The official responsible for managing financial assets and revenue for Texas public schools is stepping down amid controversy over his handling of state guidance to divest from firms, such as BlackRock, that allegedly boycott energy producers.
B. Holland Timmins III, the CEO of the Texas Permanent School Fund (PSF) Corporation, informed the chair of the corporation’s board Tuesday of his intention to retire. The PSF Corporation was established by the State Board of Education (SBOE) in 2021 to manage the $56 billion Permanent School Fund, a sovereign wealth fund meant to generate revenue to support Texas public schools.
The PSF Corporation has also drawn scrutiny in recent weeks for its decision to lease expensive office space in Austin rather than use state offices.
Tom Maynard, the SBOE member for District 10, is chairman of both the SBOE Committee on School Finance/Permanent School Fund and the PSF Corporation’s board of directors, making Maynard responsible for oversight of the PSF.
Just days before his sudden retirement, Timmins was questioned by the corporation’s board of directors over his management of the fund’s transition away from environmental, social, and governance (ESG) investing, which was mandated by the legislature in 2021.
Texas Land Commissioner Dawn Buckingham, who sits on the PSF Corporation board, told Timmins at Thursday’s board meeting that his answers on the subject made her “lose faith even more in staff’s ability and your leadership to execute on this board. … Oil and gas revenue is the majority of this fund, and voting against oil and gas will hurt the majority of this fund. I don’t think that this policy is even close to being voted on.”
A Texas law passed in 2021 prohibits the state from contracting with or investing in companies that divest from oil, natural gas, and coal companies.
Divestment is defined in the law as a refusal to do business with a fossil fuel company because it does not commit to environmental standards higher than expected by federal and state law, without an ordinary business purpose.
A Q1 2023 list of 11 “financial companies that boycott energy companies” released by Texas Comptroller Glenn Hegar includes BlackRock, Credit Suisse Group, HSBC, and others.
During the Thursday PSF Corporation meeting, BlackRock senior managing director Rich Kushel said the organization manages “about $9 billion” of assets for the PSF, or nearly one sixth of the entire fund.
The Dallas Express spoke with Maynard about Timmins and some of the controversies surrounding the organization.
Maynard acknowledged that no nationwide CEO search was conducted when the SBOE established the corporation, noting that members felt it would be beneficial to have some continuity at the new organization as it transitioned to a corporate structure. Timmins had spent 21 years with the PSF, which was previously housed within the Texas Education Agency, by the time of the corporation’s founding.
When asked about the assets that BlackRock continues to manage for the PSF Corporation, he said that there are some contracts in place that could result in financial penalties if broken.
“You know, we’re not gonna do anything that damages the fund and we just have to kind of work through those things and see if the law requires us to … And we’re gonna do our due diligence, and make decisions that are in the best interest of the fund,” Maynard told The Dallas Express.
In addition to the controversy over BlackRock, elected officials have drawn attention to a decision by the PSF Corporation to spend taxpayer money renting new offices in a commercial building instead of using state-owned offices.
During a March 1 meeting of the PSF Corporation, SBOE Member Aaron Kinsey, who sits on the PSF Corporation board, questioned John Grubenman, the PSF Corporation’s chief of staff and head of private markets, on why the organization is leasing 45,000 square feet of office space for 75 employees.
The new space is being leased at 400 West 15th St. in Austin. Other tenants include GE, Deloitte, and Wells Fargo.
The staff previously worked in a 17,000-square-foot space, according to Grubenman.
Grubenman confirmed that “we’re moving to about 45,000 square feet” of space and argued that while the space will only be occupied by 75 employees, the lease was signed “for the long term” in anticipation of growing to 150 employees.
He indicated 45,000 square feet was needed to “accommodate” so many employees.
Kinsey questioned why the PSF Corporation could not lease a smaller space more appropriate for its current staff with “an option for additional space.”
Grubenman argued this could not be done because the landlord was “looking to lease the building out today” and the “commercial real estate market in Austin was very tight.”
“The legislature has, at least at this point, expressed a desire for the corporation to be in state-owned office space. We’re still working through … in terms of what it would cost for us to abandon the lease that we’ve already executed,” Maynard told The Dallas Express.
When asked how long the lease was for, Maynard confirmed it was for 10 years and said, “Outside of that, you know, I don’t really wanna get into the details of all that.”
One member of the PSF Corporation board expressed some relief at Timmins’ departure. Kinsey told The Dallas Express:
“During my two months on the PSF Board, I have been unsatisfied with the level of transparency from PSF leadership. I’m hopeful that in our next chapter, staff will work with the Board as we assert proper oversight of the oil and gas revenue that funds the PSF, as well as our investments more broadly. Texas children, my constituents, and Texas taxpayers at large deserve such.”
The Dallas Express also reached out to SBOE Member Julie Pickren, who expressed similar sentiments, saying, “Our PSF leadership should operate in transparency and with intentionality to protect the PSF fund, taxpayers, and Texas children.”
The Dallas Express made repeated attempts to contact Timmins for comment or information on his departure but was unsuccessful as of press time.
As of February 1, Timmins was paid an annual salary of $400,388, according to The Texas Tribune’s government employee salary tracker.
“I will tell you that, uh, we will aggressively pursue a nationwide search,” Maynard told The Dallas Express about the corporation’s next CEO.