The HRO puts out a big PDF explaining all of these amendments, with arguments FOR and AGAINST. Here they are:
Supporters say:
At a time when additional state funding for the schools is badly needed, Proposition 6 would allow a larger share of the Permanent School Fund endowment to be distributed to the public schools through the Available School Fund in a prudent manner that would not harm the corpus of the PSF. It would allow PSF investment assets to be consolidated to reflect accurately the PSF's full balance by adding certain assets managed by the School Land Board to the total asset base used to calculate the annual distribution from the PSF to the ASF. It also would grant explicit authority to the School Land Board to distribute directly to the ASF proceeds from state land for spending on public education.
According to the Legislative Budget Board, the approximate value of the real assets and cash derived from PSF property that would be added to the calculation of the PSF's market value for determining the amount that could be distributed annually to the ASF for spending on the public schools would be $2.2 billion. At the 4.2 percent distribution rate adopted by the SBOE for the upcoming two-year state budget period, this would mean an extra $75.4 million could be distributed to the public schools through the ASF in both fiscal 2012 and fiscal 2013.
Proposition 6 also is needed because an attorney general's opinion concluded that current law allowing the School Land Board to send revenue from school land or properties directly to the ASF likely is unconstitutional. The SLB needs this authority to ensure that public schools may benefit directly from the investment returns from state land and property realized by the board. By amending the Constitution, Proposition 6 would remove any question about the SLB's authority to make a direct transfer to the ASF, at the discretion of the SLB and subject to a cap of $300 million per year. This could provide millions of dollars in badly needed revenue for public schools while still preserving the corpus of the PSF.
Even though the corpuses of the real estate special fund account and the PSF have grown, the SLB has transferred less money to the PSF in recent years than it did 10 years ago. Arguments that the SLB's authority to retain a portion of the returns ensures the fund's future performance fail to appreciate the detriment that hoarding money means for public schools when the need for additional funding is so pressing.
Proposition 6 also would promote transparency by drawing a traceable path between the net revenue earned from public school land and its distribution to the ASF to benefit the public schools. There is no reason PSF funds derived from state land must first go through the SBOE for investment and possible future distribution to the ASF. Despite claims that the School Land Board uses a specific methodology to determine its payout of state school land proceeds to the PSF, the land board has used its discretion to transfer larger amounts to the PSF in the past.
Replacing "perpetual public school fund" and "public free school fund" with "permanent school fund" would not be a substantive change. These terms are used interchangeably throughout the Texas Constitution - in practice, there is not a perpetual public school fund or a public free or free public school fund. The attorney general's opinion concluded that all of these funds refer to the PSF. Conforming all references to the "permanent school fund" simply would provide uniformity and prevent confusion.
Opponents say:
By changing how the total assets of the Permanent School Fund (PSF) are calculated for purposes of distributing a portion of the fund to the Available School fund (ASF), Proposition 6 would offer a short-term solution to the budget crisis, but would harm public schools and their endowment in the long run. Adding discretionary real estate investments and cash returns derived from PSF land to the basis used by the SBOE
to calculate the proportion of the PSF endowment to be distributed to the public schools annually through the ASF would diminish the corpus of the PSF that could be invested for future returns. This change would allow a short-term gain, but ultimately mean a long-term loss for the schools.
Authorizing the School Land Board (SLB) to distribute to the ASF up to $300 million each year in revenue derived from PSF land is neither necessary nor appropriate. The SLB already acts in the best interest of the fund by fulfilling its duty to manage PSF land and mineral rights. Funds generated by SLB investments are used for their intended purpose of providing an endowment for public education. Authorizing the SLB to transfer proceeds from PSF land and property directly to the ASF is unnecessary because the SLB already may transfer funds to the PSF, allowing the SBOE to ensure that the invested proceeds benefit the public schools through the annual distributions to the ASF. Alternatively, the SLB may invest the net revenue, which ultimately benefits public schools by increasing the total returns available for transfer to the PSF. It is unwise to spend funds directly that would otherwise be better invested to generate future income.
Claims that the SLB has stored money in the corpus of the PSF that should be used to benefit public schools are unfounded. The corpus of the fund has grown due to increased royalties earned from oil and gas on PSF lands. The royalties are PSF mineral rights and, as such, are dedicated constitutionally to the corpus of the PSF. The SLB has not stored money, but has adopted the same disbursement mechanism used by the SBOE.
The SLB should not be subject to a maximum transfer amount to the ASF set by the Legislature. A predetermined maximum would pressure the board to divert funds from the PSF to the ASF, regardless of its fiduciary duty to protect the corpus of the PSF. The SLB's highest priority should be its fiduciary role and determining the distribution of available funds based solely on market and investment returns.
