September 2017 Committee on School Finance Permanent School Fund

THURSDAY
September 14, 2017

9 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: David Bradley, Chair; Tom Maynard, Vice Chair; Lawrence A. Allen, Jr.;
Patricia Hardy; Ken Mercer. 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 online.

1. Proposed Amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, §105.1, Rules for the Definition of Tax Levy and Tax Collection
(Second Reading and Final Adoption)

This item presents for second reading and final adoption a proposed amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, §105.1, Rules for the Definition of Tax Levy and Tax Collection. The proposed amendment would ensure that the definition of tax collections for purposes of the Texas Education Code (TEC), §42.004, and as used in issuing additional state aid for ad valorem tax credits under the TEC, §42.2515, complies with Texas Tax Code, Chapter 313. No changes are recommended since approved for first reading. Statutory authority for this action is the TEC, §42.004.

COMMITTEE - ACTION
SBOE - ACTION

2. Per Capita Apportionment Rate for the 2017-2018 School Year

The board is responsible for setting a per capita apportionment rate for each school year based on an estimate of the amount available for expenditures from the Available School Fund. Agency staff members will propose a recommended rate for the 2017-2018 school year at the September meeting of the Committee on School Finance/Permanent School Fund. Statutory authority for this action is the Texas Education Code (TEC), §42.004 and §43.001(b).

COMMITTEE - ACTION
SBOE - CONSENT

3. Discussion of Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms

This item provides an opportunity for the committee to discuss a proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms. The proposed amendment would update the depository contract adopted in rule to reflect changes made by Senate Bill (SB) 754, 85th Texas Legislature, Regular Session, 2017. Statutory authority is the Texas Education Code, §§7.102(c)(34); 45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017; 45.206; and 45.208.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

4. Discussion of Proposed Amendment to 19 TAC Chapter 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes

This item provides an opportunity for the committee to discuss a proposed amendment to 19 TAC Chapter 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes. The proposed amendment would update the rule to reflect changes made by Senate Bill (SB) 1152, 85th Texas Legislature, Regular Session, 2017. Statutory authority is the Texas Education Code (TEC), §§12.106; 25.087, as amended by SB 1152, 85th Texas Legislature, Regular Session, 2017; and 42.004.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

5. Texas Education Agency Legislative Appropriation Comparison by Major Component Fiscal Years 2016-2017 Compared to Fiscal Years 2018-2019 and Fiscal Year 2018 Administrative and Program Budgets  

Staff will review the Texas Education Agency Appropriation for the Fiscal Years 2016-2017 biennium compared to Fiscal Years 2018-2019 biennium and the Administrative and Program Budgets for Fiscal Year 2018 as per the appropriations set by the 85th Texas Legislature in Senate Bill 1, Regular Session. The committee will be provided an opportunity to comment on the proposed budget. Statutory authority is the Texas Education Code (TEC), §7.055(c).

COMMITTEE - DISCUSSION
SBOE - NO ACTION

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

Investment staff will report on the transactions executed during the months of May, June and July 2017 in the investment portfolio of the Texas Permanent School Fund.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

7. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of May, June and July 2017

This item provides an opportunity for the committee and board to consider approval of the purchases and sales of investments executed in the portfolio of the Permanent School Fund for the months of May, June and July 2017. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

8. Second Quarter 2017 Permanent School Fund Performance Report

The performance measurement consultant to the Permanent School Fund, BNY Mellon Asset Servicing, will report on the investment performance during the second calendar quarter 2017 and cumulative investment performance of the various portfolios of the Fund. This item will allow the committee to discuss in depth various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

9. Determination as to Whether Transfers May be Made from the Permanent School Fund to the Available School Fund

This item provides an opportunity for the board to review the requirement in Article VII, §5(a)(2) that the total amount distributed over 10 years cannot exceed the total return on all investment assets of the PSF over the same 10 year period. The board will determine whether transfers may be made from the Permanent School Fund to the Available School Fund in fiscal year 2018. Statutory authority for this action is the Texas Constitution, Article VII, §5.

COMMITTEE - ACTION
SBOE - CONSENT

10. Decision on Real Estate Investments

This item provides an opportunity for the committee and board to review and consider possible real estate investments. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

11. Implementation of SB 1480 Related to the Bond Guarantee Program and Charter Schools

This item provides an opportunity for the committee to receive a presentation on the implementation of SB 1480 related to the bond guarantee program and charter schools. Statutory authority for this action is the Texas Education Code (TEC), §45.0532.

COMMITTEE - ACTION
SBOE - CONSENT

12. Discussion of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools

This item provides an opportunity for the committee to discuss legislative changes that impact 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools. Statutory authority is the Texas Education Code (TEC), §§45.053; 45.0532, as amended by Senate Bill (SB) 1480, 85th Texas Legislature, Regular Session, 2017; 45.063; and the Texas Constitution, Article VII, Education, §5(d).

COMMITTEE - DISCUSSION
SBOE - NO ACTION

13. Presentation on the Commodities Asset Class for the Permanent School Fund

This item provides an opportunity for the committee to receive a presentation on the commodities asset class and to review the commodities discretionary investment management services provided to the Permanent School Fund. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

14. 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.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

15. Review of the Permanent School Fund Governance

This item provides an opportunity for the committee to review the Permanent School Fund governance.

COMMITTEE - DISCUSSION
SBOE - NO ACTION