FOR IMMEDIATE RELEASE
March 25, 2024
CONTACT: Nicole Hill, press@texasaft.org
SBOE puts duty to donors over duty to schools and Texas taxpayers
Texas State Board of Education Chairman Aaron Kinsey announced a reckless divestment of public school funds despite warnings from his own staff.
AUSTIN, Texas — Last week, Texas State Board of Education Chairman Aaron Kinsey announced his unilateral decision to divest $8.5 billion in Permanent School Fund assets from wealth manager BlackRock, ostensibly in response to 2021’s Senate Bill 13.
Contrary to Kinsey’s claims, Texas law does not require divestment if it is not in the best financial interest of the fund. In fact, Kinsey’s own staff warned of the likely increased costs — in both higher fees and lower returns — should the SBOE cut ties with the investment giant. That Kinsey would move forward anyway, without so much as notifying his colleagues on the board, speaks volumes of where his priorities lie.
This reckless move comes amid extreme school funding shortages in Texas, which have led to mass layoffs and school closures across the state. Like Gov. Abbott, Texas Republicans are once again gambling away needed funding for our schools on a wing and a prayer of garnering favor with billionaire donors.
Zeph Capo, president of Texas American Federation of Teachers, issued the following statement:
“Earlier this month we saw West Texas oil barons buy seats in the Texas Legislature; this week we’ve seen them buy control of our public education dollars.
Texas AFT strongly condemns Texas State Board of Education Chairman Aaron Kinsey’s announcement to divest more than $8.5 billion of Permanent School Fund investments from BlackRock with no apparent plan to reinvest these dollars for the benefit of Texas schools. At the behest of his billionaire donors who stand to profit from this move, Chairman Kinsey is playing political games with our public education dollars at a time when Texas schools are critically underfunded.
Public schools are funded by our tax dollars, and any move that increases costs or reduces returns for the PSF will inevitably require Texas taxpayers to make up the difference. Over the decades that the Permanent School Fund has contracted with BlackRock, the money manager has provided consistent investment returns at a reasonable price point. In just his second month as chairman of the SBOE, Kinsey now seeks to terminate this major contract over spurious claims that BlackRock is ‘boycotting energy companies.’
Upon announcing the divestment, Chairman Kinsey stated the PSF has a ‘fiduciary duty’ to safeguard oil and gas royalties. Chairman Kinsey is mistaken. As a steward of the Permanent School Fund, Chairman Kinsey’s fiduciary duty is to safeguard the returns of the investment fund, not to safeguard oil and gas revenues.
With this move, Chairman Kinsey is representing his campaign donors, not his constituents. According to campaign finance reports, Kinsey’s campaign received nearly $100,000 donations from the oil & gas sector and individuals associated with it — the largest source of donations out of all industrial sectors.
Having bought control of the SBOE, it is clear what West Texas oil billionaires intend to do with their power over public education: enrich themselves. Texas voters must ensure that these monied interests don’t take further control of the legislature or the State Board of Education this November.”
###
The Texas American Federation of Teachers represents 66,000 teachers, paraprofessionals, support personnel, and higher-education employees across the state. Texas AFT is affiliated with the 1.7-million-member American Federation of Teachers and the AFL-CIO.