AUSTIN – The Permanent School Fund is nonspendable except for specific distributions and payments that are authorized by the state constitution and it must be classified as such in financial reports, the state attorney general said in a Jan. 7 opinion.
Texas Attorney General Ken Paxton issued a four-page opinion on Jan. 7 clarifying the issue of the funds and their report as directed by law after an opinion was requested by General Land Office Commissioner George P. Bush, who submitted the question May 10, 2018.
"...I am requesting an opinion concerning the government fund balance reporting distinction between nonspendable and restricted amounts; specifically, if some portion of the Permanent School Fund is nonspendable, 1) what is that dollar amount, and 2) if that dollar amount is prospectively variable, how should it be determined with respect to future annual revenue classifications?" Bush asked.
As stated in Paxton's opinion, "the Permanent School Fund is 'a perpetual endowment for the public schools of this state,'" which "consists of all land appropriated for public schools by the constitution or state laws, other properties belonging to the fund, and all revenue derived from the land, other properties, or investment of properties belonging to the fund."
The State Board of Education and the General Land Office are allowed, per the opinion, to "make limited annual distributions from the Permanent School Fund to the Available School Fund for the support of the public schools."
Paxton also stated in the opinion that "the Texas constitution authorizes certain specific distributions and payments, meaning a portion of the Permanent School Fund qualifies as something other than nonspendable," which can be used for management of the school land and for investments, coming from revenue generated from properties that cannot exceed $300 million a year.
The opinion also recommends that the General Land Office considers the fund nonspendable as well as to make funds restricted.
"In consultation with the comptroller and the State Board of Education, the General Land Office is in the best position to determine the appropriate amounts to include as nonspendable or restricted in the fund balances on the annual financial report of the General Land Office," Paxton said.