A Report on the Audit of the Permanent School Fund's Fiscal Year 2004 Financial Statements Page: 3 of 11
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A Report on the Audit of the
Permanent School Fund's Fiscal Year 2004 Financial Statements
SAO Report No. 05-026
clarifying this language in statute. This issue is discussed in Chapter 3 of this
report.
Discussion of Change to Total Return
A constitutional amendment that went into effect on September 29, 2003, now
requires distributions from the Permanent School Fund to the Available School
Fund to be paid from the cumulative total return of all investment assets. (Total
return is the sum of investment gains and current income such as interest and
dividends.) Previously, investment gains had to be retained, and current income
had to be paid directly to the Available School Fund. This approach required an
investment focus that delivered the desired level of annual current income for
distribution. Because investments no longer have to be managed to produce high
levels of current income, the asset allocation can be shifted to an investment mix
intended to produce higher levels of total return.
In addition, the Agency's Investment Office's administrative and operating
expenditures and the General Land Office's school land management expenditures
are now paid from the Fund.
Table 1
Current Income (prior to effective date of constitutional amendment) $ 770 $ 55
Total Return Distribution (after effective date of constitutional amendment) N/A 825
Regular Annual Distribution 770 880
One-time adjustment due to action by 78th Legislature, for fiscal year 2003 only 127 0
Sources: Permanent School Fund Annual Reports
Summary of Information Technology Review
Overall, the Agency information systems that support the Fund appeared to be
working properly and enabled the Fund to report financial results accurately.
Tests of reconciliations and financial transactions processed by the information
systems indicated that amounts reported in the financial statements were
accurate. As part of obtaining an understanding of internal control relevant to the
audit of the fiscal year 2004 financial statements, we performed limited general
and application control review procedures for the Agency's major investment
information systems related to the Fund.ii
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Texas. Office of the State Auditor. A Report on the Audit of the Permanent School Fund's Fiscal Year 2004 Financial Statements, report, February 2005; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth518380/m1/3/?q=%22~1~1%22~1&rotate=0: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.