SRC-CTC S.J.R. 17 77(R)   BILL ANALYSIS


Senate Research Center   S.J.R. 17
77R2248 ESH-DBy: Duncan
Education
3/1/2001
As Filed


DIGEST AND PURPOSE 

Currently, interest and dividend income from the Texas Permanent School
Fund (PSF), along with other revenue, flows into the Available School Fund
(ASF), which is distributed to local school districts based on average
daily attendance.  Over the past few years, there has been a steady decline
in income generated by PSF in both nominal and real terms.  To deal with
fluctuations like this, some financial experts suggest managing PSF as a
total return fund which would make distributions from a prudent portion of
its total return, regardless of how the return is generated.  As proposed,
S.J.R. 17 requires a constitutional amendment be put before the voters to
allow PSF to be managed as a total return fund and capture the additional
revenue generated into a newly created Education Excellence Supplemental
Fund.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 5, Article VII, Texas Constitution, to  require
the available school fund (ASF) to consist of the distributions made to it
from the total return on all investment assets of the permanent school fund
(PSF), rather than all the interest derivable from PSF.  Requires the
educational excellence supplemental fund (supplemental fund) to consist of
distributions made to it from the total return on all investment assets of
PSF.  Provides that the total amount distributed from PSF to ASF and the
supplemental fund in each fiscal year must meet certain conditions.   

(b) Requires ASF to be distributed to the several school districts, rather
than the several counties.  Provides that if the total amount to be
distributed from PSF to ASF and the supplemental fund under Subsection(a)
for a fiscal year, together with certain other taxes and amounts, is
sufficient, the distribution from ASF to a school district for that fiscal
year must equal the distribution from ASF the school district received for
the state fiscal year beginning September 1, 2001, as adjusted for certain
conditions.  Provides that if the total amount to be distributed under
Subsection (a) for a fiscal year, together with certain taxes and amounts,
is not sufficient to make distributions to school districts as required by
this subsection, the total amount under Subsection (a) for that fiscal year
must be distributed to ASF for distribution to the several school districts
according to their scholastic population.   

(c) Provides that the supplemental fund consists of certain amounts.
Authorizes the supplemental fund to be used only as directed by the
legislature and only for a purpose related to improving public education,
including the provision of a group health insurance program for active or
retired employees of the public schools. 

 (d)  Deletes wording related to using the income from PSF to guarantee
bonds. 

 (e)  Authorizes the legislature to appropriate part of PSF, rather than
ASF, for administration of PSF or of a bond guarantee program established
under this section. 

(g)  Provides that the total distribution from PSF to ASF and the
supplemental fundEESF, notwithstanding Subsection (a)(1) of this section,
for the state fiscal years beginning September 1, 2002, and September 1,
2003, must equal a certain amount.  Provides that this subsection expires
December 1, 2004. 

SECTION 2.  Requires that this constitutional amendment be put before the
voters in an election on November 6, 2001.  Requires the ballot be printed
to permit a person to vote for or against the proposition and sets forth
specific wording to be contained on the  ballot.