Permanent School Fund Reaches Record High Value
Commissioner of Education Michael Williams and Texas Land Commissioner Jerry Patterson announced today that the Permanent School Fund has become the nation’s largest educational endowment.
The Permanent School Fund (PSF) is an endowment fund, established by the Texas Constitution in 1854, that consists of fixed income and equity holdings, state lands, mineral rights, and royalty earnings. Created with an initial investment of $2 million, the PSF has flourished to approximately $37.7 billion in market value as of June 30, 2014.
PSF investments are primarily managed by the State Board of Education through Texas Education Agency staff, with a portion of PSF-owned lands and associated mineral rights managed by the Texas General Land Office.
The return on investments made by the Permanent School Fund is distributed by the State Board of Education to every school district in Texas on a per pupil basis. These funds are often used to purchase instructional materials.
“The substantial growth we have seen in the Permanent School Fund is largely due to Texas’ most recent oil boom,” Senator Kelly Hancock (R- North Richland Hills) said, “But the reason the PSF has remained a perpetual funding mechanism for public education is due to the conservative management by these state agencies.”
The Permanent School Fund was created to provide a continuous source of funding of public education for present and future generations of Texans. The PSF also provides for the guarantee of school district bonds, allowing districts to benefit from the equivalent of a AAA credit rating.
Senator Kelly Hancock, who was on the Birdville ISD School Board for thirteen years, said, “A substantial balance in the Permanent School Fund correlates to a higher bond rating, which translates into lower interest rates and substantial cost savings to taxpayers.”
Currently, the Permanent School Fund is distributing about $1.7 billion to school districts across the state for the 2014-15 biennium. Experts anticipate the fund distributing more than $2 billion during the next biennium.