The Act of August 30, 1856, provided that income from sales of University lands should compose a fund subject to appropriation by the Legislature for the University.
Earlier, an Act of January 30, 1854, which was primarily concerned with encouraging the growth of railroads in the State, gave the University one of every ten sections allotted for railroads. To this, the Legislature added on February 11, 1858, $100,000 in bonds, and one section of land in ten granted to the Galveston and Brazos Navigation Company.
The Constitution of 1876 provided the first real basis for the University, granting the school one million acres from the unclaimed public domain, providing that the one of every ten railroad sections were not taken by the University. An Act of April 10, 1883, added another million acres to this.
The Constitution of 1876 also provided for the establishment of a Permanent University Fund which was to be composed of all land belonging to the University and all income from the sale of this land. In later years, this fund has grown by leaps and bounds as royalties and bonuses from oil exploration and production on University lands have been added to it. At the end of 1957, the Permanent University Fund stood at about $292,000,000. This money is invested, and income from these investments goes into an available fund from which The University of Texas draws two-thirds and Texas A & M College one-third for current expenses.
Public Schools
The other great Texas educational fund is the Permanent School Fund, which amounted to nearly $360,500,000 in July, 1957. Like the Permanent University Fund, this money is invested, and income from the investments is spent for current needs. Unlike the University Fund, the Permanent School Fund may have one per cent of its value appropriated by the Legislature each year for current expenses. Of course, this appropriation—if made—is approved during the Legislature’s biennial session. The bulk of the Permanent School Fund, like the Permanent University Fund, has come from mineral development on specific lands set aside for the benefit of the fund.
These lands were provided by the Constitution of 1876, which said that one-half of the public domain of the state, alternate sections of railroad land, and all money from the sale of these lands should constitute the Permanent School Fund. An Act of February 23, 1900, gave the then remaining public domain to the Permanent School Fund, except for rivers, lakes, bays, and islands along the Gulf of Mexico. In 1939, the Texas Legislature dedicated the mineral estate of these rivers, lakes, bays and islands to the Permanent School Fund. For sometime before the dedication, most income from these sources had been channeled into the Permanent School Fund.
Under these acts, 46,500,000 acres of land, including the mineral estate alone of 7,160,000 acres, have been granted to the Permanent School Fund. Of the former figure, 42,500,000 acres are surveyed uplands, of which only about 900,000 remain unsold. The first school land sold was 160 acres in Bowie County in 1874. Since 1905 all sales have been on a competitive sealed bid basis.
Moneywise, oil production royalties alone brought the Permanent School Fund more than $14,000,000 in 1956. Of the 7800 oil leases in force, production was experienced on about 1400.
Another source of income—small though it is—for the Permanent School Fund comes from tracts of unsurveyed land. These are called “vacancies”. People occupying this land usually believe that they own it. In 1939 the Legislature passed an act designed to protect the occupants of the land in their rights and to insure that the Permanent School Fund receives its rightful share of the value of this unsurveyed land.