1. (a) The trust account shall balance the present needs and interests of the political subdivisions with those of the future. The trust account distribution objectives shall be to:

   1. (1) provide a predictable, stable stream of distributions over time;
   2. (2) ensure that the inflation-adjusted value of distributions is maintained over the long- term; and
   3. (3) ensure that the inflation-adjusted value of the corpus after distributions is maintained over the long-term.

2. (b) In order to preserve the purchasing power of future trust account distributions and of the underlying corpus, the actual distribution amount for any calendar year shall in no event exceed the lesser of.

   1. (1) 5.0% of the average trust account balance calculated as of the end of such year; or
   2. (2) the adjusted current income for such year plus the balance of the distribution stabilization account at the beginning of such year.

3. (c) Unless otherwise established by the comptroller and approved by the investment advisory committee, the actual distribution amount for each calendar year and the maximum balance in the distribution stabilization account at the end of such year shall be determined as follows:

   1. (1) subject to subsection (b) of this section, the actual distribution amount shall be equal to the greater of:

      1. (A) the calculated distribution amount or;
      2. (B) the amount actually distributed from the trust account to the political subdivisions for the previous year multiplied by a factor equal to the sum of 1.0 and the inflation adjustment factor;

   2. (2) subject to subsection (c)(3) of this section, the balance in the distribution stabilization account shall be increased by;

      1. (A) an amount equal to fifty percent (50%) of the adjusted current income for such year less the difference between the actual distribution amount and the calculated distribution amount for such year; and
      2. (B) twenty-five (25%) of the current net realized gains for such year,
   3. (3) the maximum balance in the distribution stabilization account shall be equal to the amount actually distributed from the trust account to the political subdivisions for the previous year multiplied by three (3), and the amount that exceeds such maximum balance, if any, shall be added to the corpus.

Source Note:The provisions of this §18.2 adopted to be effective November 16, 2000, 25 TexReg 11292; amended to be effective March 27, 2003, 28 TexReg 2618.