the annual implementation schedule as referenced in 19 TAC 33.67(d)(2) and took no additional action.

Staff Member Responsible:
Holland Timmins, Executive Administrator and Chief Investment Officer, Texas Permanent School Fund