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No more PSF investing for you, Land Board

Seems worth considering.

Austin Lawmakers filed bills this week that would strip the School Land Board of its ability to invest billions of dollars on behalf of Texas schoolchildren.

The bipartisan legislation, submitted Wednesday, comes amid mounting scrutiny over the management of the $44 billion Permanent School Fund, which is run jointly by the land board and the State Board of Education. The two boards are the subject of a yearlong Houston Chronicle investigation that began publishing Sunday, which found that the fund has lost out on as much as $12 billion in revenue, fueled by anemic returns, skyrocketing fees and questionable investment deals.

At the same time, students in Texas have received less annually from the endowment over the past decade, in real dollars, than they did in the two decades prior, even as the overall size of the fund has swelled.

The land board’s role has been especially contentious. It manages its portion of the portfolio — now at $10 billion — by collecting the state’s oil and gas royalty revenues and investing them, primarily in private equity. The land board has only three members, often meets behind closed doors, and since 2006 has committed or invested nearly $3.7 billion with companies run by friends, business associates or campaign donors.

The bills would end that, revoking the land board’s investment power and returning it entirely to the education board. It would still gather fees from royalties, but pass them straight on to the education board.

Consolidating the two will “put more money to work for the benefit of our schoolchildren,” Sen. Kirk Watson, an Austin Democrat who is leading the effort, said in a statement. “The legislature created this flawed structure, and it’s time we fixed it.”

Five Republican Senate committee chairs have signed on to the legislation, including Jane Nelson, Brian Birdwell, Paul Bettencourt, Dawn Buckingham and Bob Hall. Republican Rep. Ken King has filed identical legislation in the House.

See here for the background, and here for the full series published by the Chron. The SBOE had full responsibility for the PSF until 2001, so this would revert things to the earlier setup. Not that the SBOE has been a perfect steward of the PSF, but they’ve been a little better than the Land Board. I would not object to an overall higher level of scrutiny on the whole process. This is at least a step in the right direction.

In a statement, Land Commissioner George P. Bush called the proposal a “power grab.” He said he welcomes reforms, but only if they’re based upon sound financial expertise.

“Without expert evaluation, the school children of Texas stand to lose,” he said.

Bush, who oversees the land board, said after a meeting on Tuesday that he had not read the Chronicle’s reporting and didn’t plan to.

“I’m trying a new strategy in 2019 by not reading my media,” he said. He said his office would review the series’ findings and follow up later.

Remember when George P. Bush was the fresh new exciting face of the Texas GOP? Boy, those were the days.

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