Land Commissioner Jerry Patterson today told the Senate Finance Committee that the management of the state's Permanent School Fund is "dysfunctional" because responsibility is fractured among three entities: his office, the Texas Education Agency and the State Board of Education.
"It's not anyone's fault. It's just evolved that way," Patterson said. "It's remarkable it has performed as well as it has."
Senate Finance spoke with managers of the state's major investment funds Monday to determine how to improve accountability and transparency. In the case of the PSF, Patterson urged lawmakers to consider State Rep. Donna Howard's HJR 77, which would create a Permanent School Fund Investment Council to coordinate an investment strategy. Currently, Patterson believes that his office and the State Board of Education are at cross-purposes in investments, particularly real estate.
Finance chair Steve Ogden said he remains concerned about "transparency and accountability" at UTIMCO, despite reassuring testimony from A&M regent and UTIMCO board chair Earl Nye. "At a minimum, we need to pass legislation saying we are going to monitor you," Ogden said, referring not just to UTIMCO, but all of the state's major funds.
He said he was particularly troubled that the Teacher Retirement System and the Employee Retirement System will require significant increases in the state's contribution -- as early as next session -- to remain sound. "If there is not a dramatic increase in the markets, we will have to cut back benefits of people who are not yet retired," he said. "Otherwise, we'll be out of money in 20 years."
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