You have to hand it to the far-right faction on the State Board of Education. They never seem to run out of bad ideas. This one is really terrible — a $100 million loan program for facilities for charter schools. The constitution vests in the SBOE the responsibility for managing the state’s endowment for public schools. Here is the language setting the standard for investments: [T]he the State Board of Education may acquire, exchange, sell, supervise, manage, or retain, through procedures and subject to restrictions it establishes and in amounts it considers appropriate, any kind of investment … that persons of ordinary prudence, discretion, and intelligence, exercising the judgment and care under the circumstances then prevailing, acquire or retain for their own account in the management of their affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. In other words, manage the state’s money with the same level of care that you would use in managing your own investments. I favor charter schools, but I would not invest in one. I have read enough stories about charter schools going bankrupt, or shutting down operations in the middle of the school year, to know that some are very marginal operations. That comes with the territory. Charter schools are attempting to break new ground, to operate free of the regulatory framework that often handcuffs public schools. But that doesn’t mean that the state should use its endowment to provide facilities for them. In no way — no way — is this a prudent investment. The state constitution limits the ways in which income from the Permanent School Fund can be spent. It reads: The legislature by law may provide for using the permanent school fund to guarantee bonds issued by school districts or by the state for the purpose of making loans to or purchasing the bonds of school districts for the purpose of acquisition, construction, or improvement of instructional facilities including all furnishings thereto. The constitution mentions only school districts. It does not mention charter schools. What the SBOE wants to do requires a constitutional amendment. I want to yield the rest of my space to Thomas Ratliff, a newly elected member of the SBOE, who posted the following comment to the online version of Terrence Stutz’s story in the Morning News. Ratliff writes: Sorry for the scarcasm, but I don’t know how else to respond to something like this. I think the SBOE needs to amend the Social Studies TEKS regarding free market principles. Here’s a suggestion, based on yesterday’s vote. “We support free market principles that made this country great. We support the courageous men and women who strike out on their own to start their own business, create jobs, and fuel the economic engine. However, if you are unable to be successful on your own, and if your business finds itself in favor with a select few (7 to be exact) elected officials, come on down for your share of the $100 million government-subsidized sub-prime loan program and we’ll help you succeed.” I think this is exactly the kind of message the 4.5 million school children need to hear. It will make them feel so much better about their future. Don’t worry, the government will always be here to back you up. Washington D.C., the ball is in your court. Try to top this. And this is a board that is controlled by “conservative” Republicans? To be clear, charter schools need facilities funding assistance and I support their role in the education landscape in Texas. I just don’t see how this idea makes sense from a FINANCIAL perspective, which is the Constitutional requirement for investments from the PSF. “Maximize return and minimize risk” is what the SBOE’s fiduciary counsel said. This is “social investing” not “financial investing” and it is a BAD idea. This will just add fuel to the fire for the Texas Legislature to consider taking the PSF away from the SBOE. Lastly, while $100 million may not seem like much to some members of the SBOE, it is a lot of money to most Texans. It’s hard to imagine how this much money can be described [by a proponent of the loan program–pb] as “rounding error”.
Politics & Policy