By Ellis, et al.                                      S.J.R. No. 19
         77R642 ESH-D                           
                                 A JOINT RESOLUTION
 1-1     proposing a constitutional amendment relating to the use of income
 1-2     and appreciation of the permanent school fund.
 1-4           SECTION 1.  Section 5, Article VII, Texas Constitution, is
 1-5     amended to read as follows:
 1-6           Sec. 5. (a)  The permanent school fund consists of all land
 1-7     appropriated for public schools by this constitution or the other
 1-8     laws of this state and other properties belonging to the permanent
 1-9     school fund.  The available school fund consists of the
1-10     distributions made to it from the total return on all investment
1-11     assets of [principal of all bonds and other funds, and the
1-12     principal arising from the sale of the lands hereinbefore set apart
1-13     to said school fund, shall be] the permanent school fund, [and all
1-14     the interest derivable therefrom and] the taxes [herein] authorized
1-15     by this constitution or general law to be part of [and levied shall
1-16     be] the available school fund, and appropriations made to the
1-17     available school fund by the legislature.  The public school
1-18     employee health insurance fund consists of the distributions made
1-19     to it from the total return on all investment assets of the
1-20     permanent school fund and appropriations made to the public school
1-21     employee health insurance fund by the legislature.  The total
1-22     amount distributed from the permanent school fund to the available
1-23     school fund and the public school employee health insurance fund in
1-24     each fiscal year must be an amount equal to the lesser of:
 2-1                 (1)  five percent of the average of:
 2-2                       (A)  the market value of the permanent school
 2-3     fund on the first day of that fiscal year; and
 2-4                       (B)  the market value of the permanent school
 2-5     fund on the first day of the two preceding fiscal years; or
 2-6                 (2)  a portion of the total return on all investment
 2-7     assets of the permanent school fund such that the portion of the
 2-8     total return retained in the permanent school fund is sufficient,
 2-9     as determined by the comptroller of public accounts, to preserve
2-10     the purchasing power of the permanent school fund for the current
2-11     fiscal year and the next nine fiscal years.
2-12           (b)  Eighty percent of the annual distribution from the
2-13     permanent school fund under Subsection (a) of this section shall be
2-14     transferred to the available school fund, and twenty percent shall
2-15     be transferred to the public school employee health insurance fund.
2-16           (c)  The expenses of managing permanent school fund land and
2-17     investments shall be paid by the permanent school fund.
2-18           (d)  The available school fund shall be applied annually to
2-19     the support of the public free schools.  Except as provided by this
2-20     section, the legislature may not enact a [no] law [shall ever be
2-21     enacted] appropriating any part of the permanent school fund or
2-22     available school fund to any other purpose.  The permanent school
2-23     fund and the available school fund may not [whatever; nor shall the
2-24     same, or any part thereof ever] be appropriated to or used for the
2-25     support of any sectarian school.  The [; and the] available school
2-26     fund [herein provided] shall be distributed to the several counties
2-27     according to their scholastic population and applied in the [such]
 3-1     manner [as may be] provided by law.
 3-2           (e)  The public school employee health insurance fund may be
 3-3     used only for providing and administering a group health program
 3-4     for active and retired public school employees.  The legislature by
 3-5     general law shall designate an agency to provide and administer
 3-6     that program.
 3-7           (f) [(b)]  The legislature by law may provide for using the
 3-8     permanent school fund [and the income from the permanent school
 3-9     fund] to guarantee bonds issued by school districts or by the state
3-10     for the purpose of making loans to or purchasing the bonds of
3-11     school districts for the purpose of acquisition, construction, or
3-12     improvement of instructional facilities including all furnishings
3-13     thereto. If any payment is required to be made by the permanent
3-14     school fund as a result of its guarantee of bonds issued by the
3-15     state, an amount equal to this payment shall be immediately paid by
3-16     the state from the treasury to the permanent school fund.  An
3-17     amount owed by the state to the permanent school fund under this
3-18     section shall be a general obligation of the state until paid.  The
3-19     amount of bonds authorized hereunder shall not exceed $750 million
3-20     or a higher amount authorized by a two-thirds record vote of both
3-21     houses of the legislature.  If the proceeds of bonds issued by the
3-22     state are used to provide a loan to a school district and the
3-23     district becomes delinquent on the loan payments, the amount of the
3-24     delinquent payments shall be offset against state aid to which the
3-25     district is otherwise entitled.
3-26           (g) [(c)]  The legislature may appropriate part of the
3-27     available school fund for administration of [the permanent school
 4-1     fund or of] a bond guarantee program established under this
 4-2     section.
 4-3           (h) [(d)]  Notwithstanding any other provision of this
 4-4     constitution, in managing the assets of the permanent school fund,
 4-5     the State Board of Education may acquire, exchange, sell,
 4-6     supervise, manage, or retain, through procedures and subject to
 4-7     restrictions it establishes and in amounts it considers
 4-8     appropriate, any kind of investment, including investments in the
 4-9     Texas growth fund created by Article XVI, Section 70, of this
4-10     constitution, that persons of ordinary prudence, discretion, and
4-11     intelligence, exercising the judgment and care under the
4-12     circumstances then prevailing, acquire or retain for their own
4-13     account in the management of their affairs, not in regard to
4-14     speculation but in regard to the permanent disposition of their
4-15     funds, considering the probable income as well as the probable
4-16     safety of their capital.
4-17           SECTION 2. This proposed constitutional amendment shall be
4-18     submitted to the voters at an election to be held November 6, 2001.
4-19     The ballot shall be printed to permit voting for or against the
4-20     proposition:  "The constitutional amendment relating to the use of
4-21     income and appreciation of the permanent school fund and
4-22     authorizing the use of a portion of that income and appreciation to
4-23     provide and administer a group health program for active and
4-24     retired public school employees."