Increasing Pressure Comes To Bear On State School-Fund 'Nest Eggs'

By Robert C. Johnston

Texas lawmakers could scarcely have imagined the rich harvests they would reap from the $2 million they set aside in 1854 to support public schools.

Nurtured over the years by the proceeds from 46.5 million acres of land--much of it covering oil--the fund grew wildly. Mineral royalties, leases, and investments have boosted the value of the 142-year-old fund to $13 billion, and last year it generated $1.4 billion for textbooks and state school aid.

But Texas and some two dozen other states with "permanent school funds"--money or land set aside to generate interest for public schools--are experiencing growing pains. Under pressure to maximize revenues, policymakers are weighing the risks of more aggressive investments. And people are even asking who should manage the billion-dollar nest eggs--in-house staff...