If the SBOE invested the SLB's cash on hand, it could make more money for education.
FACT: This assertion is based upon the assumption that the SBOE can temporarily invest the SLB's cash in a pro-rata fashion across its existing diversified portfolio and generate a higher investment return than the Texas Safekeeping Trust Company currently earns on the SLB's cash (on March 13, 2019, the yield on the SLB's cash invested by TSTC was 2.55%). This is a flawed assumption because the SBOE's investment portfolio is not structurally liquid, and the SLB needs the liquidity necessary to fund capital calls from its external investment managers at any time and in any amount, up to the full amount of its existing capital commitments.
Therefore, the SBOE would need to temporarily invest the SLB's cash in a highly liquid format, which would generate returns lower than its existing diversified portfolio. While it is possible that the SBOE could generate a rate of return on the SLB's cash through a portfolio of highly liquid investments that exceeds that generated by TSTC, it is doubtful that it would be meaningfully higher, and unless segregated into an account separate
from the SBOE's diversified portfolio, it would likely produce a "cash drag" effect on the overall SBOE portfolio that would significantly reduce the SBOE's overall investment returns.
If the SLB gave the cash directly to the SBOE they would make more money for the PSF, and they would then be able to give additional money to the Available School Fund.
FACT: False, there is no support for this statement. Under the past four years of Commissioner Bush's leadership, the SLB agreed to release 6% of the trailing 16-quarter average market value of its investment portfolio either to the SBOE for investment in the PSF or directly to the Available School Fund. In contrast, the SBOE has historically released approximately 3% of the trailing 16-quarter average market value of its investment portfolio to the Available School Fund. However, the SBOE is allowed to release up to 6%, so if it wants to release more to the ASF, it can easily do so without receiving more from the SLB. The attached chart shows the SLB's total contributions to the SBOE and ASF since 2002.