The State Board of Education (SBOE) broke into committees Thursday, and the Committee on School Finance/Permanent School Fund took a look at legislation passed by the 85th Texas Legislature.
Effective September 1, 2017, House Bill (HB) 89 prohibits state agency contracts with and investments in companies that boycott Israel. The state comptroller is currently compiling a list of companies that could fall under this category. Agencies would be required to submit a report by January 1 of each year to the legislature and the office of attorney general. This affects the SBOE due to the board’s role in overseeing investments of the Permanent School Fund (PSF).
Committee chair David Bradley (R-Beaumont) asked whether HB 89 would require the board to scrub hedge fund portfolios. Staff advised that in such cases, the board may not necessarily be required to divest. Staff suggested the board may not be required to comply with HB 89 in the event that doing so would violate the board’s fiduciary responsibility.
Similarly, Senate Bill (SB) 253 relates to companies that engage in business in Sudan or Iran or with terrorist organizations. This legislation does not specifically name SBOE or the PSF, so staff advised that the board is likely unaffected.
SB 1480 phases in a higher capacity for charter schools to access the Bond Guarantee Program (BGP), which guarantees bonds for public and charter schools by backing them with the PSF. This enables public and charter schools to access better interest rates. The total capacity available to charters was $1 billion on January 1, 2017. SB 1480 will increase the total capacity to $5.4 billion over five years, increasing by about 20 percent, roughly $800 million, each year. The SBOE will have to determine the exact percentage of increase each year, beginning in September.
The committee also approved changing the definition of tax collections used to calculate state aid for ad valorem tax credits. Texas Education Agency (TEA) staff recommended the change to conform the rules to align with statute. Instead of the current process in which a refund is issued after taxes are collected, the tax credit will be excluded from collection.
The board will conclude its June meeting on Friday.