Education board at odds with Bush
School Land Board facing criticism for financial decisions.
The GOP-dominated State Board of Education is blasting Texas Land Commissioner George P. Bush, a Republican running for re-election, for taking undue credit in funding Texas public schools while reducing the amount of money schools will receive in the next state budget.
Tensions stem from a recent decision by the School Land Board, which is housed within the General Land Office and run in part by Bush, to halt payments to the Permanent School Fund from revenue from mineral interests the agency manages on public lands. Instead, the land board has decided to direct $600 million, the maximum allowed by law, into a separate fund called the Available School Fund and invest an additional $55 million.
The decision could result in a $140 million cut in public education funding in the upcoming twoyear budget, according to State
Board of Education officials.
“The whole reason that we created the School Land Board ... is to support the Permanent School Fund and not for the land commissioner to do their political empire building,” State Board of Education member Tom Maynard, R-Florence, told the American-Statesman.
Democratic members of the education board also are peeved. “It’s shameful,” said Georgina Pérez, D-El Paso, said during the board’s meeting Wednesday.
The education board uses the $41.4 billion Permanent School Fund, the nation’s largest education endowment, to back construction bonds so that school districts and charter schools can earn lower interest rates, and to dispense money into the Available School Fund, which is used to pay for textbooks and other instructional materials as well as general education expenses.
By bypassing the State Board of Education and the Permanent School Fund, the School Land Board hurts future returns on investments and the ability to back school bonds, while inflating Bush’s role in school funding, said education board member David Bradley, R-Beaumont.
“It all has to do with November,” said Bradley, the longest-serving member of the board. “This board since the commissioner took office four years ago has extended numerous invitations as with prior commissioners to work jointly on the Permanent School Fund, and all of our invitations have been ignored.”
Officials with the General Land Office said putting money into the Available School Fund is a more direct way of funding education than waiting on returns on investment.
“Today, education dollars are needed in our classrooms more than ever. Texas public school funding will be a hotly debated issue in the upcoming session of the Texas Legislature. The SLB’s decision sent much needed money directly to classrooms across Texas and will be put to use immediately, providing textbooks and supplies for our students. Commissioner Bush believes this direct source of funding is in the best interest for our kids,” General Land Office spokeswoman Karina Erickson said in a statement.
Constitutional duty?
Managing more than 13 million acres of land, the School Land Board generates money for education through the sale and lease of land; oil and gas revenue; and grazing, agricultural, commercial and right-of-way uses. In addition to transferring the money into the permanent and available school funds, the land board also can invest the money to generate additional money for education.
In fiscal 2017, the gross revenue from the land it manages totaled $1.9 billion, and the land board’s investment income totaled $943 million.
Maynard believes the land board’s investment efforts are redundant and said that such duties should be relegated to the State Board of Education as dictated in the Texas Constitution.
“As it was originally envisioned, the School Land Board/General Land Office would oversee the leases and they would collect the royalties for the purpose of then handing that money off to the Permanent School Fund. The only constitutional duty that the State Board of Education actually has is the management of the Permanent School Fund,” Maynard said.
The education board took a preliminary vote Wednesday to transfer $2 billion from the Permanent School Fund to the Available School Fund in the 2020-21 budget, $450 million less than in the 201819 budget, as a result of the land board’s expected cut to the Permanent School Fund, board members say. Even with the land board’s $600 million contribution, the total amount of money the Available School Fund will receive from the two entities is about $140 million less than in the 201819 budget cycle.
Education board Chairwoman Donna Bahorich, R-Houston, said Wednesday she will send a letter to the land board asking its members to change their minds by November and contribute money to the Permanent School Fund so the education board can transfer it to the Available School Fund.
Texas students need the money now because school districts will need to replace their English and Spanish language arts textbooks to align with new curriculum standards in the 2020-21 biennium, education board members said.
The land board’s “decision can be reversed,” said education board member Marisa Perez-Diaz, D-Converse. “This is not about any kind of hubris that this board has over responsibility for this money except that we want to see students have access to ... instructional materials and then, funding generally.”
Competitive endowments
In February, Maynard and Bradley penned an open letter to Bush saying he had overstated his contributions to public education in campaign ads; Bush suggested in a mailer that he had contributed more than $4 billion to education. The school board members said the credit should have gone to the State Board of Education, which will have contributed that much to the Available School Fund between 2016 and 2019.
Erickson defended the agency’s role in school funding by pointing to its 13.8 percent return on investment over a five-year period. The State Board of Education’s return was 8.3 percent.
But Bradley said the land board’s figures are inflated and if the agency’s cash assets were factored in, the land board’s rate of return would be 7.8 percent. Nearly 40 percent of the school land board’s $8.7 billion in assets are in cash, according to the education board. Less than 1 percent of the State Board of Education’s $32.7 billion in assets is in cash. The land board said the cash is already committed to investments over a period of time and not available for use.
During an Aug. 30 Sunset Commission meeting, state Sen. Kirk Watson, D-Austin, asked Bush why the land board is sitting on an additional $55 million in cash that could be transferred to the State Board of Education to invest in the Permanent School Fund.
Bush responded that the money is being invested in the land board’s own portfolio to generate higher returns than if the money had gone to the education board.
“I can see why others may say there’s an inherent tension (between the two agencies) because we have two slightly competitive endowments, but you know what? That’s probably a good thing. That means we continue to get better returns for our schoolchildren because that’s ultimately the beneficiary at stake here,” Bush said
The Sunset Commission staff has recommended the land board continue to operate and has said the board’s “investments perform very well and the review found no significant problems within the investment program.”