Texas Proposition 6, Permanent School Fund Amendment (2011)

Texas Proposition 6
Election date November 8, 2011
Topic Education and State and local government budgets, spending, and finance
Status Approved
Type Legislatively referred constitutional amendment	Origin State legislature

Texas Proposition 6 was on the ballot as a legislatively referred constitutional amendment in Texas on November 8, 2011. It was approved.

A "yes" vote supported making additional funding available for public education through accounting changes in the Permanent School Fund and State Land Board and authorizing up to $300 million a year to be transferred directly from the State Land Board to the Available School Fund.

A "no" vote opposed making additional funding available for public education through accounting changes in the Permanent School Fund and State Land Board and authorizing up to $300 million a year to be transferred directly from the State Land Board to the Available School Fund.

Election results

See also: 2011 ballot measure election results

Texas Proposition 6
Result		Votes	Percentage
a Yes		346,023	51.57%
No		324,904	48.42%

Text of measure

Ballot summary

The ballot text read:

"The constitutional amendment clarifying references to the permanent school fund, allowing the General Land Office to distribute revenue from permanent school fund land or other properties to the available school fund to provide additional funding for public education, and providing for an increase in the market value of the permanent school fund for the purpose of allowing increased distributions from the available school fund."

Constitutional changes

Proposition 6 amended Section 49-b (h) of Article 3; amended Sections 2, 4, 5(a), and added 5(g) to Article 7 of the Texas Constitution; and added a temporary provision to the Texas Constitution.

Note: Hover over the text and scroll to see the full text.

Section 49-b (h), Article III

(h) Lands purchased and comprising a part of the Veterans Land Fund are declared to be held for a governmental purpose, but the individual purchasers of those lands shall be subject to taxation to the same extent and in the same manner as are purchasers of lands dedicated to the Permanent [Free Public] School Fund. The lands shall be sold to veterans in quantities, on terms, at prices, and at fixed, variable, floating, or other rates of interest, determined by the Board and in accordance with rules of the Board. Notwithstanding any provisions of this section to the contrary, lands in the Veterans ’ Land Fund that are offered for sale to veterans and that are not sold may be sold or resold to the purchasers in quantities, on terms, at prices, and at rates of interest determined by the Board and in accordance with rules of the Board.

Section 2, Article VII All funds, lands and other property heretofore set apart and appropriated for the support of public schools; all the alternate sections of land reserved by the State out of grants heretofore made or that may hereafter be made to railroads or other corporations of any nature whatsoever; one half of the public domain of the State; and all sums of money that may come to the State from the sale of any portion of the same, shall constitute a permanent [perpetual public] school fund.

Section 4, Article VII The lands herein set apart to the Permanent [Public Free] School fund, shall be sold under such regulations, at such times, and on such terms as may be prescribed by law; and the Legislature shall not have power to grant any relief to purchasers thereof. The proceeds of such sales must be used to acquire other land for the Permanent [Public Free] School fund as provided by law or the proceeds shall be invested by the comptroller of public accounts, as may be directed by the Board of Education herein provided for, in the bonds of the United States, the State of Texas, or counties in said State, or in such other securities, and under such restrictions as may be prescribed by law; and the State shall be responsible for all investments.

Section 5, Article VII (a) The permanent school fund consists of all land appropriated for public schools by this constitution or the other laws of this state, other properties belonging to the permanent school fund, and all revenue derived from the land or other properties. The available school fund consists of the distributions made to it from the total return on all investment assets of the permanent school fund, the taxes authorized by this constitution or general law to be part of the available school fund, and appropriations made to the available school fund by the legislature. The total amount distributed from the permanent school fund to the available school fund:

(1)in each year of a state fiscal biennium must be an amount that is not more than six percent of the average of the market value of the permanent school fund, excluding real property belonging to the fund that is managed, sold, or acquired under Section 4 of this article, but including discretionary real assets investments and cash in the state treasury derived from property belonging to the fund, on the last day of each of the 16 state fiscal quarters preceding the regular session of the legislature that begins before that state fiscal biennium, in accordance with the rate adopted by:

(A) a vote of two-thirds of the total membership of the State Board of Education, taken before the regular session of the legislature convenes; or

(B)the legislature by general law or appropriation, if the State Board of Education does not adopt a rate as provided by Paragraph (A) of this subdivision; and

(2) over the 10-year period consisting of the current state fiscal year and the nine preceding state fiscal years may not exceed the total return on all investment assets of the permanent school fund over the same 10-year period.

(g) Notwithstanding any other provision of this constitution or of a statute, the General Land Office or an entity other than the State Board of Education that has responsibility for the management of permanent school fund land or other properties may in its sole discretion distribute to the available school fund each year revenue derived during that year from the land or properties, not to exceed $300 million each year.

TEMPORARY PROVISION.

(a) This temporary provision applies to the constitutional amendment proposed by H.J.R. No. 109, 82nd Legislature, Regular Session, 2011, providing for an increase in the market value of the permanent school fund for the purpose of allowing increased distributions from the available school fund.

(b) The change to Section 5(a), Article VII, of this constitution made by the amendment applies to a distribution from the permanent school fund to the available school fund made on or after September 1, 2011.

(c)A This temporary provision expires December 1, 2015.

Fiscal note

See also: Fiscal impact statement

The Texas Legislative Budget Board issued a fiscal note about HJR 109 to the House Committee on Appropriations on April 30, 2011.

According to the fiscal note:

• "No fiscal implication to the State is anticipated, other than the cost of publication."
• "The cost to the state for publication of the resolution is $105,495."
• "No fiscal implication to units of local government is anticipated."

Background

The Permanent School Fund (PSF) is an endowment trust established to benefit Texas public education. Proceeds from the PSF are transferred to the Available School Fund (ASF), which then distributes the funding to school districts throughout the state. The Texas Constitution dictates that no more than 6 percent of PSF investment returns can be transferred to the ASF; it also prohibits the PSF from distributing any proceeds if the principal of the fund falls below a certain benchmark.

The Permanent School Fund is composed of two sources of funding: (1) returns from investments on the fund's principal (2) proceeds from state land and mineral investments. This amendment made accounting changes to how the second source of funding (land and mineral proceeds) are distributed to the PSF. The Permanent School Fund's endowment is composed of significant amounts of public land. Money is earned from these lands through a number of ways such as oil and gas revenues, sales, leases, etc. While the PSF owns the lands, the General Land Office is charged with the management, administration, and sale of the land. The State Land Board (SLB) is an entity responsible for handling General Land Office affairs as related to the Permanent School Fund. The SLB had the discretion to use proceeds and revenue earned from PSF land to invest in real estate if it deemed prudent.

The State Land Board decided how much of the proceeds from PSF land were transferred to the PSF. There were no minimum parameters or regulations stipulating how the State Land Board distributes those proceeds to the PSF. The SLB determined how much is distributed to the PSF for public education purposes and how much is reinvested.

At the time of the election, assets managed by the School Land Board were not included in assessing the Permanent School Fund's market value. Proposition 6 would changed that by amending the constitution to include certain SLB real estate and cash assets in calculating the PSF's market value. The PSF's market value influences how much money is available to transfer to the Available School Fund for public schools each year.

Proposition 6 also amended the constitution as to allow the SLB to transfer funds directly to the ASF (capped at $300 million annually), instead of sending them first to the PSF to be passed on to the PSF.

Support

Supporters

• Bill authors: House Representatives Rob Orr, Jimmie Don Aycock, Scott Hochberg, Jim Pitts, John Otto
• Senate Sponsors: Steve Ogden

Education on the ballot in 2011

Arguments

Supporters said:

• Education funding is being cut and teachers are being laid off. This amendment would increase the amount of funding available for public education "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)."
• In recent years the General Land Office has decreased the total funding transferred for public education spending despite its returns from successfully investing lands. In these times the schools should be getting as much of the proceeds from school lands as possible to pay for critical education services.
• "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."

Donors

According to the state campaign finance database, there were no registered committees (PACs).

(last updated December 2011)

Opposition

Arguments

Opponents said:

• The accounting changes put forth in this amendment offer a short-term increase in public education funding, but would actually decrease the total amount of education funding in the long-run. The Permanent School Fund is structured to be an endowment; reducing the principal of the fund lowers future investment returns, thus lowering future public education transfers.
• The GLO should have the discretion to invest land funds in the way it sees fit for the interests of the state without limitations on how much it has to put towards schools.
• We Texans, a limited-government and economic freedom advocacy organization, opposed Proposition 6. In an October 19, 2011 post they explained their reasoning: "The Permanent School Fund was established for the support of public schools in this state. The Texas Constitution limits the amount of money that may be transferred from the Permanent School Fund to the Available School Fund each year to 6% of the average market value of the Permanent Fund. One virtually needs a degree in finance to understand the complex language of this proposal but it would change the manner of calculating the market value of the Permanent School Fund. This proposition would make a larger amount of money available for transfer to the Available School Fund consequently reducing the amount available for investment growth in the Permanent School Fund."
• Empower Texans, a limited-government advocacy organization, opposed Proposition 6. In an October 7, 2011 post they explained their reasoning: "By allowing state government to take more money from the PSF in the short term, this amendment would endanger the principal of the fund thereby compromising future school funding."
• Texas Eagle Forum, a conservative and pro-family advocacy organization, opposed Proposition 6. In an October 7th, 2011 post they explained their reasoning: "Many legislators have wanted to use the PSF to help make up shortfalls experienced by Texas in previous biennium budgets, but the constitution has prevented this effort. This amendment would allow this access through the GLO. Legislators were so sure of the passage of this amendment, that the extra $300 million was included in the next biennium budget."

Donors

According to the state campaign finance database, there were no registered committees (PACs).

(last updated December 2011)

Media editorial positions

See also: Endorsements of Texas ballot measures, 2011

Support

• The Dallas Morning News supported Prop 6: In a October 16, 2011 editorial the Dallas Morning News supported Proposition 6 stating that "The Texas Legislature used various accounting maneuvers this year to ease cuts in the no-new-taxes state budget. Voters will have the final say on one of them, Proposition 6 on the Nov. 8 ballot. Passage wouldn’t produce a windfall, but neither would it raise taxes or compromise state finances. We urge support. "
• The San Antonio Express-News said,"Amending the Constitution should not be considered the solution to the state's public school finance crisis. The courts and the Legislature still need to resolve that. This proposition provides a much-needed infusion of funding for education while preserving the principal in the state's public school endowment."
• The Austin Chronicle said,"The income from sales and leases of property and royalties that must currently be returned to the corpus of the fund (where they can generate interest revenue for subsequent distribution) would under this amendment be available for direct distribution to the permanent school fund, which lends greater flexibility to the fund."
• The Corpus Christi Caller-Times said, "The Caller-Times Editorial Board recommends approval of all 10, and urges that all registered voters exercise their right to vote...Proposition 6...The Permanent School Fund goes by several names within the Constitution and this amendment would eliminate the confusion. It also would provide more potential funding to schools for classroom instructional materials and technology."
• The El Paso Times said, "The proposition would clear up constitutional language concerning the Permanent School Fund and would help provide support for public schools. After the recent Legislature debacle concerning school funding, this is a good idea."
• The Statesman said, "Ten proposed amendments to the Texas Constitution are on the ballot for your approval or disapproval. We recommend you vote for all 10."

Opposition

• The Conroe Courier of Montgomery County opposed Prop 6: In a October 22, 2011 editorial the Conroe Courier of Montgomery County recommended voters oppose Proposition 6.
• The Lufkin News said, "There is no doubt our public schools could use this money, but we would rather see the Legislature take real action instead of playing shell games with the PSF. For that reason we recommend a vote against Proposition 6 to send a message to the legislature that we need real public education financing reform."
• The Burka Blog, written by senior editor for the Texas Monthly Paul Burka, opposed Proposition 6. In an October 18, 2011 post he stated "The idea of letting the Legislature take money out of the endowment for public education gives me heartburn. Who knows how the Lege might spend the money? Remember when Craddick, Dewhurst, and Perry were talking about an infrastructure bank for toll roads?"
• The Star-Telegram opposed Prop 6.

Path to the ballot

See also: Laws governing direct democracy in Texas

The measure was passed by the Texas State Legislature on May 26, 2011, and was filed with the Texas Secretary of State May 27, 2011. HJR 109 passed the Texas State Senate by a vote of 31-0 and passed the Texas House by a vote of 143-0.

As laid out in Article 17 of the Texas Constitution, in order for a proposed constitutional amendment to be placed on the ballot, the Texas State Legislature must propose the amendment in a joint resolution of both the Texas State Senate and the Texas House of Representatives. The joint resolution can originate in either the House or the Senate. The resolution must be adopted by a vote of at least two-thirds of the membership of each house of the legislature. That amounts to a minimum of 100 votes in the House of Representatives and 21 votes in the Senate. SJR 4 was passed the Texas State Senate by a vote of 29-2.

Timeline

The following is a timeline of events surrounding the measure:

Event	Date	Developments
House vote	May 26, 2011	House voted 143-0 in favor of the proposed measure
Senate vote	May 26, 2011	Senate voted 31-0 in favor of the proposed measure
Certified	May 27, 2011	Measure received by the Secretary of State for the 2011 ballot

See also

• Texas 2011 ballot measures
• 2011 ballot measures
• List of Texas ballot measures
• Texas Legislature

Articles

• Election aftermath: 7 Texas amendments approved, 3 defeated
• Texans to vote on ten constitutional amendments next week

External links

• Texas House Research Organization: "Focus Report for Amendments Proposed in November 8, 2011 Election"