Tag Archives: Rainy Day Fund

The Rainy Day Fund Roadshow Makes a Stop in the House Appropriations Committee

The House Appropriations Committee, similar to its counterpart in the Senate, heard a number of interim charges Wednesday. Of note for public education, and for educators in particular, was an interim charge to continue to study strategies to use the Economic Stabilization Fund (ESF), also known as the “rainy day fund,” to generate additional revenue for state obligations without compromising the fund’s intended purpose. The charge instructed lawmakers to evaluate the current methodology used to set the ESF cap.

The committee heard testimony on ESF investment history, utilization, and investment practices from the Legislative Budget Board, the state comptroller, and the Texas Taxpayers and Research Association, whose executive director helped draft the legislation that brought the ESF into existence.

Read more about Comptroller Glenn Hegar’s plan to invest ESF dollars to create new revenue stream to fund state priorities and why that revenue is needed, in this previous Teach the Vote post.

Making better use of the state’s rainy day fund when it’s not raining

The Senate Finance Committee met today to take up a number of Senate interim charges. Among them, the committee took up the charge to examine options to increase investment earnings of the Economic Stabilization Fund in a manner that minimizes overall risk to the fund balance and to evaluate how the Economic Stabilization Fund constitutional limit is calculated; considering alternative methods to calculate the limit, and alternative uses for funds above the limit.

the Texas Economic Stabilization Fund, often referred to as the state’s rainy day fund, is a mechanism that diverts a part of the severance taxes the state collects on oil and gas production and sets those monies aside to fill budget shortfalls resulting from temporary economic downturns. The fund, which has been used many times since its inception, has in recent years grown to approximately $11 billion, larger than at anytime in its history.

During the last session lawmakers facing stiff budget constraints began to discuss how they could better utilize the rainy day fund, other than continuing to stuff cash into the state’s proverbial mattress. One idea floated by Texas Comptroller Glenn Hegar was to take a portion of the fund and invest it as an endowment such that the investment returns could be used to help pay for state priorities, like shoring up the state’s pension funds. Legislators were not comfortable acting on that idea without more time to vet it.

In today’s hearing Hegar reintroduced the idea of investing the whole of the rainy day fund in very liquid assets that would allow for a return that roughly matches the inflation rate and investing a portion of the fund, in excess of what legislators think they might need quick access to, in less liquid assets that would generate a higher return. The Comptroller’s office predicts that an investment of $3 billion, with additional biennial investments over a certain threshold, would within 10 years accumulate to a fund that generates $1 billion a year in usable revenue. In 20 years, that projection jumps to more than $2 billion a year. The idea was received fairly favorably.

One of the things the state has used the rainy day fund for in recent years is to justify credit rating firms’ assignment of a AAA (the highest) credit rating to the state. Having a AAA rating allows the state and school districts through the Permanent School Fund (PSF) bond guarantee program to pay the lowest possible rate on bond debt. It was pointed out in the hearing however, that the rainy day fund is only one factor those firms look at when assigning a score. Another, more heavily weighed factor is the health/unfunded liabilities of a state’s pension funds. Both TRS and ERS need improvement to ensure the state is able to keep its current rating. A downgraded rating could cost the state billions in additional interest over the life of the state’s and school dostricts’ many bonds.

Teach the Vote’s Week in Review: April 7, 2017

It was another big week at the Texas Capitol. Here’s the latest news from ATPE:


The Texas House passed its version of the general state budget bill in the early morning hours of April 7 after nearly 16 hours of lively debate. Senate Bill (SB) 1 provides for appropriations for state needs over the next two fiscal years. It also sends a strong message about attitudes in the House toward private school vouchers.

As approved unanimously by the Senate on March 28, the $106.3 billion bill provided for school enrollment growth and needs of the Foundation School Program, but did little to address the looming funding crisis for TRS-Care or add any additional support for public education to offset cuts from recent years. The House Appropriations Committee, chaired by Rep. John Zerwas (R-Fulshear), substituted its own language into the bill during a March 29 committee hearing, and then the House considered hundreds of additional amendments in yesterday’s floor debate.

Lobbyists at budget debate

ATPE Lobbyists Kate Kuhlmann, Mark Wiggins, and Monty Exter awaited the House’s budget vote Thursday night.

As finally passed, the House’s version of SB 1 creates a $218.2 billion budget, which includes tapping into the state’s Economic Stabilization Fund (rainy day fund) to the tune of $2.5 billion to help address critical needs like an extra $500 million for retired educators’ rising healthcare costs. The final House vote on the bill was 131-16, well above the two-thirds threshold needed for accessing the rainy day funds.

Leading into yesterday’s floor debate, the House Calendars Committee had already adopted a “put and take” rule requiring that any amendment to the budget that proposed spending more money in one area must cut an equal or greater amount of spending from another area of the budget. That rule resulted in several heated arguments among House members as representatives looked to raid each other’s favored programs for funding sources.

Voucher vote boardWithout question, though, the most dramatic votes of the night included multiple votes taken to prohibit the funding of private school vouchers. The House first considered Amendment #8 by Rep. Abel Herrero (D-Corpus Christi) to prohibit the use of certain state funds provided to the Comptroller for private school vouchers. At ATPE’s request, Rep. Gary VanDeaver (R-New Boston) filed Amendment #9, an amendment to Herrero’s amendment, to ensure that the legislature could not spend any public funds on private school vouchers. ATPE supported both of these amendments, which the House passed overwhelmingly. Freshman Rep. Briscoe Cain (R-Deer Park) offered another amendment #10 to try to carve out an exception that would allow the legislature to fund vouchers for low-income families, but the House similarly rejected that measure by tabling the Cain amendment. View the unofficial vote breakdown for these amendments here. ATPE thanks all the legislators who voted to prevent the legislature from wasting taxpayer dollars on unregulated private and home schools and appreciates all the educators who took time to contact their legislators about these important votes.

The House budget votes this week spell disaster for the voucher legislation heavily favored by Lt. Gov. Dan Patrick and Gov. Greg Abbott. The primary voucher bill, SB 3 by Sen. Larry Taylor (R-Friendswood), passed the Senate on March 30 by an 18 to 13 vote. Leaders in the House including House Public Education Committee Chairman Dan Huberty had already expressed doubt that the voucher bill would survive after being sent to the lower chamber. Yesterday’s budget votes punctuate that sentiment, evidencing a clear lack of support for vouchers this session in the Texas House. For more on the significance of yesterday’s voucher-related budget votes, read this article from The Texas Tribune republished on our blog.

 


Earlier this week, the House Public Education Committee heard a number of bills dealing with special education and also approved a bill aimed at improving the state’s much-criticized A-through-F accountability system for school campuses. As ATPE Lobbyist Mark Wiggins reported on our blog, the committee unanimously passed Chairman Dan Huberty’s (R-Kingwood) House Bill 22 on Tuesday.

The committee will meet again on Tuesday, April 11, with a lengthy agenda. Its Subcommittee on Educator Quality will meet Monday, April 10, to consider several bills pertaining to educator preparation and certification. ATPE will be there to weigh in on bills of interest, of course. Stay tuned for more details next week on our Teach the Vote blog.

 


TRS logoThe Teacher Retirement System (TRS) board of trustees also met this week. ATPE Political Involvement Coordinator Edwin Ortiz attended the April 6 meeting and provided this report.

First, TRS investment managers shared news that the overall pension fund is performing considerably well despite economic uncertainty leading up to the 2016 elections. The fund is actuarially sound and has enough money to pay for its retirement benefit obligations until 2048.

The board meeting also addressed cyberattack prevention and defense measures being undertaken by the TRS staff. With cybersecurity threats dominating the news lately, TRS has been taking the necessary steps to secure members’ information by implementing safeguards that would prevent any cyberattackers from gaining access to the TRS system. Hackers are becoming bolder and using every method to gain access to vital information such as Social Security and bank information, but TRS staff along with security vendors are working to keep one step ahead of cyber criminals.

Finally, TRS Executive Director Brian Guthrie provided the board with a legislative update. Mr. Guthrie explained that he and his staff are tracking various bills and working closely with certain legislative offices on specific pieces of legislation that are of concern. One such bill is Senate Bill (SB) 788 by Sen. Joan Huffman (R-Houston) that would reform TRS-Care. The bill sparked some discussion at Thursday’s board meeting because of sweeping changes it proposes, including the elimination of TRS-Care 1, 2, and 3. As it’s currently written, SB 788 would require a high-deductible plan for participants under the age of 65 and a Medicare Advantage plan for anyone eligible for Medicare.  Mr. Guthrie indicated that he would continue to work with the stakeholders to ensure that retirees feel a minimal impact, but agreed that something needed to be done this session because of the increasing healthcare costs.

ATPE members can find additional information about TRS bills being considered this session by logging into Advocacy Central.

 


ATPE Lobbyist Kate Kuhlmann provided a blog update on this week’s work by the Senate Education Committee. Its deliberations included some controversial bills relating to home school students and charter school partnerships. Read more in Kate’s post here.

Also this week, the Senate Committee on State Affairs heard SB 179 by Sen. Jose Menendez (D-San Antonio) to address the growing problem of cyberbullying. ATPE supports the bill, which has been named David’s Law in memory of San Antonio teenager David Molak who tragically took his own life after being cyberbullied. The bill calls for tougher civil and criminal penalties for those who use electronic messaging to urge victims to commit suicide, and provides for prompt response and notifications when school officials learn about cyberbullying incidents.

 


 

Vote for candidates who will prioritize education funding

This post is the first in a new Teach the Vote series: A Dozen Days, A Dozen Ways to Vote Your Profession. From now through the March 4 primary election, we’ll explore a top education issue each day– one that is likely to be discussed in the policymaking arena over the next two years. We hope to show you exactly what’s at stake and why it’s so important to elect candidates who will support public education.


At issue: The State of Texas is once again defending itself in a massive school finance lawsuit. Although the case is still pending, a district judge has already said that the state’s system of funding public education is unconstitutional, which means it fails to fund our schools adequately or equitably. Most educators would agree with that, considering these facts:

  • Texas is among the 10 lowest states in the nation in terms of per-pupil expenditures.
  • After adjusting for inflation, state spending on public education rests at about the same level it did in 2003.
  • Our outdated system for equalizing school district funding doesn’t work: Current annual funding ranges from $5,000 to $12,000 per student depending on where the student lives.
  • Even though our student population grows by nearly 80,000 children each year, the teacher population is shrinking because districts can’t afford to hire more personnel.

Legislators have the power to fix our broken school finance system: While schools struggle to do their best with insufficient funds and recover from the devastating 2011 budget cuts (which were only partially restored last session), the Texas economy is flourishing. Revenue estimates from taxes and other sources are on the rise, and by the end of 2015, it’s estimated that Texas will have a budget surplus of $2.5 billion, as well as $8 billion in the Rainy Day Fund (according to Moak, Casey and Associates, Inc.). Shouldn’t we elect legislators who support increasing state funding for public education so that we reach an adequate level of funding and make sure all students can benefit, regardless of where they live?

Your vote in the March primary is the best way to fund education now: If you have a contested Republican or Democratic primary in your district, your vote now will either shape or decide the outcome of the November general election and what it means for public education. Early voting continues through Friday, Feb. 28, and Tuesday, March 4, is election day, so get out and vote.

Find out how your lawmakers voted and see firsthand if history repeats itself: Visit our 2014 Races page to view profiles of the legislative candidates in your districts. Open the Voting Record section to find out whether your incumbent voted to increase public education funding in the budget last year. Pay attention to the candidates’ answers to our first three survey questions, which relate to education funding. Pro-public education candidates will make school finance a top priority, and they need your vote in the upcoming primary.