Something’s Rotten Here

In today’s Texas Tribune story about the State Board of Education‘s management of the Permanent School Fund (PSF), much of the focus has been on this inane quote from board member David Bradley, R-Beaumont Buna:

“If you sit on the mental health commission, do you have to be retarded? If you sit on the [Texas Alcoholic Beverage Commission], do you have to be a drunk?”

Bradley was arguing that the board — made up mostly of non-finance types, like a dentist, lawyers, an insurance salesman and political activists — could do a fine job of managing the massive PSF. But perhaps more interesting was Bradley’s sneering criticism of the fund’s permanent professional staff. He told the Tribune that the staff simply couldn’t be trusted because those employees work for the Texas Education Agency instead of reporting to the state board:

“Staff usually works against the board. Sometimes staff can facilitate an agenda of their own.”

And what agenda would that be, Mr. Bradley? Is the professional staff you hold with such contempt interested in something more than maximizing the return on investments for a fund that benefits Texas kids and public education? If that’s what you mean, bring forth the evidence.

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Talking Points

From today’s TFN News Clips:

“If you sit on the mental health commission, do you have to be retarded? If you sit on the [Texas Alcoholic Beverage Commission], do you have to be a drunk?”

— Texas State Board of Education member David Bradley, R-Beaumont Buna, arguing that state board members don’t need to be finance experts to manage the $23 billion Permanent School Fund. Really.

Stay informed with TFN News Clips, a daily digest of news about politics and the religious right. Subscribe here.

Finger Pointing at the Texas SBOE

Once again we see evidence that the Legislature made a huge mistake last spring by not letting Texas voters decide whether to strip the State Board of Education of authority over managing the Permanent School Fund. (Republican leaders in the state Senate helped kill that and a number of other SBOE reform bills.) It has become increasingly apparent that board decisions on curriculum and textbooks are influenced by political shenanigans over how to invest the $20+ billion in the PSF. See here and here for earlier posts on this. Now the San Antonio Express-News reports that board members at the center of those shenanigans are pointing fingers at others.

Ethics Complaints Target Texas SBOE Members

An Austin-based ethics watchdog filed complaints Monday with the Texas Ethics Commission against two State Board of Education members for not disclosing gifts they reportedly received from a firm seeking investment business with the board. The complaints filed by Texans for Public Justice urged the commission to determine whether Rick Agosto, D-San Antonio, and Rene Nuñez, D-El Paso, violated public disclosure laws.

This is the latest development in the growing controversy over ethics concerns involving the state board’s management of the Permanent School Fund. The more than $20 billion fund pays for textbook purchases. The Texas Freedom Network has also called on state legislators to investigate ethics concerns swirling around the board.

Mr. Agosto and Mr. Nuñez have denied that they violated any disclosure laws, and a state board committee discussed revising ethics policies at a meeting earlier this month.

All of this comes just months after the Texas Senate failed to give voters the opportunity to remove the state board’s authority over the Permanent School Fund and give it to a panel of finance experts. The Texas House had overwhelmingly approved measures doing so.

Reality vs. Perception on SBOE Ethics?

On Friday two Texas State Board of Education members at the center of recent stories about ethics concerns denied that they have done anything wrong. Check out reports on this from the Houston Chronicle, Austin American-Statesman and Dallas Morning News.

The denials came on the same day the state board’s Finance/Permanent School Fund Committee discussed whether the board should make any changes to its ethics policies. Some committee members argued that those policies should be clearer, should align more closely with policies for other state agencies and should make reporting requirements the same for board members and firms bidding for the board’s business. They also wanted to give board members time to review and possibly contest any questionable statements in bidders’ disclosure forms before those disclosures are made public.

State board chair Gail Lowe, R-Lampasas, said she especially wanted changes that would encourage board members to avoid even the perception of ethics problems when they carry out their official duties.

Well, that suggestion sounds good to us. Obeying the letter of the law might protect board members from prosecution, but it won’t necessarily assure the general public that members aren’t seeking private benefit from their official actions. For example, a policy might forbid or at least require disclosure of private contact with a bidder during a specified period. But why shouldn’t a public official voluntarily disclose other contacts outside that period, simply as a way to assure the public that there are no hidden personal agendas?

Moreover, wouldn’t it be in the best interests of all involved for a public official to recuse himself or herself from decisions regarding bidders with which he or she has had prior contact and possible business dealings? Doing so doesn’t suggest that public official has done anything wrong. To the contrary, doing so reassures constituents that decisions are being made in the best interests of the public good, not for personal gain.

Ms. Lowe is right: board members should act, when possible, in ways that avoid even the perception that something is not appropriate. That’s common sense.

But we would like a real answer to this question: why did Ms. Lowe and other members of the state board’s far-right faction vote as a bloc to hire a new investment consultant when other board members had voiced serious concerns about possible ethics problems involving that decision? Not only that, but the Permanent School Fund‘s staff had rated the firm lower than the consultant the far-right bloc essentially voted to fire. And the firm the far-right bloc voted to hire had submitted a substantially higher bid.

If Ms. Lowe is really concerned about perceptions, she should seriously review and explain her own votes. So should her colleagues.

TFN Calls for Lege to Investigate SBOE Ethics

The Texas Freedom Network issued the following press release today:

The president of the Texas Freedom Network today called on state lawmakers to investigate ethics concerns swirling around the Texas State Board of Education’s management of the Permanent School Fund and to reconsider their failure this spring to let voters decide whether the board should continue to manage the fund.

SBOE Committee to Discuss Ethics Concerns

This requires close watching. Faced with growing a growing list of ethics concerns regarding the Texas State Board of Education‘s management of the Permanent School Fund, the board’s Finance Committee is meeting on Friday to review ethics rules. The Austin American-Statesman has the story here. What isn’t clear, however, is whether some board members are more interested in weakening ethics rules than in cleaning up the problems.

New Revelations on SBOE Ethics Concerns

The Dallas Morning News just dropped another ethics bomb on the Texas State Board of Education. The newspaper reports that two board members “have received thousands of dollars in gifts from a company seeking a lucrative contract with the board, records show, and those members have not reported the gifts on financial disclosure forms.”

Today’s story follows on others recently that have detailed ethics concerns regarding the board’s management of the Permanent School Fund. (See here, here and here.)

From today’s Morning News story:

Growing Concern over Texas SBOE Ethics

A major story and two scathing editorials in the last few days show that concerns over possible financial shenanigans and vote-trading on the Texas State Board of Education are growing.

We told you last week about ethics concerns (see here and here) surrounding the state board’s management of the Permanent School Fund. Today the San Antonio Express-News looks closer at concerns over the involvement of San Antonio board member Rick Agosto. And on Friday the Express-News and Dallas Morning News published strong editorials about the issue. Read on.

Money and Politics at the Texas SBOE, Part II

(Click here for Part I of this series.)

The Texas Freedom Network and other observers have long been puzzled about why Rick Agosto, a San Antonio Democrat, has often sided with the State Board of Education’s far-right faction since his election in 2006. He has done so even when all other Democrats — and even some Republicans (who are not part of the far-right faction) — have refused to do so.

The revelations this weekend in the Dallas Morning News and the Austin American-Statesman about ethics concerns surrounding the board’s hiring of an investment consultant raise more questions about Mr. Agosto’s relationship to the board’s far-right faction. More importantly, perhaps, they reinforce the need for the Legislature to ensure that decisions about what Texas children learn in their public school classrooms are not held hostage to political games involving management of the $20.5 billion Permanent School Fund. Read on.

Money and Politics at the Texas SBOE, Part I

Earlier this year the Texas House voted overwhelmingly to shift authority over the Permanent School Fund (PSF) from the State Board of Education to a panel of financial experts. Senate Republican leaders, however, let the measure die without even a hearing. Now they may have good reason to regret that decision.

On Sunday the Dallas Morning News and the Austin American-Statesman ran separate stories about ethics concerns surrounding the state board’s management of the PSF. The $20.5 billion fund is the second largest educational endowment in the country. That money funds the purchase of textbooks and other school supplies and guarantees bonds issued by local school districts.

There is more to the story than what was reported on Sunday by the Morning News and Statesman. But first, here’s a summary of what we saw as some key points in the two stories:

–  The stories detail ethics concerns regarding recent board votes to hire a new general investment consultant, Massachusetts-based New England Pension Consultants (NEPC), to help board members manage the PSF.

– Some state board members say they were not told that several members of PSF’s executive staff expressed concerns about potential ethics violations by board members involved with the decision to hire NEPC.

– NEPC’s primary champion on the state board was Rick Agosto, D-San Antonio, who works as a marketer for institutional investment firms in his private business. According to the Morning News and the American-Statesman, Mr. Agosto had prior business contacts with NEPC and was seeking the firm’s help in getting investment business for one of his clients.

– NEPC won the PSF contract from the state board despite submitting the highest bid and receiving the lowest ranking from the PSF’s professional staff. The firm’s first bid, $1.045 million per year, was more than twice the bid of each of its competitors, $430,000 and $448,251. NEPC subsequently lowered its bid to $580,000 per year, but even that figure was still the high bid by a substantial margin.

– Mr. Agosto suggested to the American-Statesman that questions about his relationship with NEPC were politically motivated. Some board members, he alleged, “like to use things like this … and create controversy, and they even have certain staff members on their side.” From the American-Statesman story:

“There is total mistrust between the staff and the board,” Agosto said. He lamented that (Texas Education Commissioner Robert) Scott, not the board, has the authority to hire or fire the investment staff.

That could change.

At the most recent Permanent School Fund meeting, the committee asked that a management study be conducted to look at adopting a structure similar to that of the University of Texas Investment Management Co., a private nonprofit corporation that oversees several higher education funds.

Such a change would put the staffing decisions solely in the hands of the State Board of Education.

So now some board members want even more authority over the Permanent School Fund. Specifically, they want the board to oversee the jobs of the finance professionals who help run the PSF for Texas taxpayers.

But there’s even more to this story that went unreported by the Dallas Morning News and the American-Statesman. TFN Insider digs deeper into this shady situation in Part II.