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Texas Economic Stabilization Fund (Rainy Day Fund)

United States · North America · Founded 1988 · Stabilisation fund · Not an IFSWF member

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Focus

Rainy Day Fund: what it invests in

Financial services
Cash and money marketsFixed income

Geography Global

Scale

Rainy Day Fund: how big it is, and on what basis

USD 24.8B
Fund market valueAs of

In US dollars: about USD 24.8B. Fund reports in US dollars

Pool return since start 1.8% a year (to January 2023)

Transparency

Rainy Day Fund: what it publishes

4.5 of 10 Band 3 of 5

Published 4 · Partly 1 · Not published 5

Our 10 item score. It measures what is public, not how well a fund is run.

Balance, end FY2025S2
USD 24.8B (record)
As of
Projected FY2026S4
USD 27.43B
As of
Cap FY2026S4
USD 26.51B
As of
Spent since 1988S5
About USD 18B
Pool return since startS6
1.8% a year (to January 2023)
As of
Vote to spendS1
Two-thirds
Transparency scoreS2
4.5 of 10
As of

At a glance. The Texas Rainy Day Fund is the state's budget reserve, filled from oil and gas severance taxes. It held a record USD 24.8 billion at the end of fiscal 2025 and is projected at about USD 27.4 billion for fiscal 2026, above its constitutional cap. The Legislature can spend it with a two-thirds vote; most of the balance is invested by the state's Treasury Safekeeping Trust Company. S2 S4 S1

Key points

  • Reached its constitutional cap after a USD 2.05 billion transfer at the start of fiscal 2026; no transfer is due in fiscal 2027. S2
  • Projected balances: USD 27.43 billion in fiscal 2026 and USD 28.50 billion in fiscal 2027, against caps of about USD 26.5 billion. S4
  • The Legislature has spent about USD 18 billion from the fund since 1988. S5
  • Its investment pool returned 1.8 percent a year to January 2023, against 1.3 percent for the State Treasury, adding about USD 700 million. S6
  • At least 25 percent of the invested balance must stay liquid. S6
  • Investment earnings go to the Texas University Fund, up to about USD 100 million a year, rising with inflation. S1
  • Fiscal 2026 oil production tax was USD 5.88 billion and gas production tax USD 2.43 billion, the taxes that feed it. S7

Interesting facts

  • Seeded USD 2 billion of the State Water Implementation Fund for Texas, which subsidises water project finance. S3
  • Its largest single draw was about USD 3.2 billion in 2011 to close a budget gap. S8
  • Until 2015 its cash sat in short-term instruments; a law change let it invest for higher returns. S6

Mandate and goals

A budget stabilisation reserve: it stores part of the oil and gas tax windfall and can be used to cover revenue shortfalls or other needs the Legislature approves. S1 S2

  • Cover temporary cash shortfalls in the state's General Revenue Fund. S1
  • Hold a minimum balance of 7 percent of General Revenue-related appropriations for the biennium. S1
  • Keep purchasing power and beat short-term cash returns on the invested balance. S3
  • Spending rule: Appropriations need a two-thirds vote of members present in each house of the Legislature S1

How it invests

IndustriesFinancial services. Sector agnostic S3
Asset classesCash and money markets, Fixed income S3 S6
StagesPublic markets S3
GeographyGlobal. No geographic split published S3
Direct / through funds / co-investNo / Yes / No S3 S6
Ticket sizeNot applicable: the fund is a reserve and does not make deals. S2
External managersManaged by the state Trust Company; external managers not published for this pool S3
Co-investment programmeNone S2

Published criteria

  • At least 25 percent of the invested balance must be liquid and readily available. S6
  • Aim to beat inflation over a full market cycle and beat short-term cash returns. S3

Past investments

YearInvestmentTypeSectorStageAmount
2025Texas Windstorm Insurance Association financing. Legislature authorised a financing arrangement backed by the fund. S1Direct investmentFinancial servicesCreditNot published
2024Texas University Fund. Fund earnings go to the university endowment from fiscal 2024. S1State asset transferFinancial servicesNot statedUp to USD 100M a year
2016Texas Economic Stabilization Investment Fund. Invested pool for the balance; whole non-appropriated balance from 2019. S6 S3Fund commitmentMulti-sectorPublic marketsNot published
2013State Water Implementation Fund for Texas. Seed money to subsidise water project financing. S3State asset transferInfrastructure and utilitiesNot statedUSD 2B
2011Budget gap appropriation. Largest single draw, to the Comptroller. S8State asset transferFinancial servicesNot statedAbout USD 3.2B

Case studies

From idle cash to an invested reserve S6 S1

  • What: Lawmakers let the Trust Company invest part of the balance in 2015 and the whole non-appropriated balance in 2019.
  • When: 2015 to 2019
  • Size: Not published
  • Why: Low-yield cash was losing purchasing power as the balance grew.
  • Outcome: Returned 1.8 percent a year against 1.3 percent for the Treasury, adding about USD 700M to January 2023.

SWIFT: rainy day money for water S3

  • What: Voters approved moving USD 2 billion from the fund to a new water financing fund.
  • When: 2013
  • Size: USD 2B
  • Why: To cut financing costs for projects in the State Water Plan.
  • Outcome: Subsidies are repaid to SWIFT over time.

Investment process

The Constitution sets the deposit formula and cap. The Legislature decides any spending by a two-thirds vote. The Comptroller manages the fund and the Trust Company invests it. S1 S2

CommitteeRole
Texas LegislatureApproves appropriations from the fund by a two-thirds vote S1
Texas Treasury Safekeeping Trust CompanyInvests the balance through its stabilisation investment pool S3
  1. Severance tax transfers arrive each year until the cap is reached. S2
  2. The Comptroller sets the minimum balance at 7 percent of General Revenue-related appropriations. S1
  3. The Trust Company invests the balance, keeping at least 25 percent liquid. S6
  4. The Legislature appropriates money by a two-thirds vote. S1

How to approach: No intake. The fund is a state reserve and does not take investment proposals. S2

Size and returns

  • Headline size: USD 24.8B (Fund market value, as of 2025-11-05) S2
  • In US dollars: about USD 24.8B. Fund reports in US dollars
  • Projected balance, fiscal 2026: USD 27.43B (Published estimate, as of 2025-01) S4
  • Constitutional cap, fiscal 2026: USD 26.51B (Announced target, not current assets, as of 2025-01) S4
  • Return, Since inception of the investment pool to January 2023: 1.8 percent a year (investment pool only; against 1.3 percent for the State Treasury) S6
  • Size over time (USD billion): FY2022 10.69, FY2023 14.17, FY2024 21.02, FY2025 24.8 S2 S4 S5

Leadership

NameTitle
Don HuffinesTexas Comptroller of Public Accounts S7

Governance and transparency

  • Legal basis: Texas Constitution, as amended by H.J.R. 2 (1988); Government Code Section 404.0241 for the investment pool S1 S3
  • Oversight: Texas Legislature and the Comptroller of Public Accounts S1
  • Minimum balance rules expire on 31 December 2034 unless renewed. S1

Transparency score: 4.5 of 10 (band 3 of 5). Our own 10-item rubric; see the methodology page.

  • Published: total assets, governance and mandate documents, named leadership, regular reporting schedule. S1 S2 S7
  • Partly published: audited financial statements. S2
  • Not published: annual return, long-term returns, asset allocation, geographic or sector split, holdings or deal list. S2 S6

History

DateEvent
1988-11-08Voters create the fund. S1
2011About USD 3.2B drawn to close a budget gap. S8
2013USD 2B moved to the State Water Implementation Fund. S3
2014-11Voters split severance transfers with the State Highway Fund. S1
2015Law allows part of the balance to be invested. S6
2019Whole non-appropriated balance can be invested. S6
2023-11-07Voters direct fund earnings to the Texas University Fund. S1
2025-08-31Record balance of USD 24.8B. S2
2025-09Cap reached after a USD 2.05B transfer. S2

For family offices

The Rainy Day Fund is a state reserve with no programme for outside investors or managers. It matters to investors as a signal of Texas fiscal strength. S2

Reports

Common questions

How big is the Texas Rainy Day Fund?

USD 24.8 billion at the end of fiscal 2025, a record, with about USD 27.4 billion projected for fiscal 2026. S2 S4

Who runs it?

The Texas Comptroller, Don Huffines; the Treasury Safekeeping Trust Company invests it. S7 S3

How can the money be spent?

Only by a two-thirds vote of members present in each house of the Legislature. S1

Is it a sovereign wealth fund?

It is a state budget stabilisation reserve funded by oil and gas taxes rather than a long-term wealth fund. S2

All sovereign wealth funds in North America · All stabilisation funds · All funds in United States

Sources

  1. S1Texas Comptroller, Manual of Accounts, Fund 0599 Economic Stabilization Fund
  2. S2Texas Comptroller, State of Texas Annual Cash Report release, 5 November 2025
  3. S3Texas Treasury Safekeeping Trust Company, Investments
  4. S4Texas Comptroller, Biennial Revenue Estimate 2026-27, ESF balance
  5. S5Texas Comptroller, ESF History
  6. S6Texas Comptroller, Fiscal Notes, Rainy Day Fund projected to hit cap
  7. S7Texas Comptroller, state revenue for fiscal 2026, 11 September 2026
  8. S8Legislative Budget Board, History of the Economic Stabilization Fund

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