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Legislative analysts: Public Education Stabilization Fund at $250.8 million, 15% cap leaves room for more deposits
Summary
Legislative Services Office staff reviewed the Public Education Stabilization Fund (PSIF), reporting a $250.8 million cash balance, a statutory cap increased to 15% of state school funding, and a remaining capacity before the cap of roughly $189.6 million.
Jared Tedrow, deputy division manager in the Budget Policy Analysis Division of the Legislative Services Office, told the Joint Finance-Appropriations Committee that the Public Education Stabilization Fund (PSIF) held $250,880,000 as of July 1, 2024.
Tedrow said PSIF acts as a safety net for the public school support program: withdrawals occur when appropriations fall short and deposits occur when appropriations exceed the formula set in state law and committee guidance. He said the statutory cap, historically 8.334 percent of state funds appropriated to schools, was increased to 15 percent by legislation cited in the presentation as "House Bill 521." He summarized: "This fund is generating about $8.9 million each month in interest" and that 15 percent of current state funds for schools would equal about $440,390,000.
The presentation recapped the fund's history: initial legislative investment lifted the balance to about $112 million in 2006, the fund fell during the 2008–2011 period, and later legislative actions rebuilt the balance. Tedrow said deposits and withdrawals occurred from 2015–2021, when rising support units and appropriations caused withdrawals; committee transfers occurred in subsequent years. He noted that no deposits or withdrawals were recorded in fiscal year 2024 after committee language directed that any appropriated money be distributed to schools.
Tedrow told the committee that with the 15 percent cap equal to approximately $440.4 million and the current balance at about $250.9 million, there is a remaining capacity of roughly $189.6 million before the fund would reach the cap. He also noted a governor recommendation (as presented) to transfer $50 million into the fund on July 1, 2026, and estimated that if no additional action is taken, an additional $35 million–$40 million could be deposited at fiscal year end under current assumptions.
Why it matters: PSIF is part of the state's mechanism to stabilize K-12 funding through revenue cycles. A higher cap increases the fund's capacity to smooth school funding in downturns; conversely, reaching the cap redirects excess dollars to other statutorily designated accounts as specified in the referenced legislation.
The committee did not take formal action on PSIF during this presentation; the session recorded the fund review and the statutory context described by staff.
