January 2014 Committee on School Finance Permanent School Fund

 THURSDAY
January 30, 2014

10 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: Patricia Hardy, Chair; Lawrence A. Allen, Jr., Vice Chair; David Bradley;
Ken Mercer; Thomas Ratliff. A quorum of the State Board of Education may attend the committee meeting and discuss items on the committee agenda. A quorum of the Committee of Investment Advisors to the Permanent School Fund may attend the committee meeting and discuss items on the committee agenda.

Public Testimony - Individual testimony will be taken at the time the related item comes up for committee discussion or action. The procedures for registering and taking public testimony at State Board of Education committee meetings and general board meetings are provided at http://www.tea.state.tx.us/index4.aspx?id=25769804094.

1. Proposed New 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.67, Bond Guarantee Program for Charter Schools
(Second Reading and Final Adoption)
 

This item presents for second reading and final adoption proposed new 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.67, Bond Guarantee Program for Charter Schools. The proposed new rule would implement provisions of the Texas Education Code (TEC), Chapter 12, Subchapter D, and Chapter 45, Subchapter C, that were added by Senate Bill (SB) 1, Article 59, 82nd Texas Legislature, First Called Session, 2011, and amended by House Bill (HB) 885, 83rd Texas Legislature, Regular Session, 2013. These provisions expand the Permanent School Fund (PSF) Bond Guarantee Program to allow for guarantee of bonds issued for the benefit of open-enrollment charter schools. Statutory authority for this action is the TEC, §7.102(c)(33) and §45.063, and Texas Constitution, Article VII, §5(d).

COMMITTEE - ACTION
SBOE - ACTION

2. Proposed Amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract
(First Reading and Filing Authorization)
 

This item presents for first reading and filing authorization proposed amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.51, Uniform Depository Bank Bid or Proposal Form, and §109.52, Uniform Depository Bank Contract and Surety Bond Forms. The proposed amendment to §109.51 would remove the requirement for a school district to file its bid or proposal with the Texas Education Agency (TEA) and would add a requirement for the district to make the selected bid or proposal available to the TEA on request. The proposed amendment to §109.52 would require a school district to file a copy of its depository contract electronically with the TEA and would revise the depository contract form adopted as a figure in that section to remove the requirement that TEA staff members sign the form to indicate approval. The proposed amendment to §109.52 would also add a provision for the TEA to notify a district by email if its depository contract is incomplete and a provision stating that a district that has no depository contract in force and filed with the TEA will receive its warrants from the TEA by US mail. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(34), 45.206, and 45.208.

COMMITTEE - ACTION
SBOE - ACTION

3. Review of 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, and Subchapter B, Use of State Funds
(Adoption of Review)

The Texas Government Code, §2001.039, establishes a four-year rule review cycle for all state agency rules, including State Board of Education (SBOE) rules. This item presents the review of 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, and Subchapter B, Use of State Funds. The rules being reviewed provide for the use of Foundation School Program (FSP) funds. The statutory authority for the rule review is the Texas Government Code, §2001.039. The statutory authority for 19 TAC Chapter 105, Subchapter A, is the Texas Education Code (TEC), §42.004. The statutory authority for 19 TAC Chapter 105, Subchapter B, §105.11, is the TEC, §§42.151(h), 42.152(c), 42.153(b), 42.154(c), 42.1541, and 42.156(b). The statutory authority for 19 TAC Chapter 105, Subchapter B, §105.12, is the TEC, §42.004.

COMMITTEE - ACTION
SBOE - CONSENT

4. Review of Permanent School Fund Securities Transactions and the Investment Portfolio 

Investment staff will report on the transactions executed during the months of October and November 2013 in the investment portfolio of the Texas Permanent School Fund.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

5. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of October and November 2013 

This item provides an opportunity for the committee and board to consider approval of the purchases and sales of securities executed in the portfolio of the Permanent School Fund for the months of October and November 2013. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

6. Annual Reporting Requirement of the Internally Managed Permanent School Fund Investment Portfolio 

This item provides an opportunity for the Executive Administrator and Chief Investment Officer of the Permanent School Fund to report on various items required by 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

7. Presentation by BlackRock Investment Management, LLC on Investment Management Services Provided to the Permanent School Fund 

This item provides an opportunity for the committee to receive a presentation from BlackRock Investment Management, LLC on investment management services provided by the firm to the Permanent School Fund.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

8. Presentation by Private Equity Managers on Investment Management Services Provided to the Permanent School Fund 

This item provides an opportunity for the committee to hear a presentation by private equity managers on investment management services provided to the Permanent School Fund.

COMMITTEE – DISCUSSION
SBOE - NO ACTION

9. Discussion of the Implementation of the Emerging Market Equities Allocation of the Permanent School Fund 

This item provides an opportunity for the committee to discuss the implementation of the emerging market equities allocation of the Permanent School Fund. The committee will direct staff regarding future agenda items.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

10. Report of the Permanent School Fund Executive Administrator and Chief Investment Officer 

The Permanent School Fund executive administrator will report to the committee on matters relating to the management of the Permanent School Fund. The report will present information on historical and current status of Fund holdings, current and proposed investment policies and procedures, and historical and current Fund performance and compliance. The administrator will update the board on the bond guarantee program, the status of requests for proposal or for qualifications and current contracts for services and other administrative activities undertaken on behalf of the board. The administrator may provide an update on the PSF distribution or on the effect of legislation impacting the PSF. The administrator will provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the Permanent School Fund. The committee will direct investment staff regarding future agenda items.

COMMITTEE - DISCUSSION
SBOE - NO ACTION