June 2026 Committee on School Finance and Permanent School Fund Item 3

Report of the State Auditor’s Office Related to the Certification of the Bond Guarantee Program for Fiscal Year 2025

June 25, 2026

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION

SUMMARY: This item provides an opportunity for the committee to discuss a report from the State Auditor’s Office (SAO) regarding the SAO’s certification of the Bond Guarantee Program (BGP) for fiscal year 2025.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §2 and §5; Texas Education Code (TEC), §45.053(b) and §45.0531(b).

The Texas Constitution, Article VII, §2 and §5 establish the Permanent School Fund (PSF), the assets that comprise the permanent school fund, the bond guarantee program, the available school fund, and authorize the State Board of Education (SBOE) to manage and invest the permanent school fund in accordance with the prudent person standard.

Statute requires the SAO to analyze the status of (1) guaranteed bonds and certify that the amount of such bonds is within limits prescribed by law, and (2) the reserved portion compared to the cost value of the PSF.

The full text of statutory citations can be found in the links above.

BACKGROUND INFORMATION AND JUSTIFICATION: Statute requires the state auditor to analyze annually, the status of guaranteed bonds under TEC, Chapter 45, Subchapter C as compared to the cost value of the permanent school fund. Based on that analysis, the state auditor shall certify whether the amount of bonds guaranteed under Subchapter C is within the limit prescribed by TEC, §45.053.

Statute requires the state auditor to analyze the status of the reserved portion compared to the cost value of the permanent school fund. Based on that analysis, the state auditor shall certify whether the portion of the permanent school fund reserved from use in guaranteeing bonds under this subchapter satisfies the reserve percentage established pursuant to TEC §45.0531(a).

Staff Member Responsible:
Jared Stout, Deputy Chief Investment Officer, Texas Permanent School Fund Corp.

Attachment:
SAO Audit Report on the Certification of the Permanent School Fund’s Bond Guarantee Program for Fiscal Year 2025