File this is in the "you can't make this stuff up" file, under Texas State Board of Education. After the utterly bizarre meeting in May where the term "free market" was substituted for "capitalism", Board members decided to take funds set aside since the beginning of Texas and make a market.

Well, not make a market so much as subsidize one that was floundering. As I've mentioned before, the Permanent School Fund was established to make sure that Texas schoolchildren get an education. Trustees of the fund are charged with making decisions according to the "prudent man" rule.

The prudent man rule is very specific, and very, very limited. It says that not only must investment decisions be made in a way that protects the interests of the beneficiaries of the fund (the schools), but it goes one step further. If a Trustee is bound by the prudent man rule, they must make decisions in a similar fashion as one who is familiar with such matters might.

That's a key concept right there. It's not enough for these Trustees to say they believe making a certain investment will preserve the principal, generate income, and not subject the fund to excessive risk. They must make that decision in a fashion as someone else familiar with such matters would make it.

In our current economic environment, investing $100 million of the Texas Permanent School Fund into facilities for charter schools would certainly not appear to meet the standards of the Prudent Man Rule. In fact, the Texas State Board of Education fired their investment advisor, who specifically advised against investing in charter schools.

SBOE Candidate Judy Jennings:

Last year the financial consultants hired to give advice to the SBOE were fired when some board members did not like the advice they paid for. That advice included not investing Permanent School funds in risky schemes, and one example was real estate for charter schools.

After an amazingly convoluted session of arm-twisting last weekend, it appears that the Texas SBOE has decided to toss prudence to the wind along with any appearance of propriety and buy real estate to lease back to Texas charter schools at a reduced rate.

After the first vote failed, a second vote was taken the following day, after two Democrats had left for some inexplicable reason.

The Texas Observer (with language edited to C&L post standards):

Among the lobby, there was clear perception that too few on the board understood the complexities of the plan. "Can you use 'clusterf*ck' in the Observer?" one lobbyist muttered to me as he walked by during the debate. (Guess that answers that.)

However, Bradley has argued that the specific plan is almost irrelevant to his efforts. "There are no details, there is no program," he told colleagues Thursday. Passing the plan, he said, "at least signals intent" to deal with the charter school problem.

No, see, here's the problem. You can't commit an investment of $100 million in something where there are no details, there is no plan, and claim to be making a prudent investment. That's not how investing works. The right way to make this investment, assuming it might be prudent, would be to have a written proposal with specific properties presented, outlining a specific plan and specific rates and specific locations, among other things.

The problem is significant. Many people who run charter schools have backgrounds in education and not business. They can't easily turn to bonds since, unlike traditional districts, they have no tax base and state gives charter schools $1,000 less per student than traditional schools. With little credit history, charters have trouble getting the funding they need. They can wind up teaching out of strip malls, churches and pretty much anywhere with an empty room or two. Last session, the legislature created the Intercept Program to help lower interest rates for charter schools that could show private funding sources using legitimate financial tools, but according to David Dunn, executive director of the Texas Charter School Association that alone won't solve the problem.

Well, yeah, there's that. And also the more interesting issue, which is that charter schools are public schools but not really public schools. Originally conceived as a public-private partnership, charter schools operate outside of traditional school systems, tend to be small, insular, and sometimes innovative. Charter schools are public schools in the sense that they receive state and federal funds on a per-student basis, but state funds are generally not provided for facilities.

And really, this is the heart of the matter on charter schools:

Hochberg says that while he supports charter schools, they get to choose how much they want to grow and which students to accept. "There are legitimate differences in the prioritization" between traditional and charter schools, he says.

Public schools should be available to everyone. A public fund established to ensure that Texas children receive a great public education should not be invested in risky enterprises intended to pick and choose students who benefit.

Beyond that, I have these questions for the Texas State Board of Education:

• Who would decide which facilities to purchase?
• Who would administer the day-to-day collection and maintenance of the facilities?
• Why would leasing facilities to charter schools at below-market rates be of benefit to all beneficiaries -- present and future -- of the fund?
• Who would sell the facilities to the fund? Are any of those SBOE members involved in real estate sales and investing? Are any of their families? Extended families?
• On what basis is an investment of $100 million of the Fund's principal into real estate investments where occupancy is not guaranteed and rates will be below-market discount rental rates a prudent decision?

I'm not sure what I think is worse: Rewriting history or bankrupting the funds set aside to teach it.

Please go read Rebecca Bell-Metereau's and Judy Jennings' diaries and if you live in Texas, please help get some sane voices on that Board of Education.

What starts in Texas rarely stays there. If this type of risky, self-dealing investment is permitted to stand, it won't be long before other states will try it. Our kids deserve better than that.