November 14, 2019 Committee on School Finance/Permanent School Fund

THURSDAY
November 14, 2019

9 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104

Members: Tom Maynard, chair; Lawrence A. Allen, Jr., vice chair; Donna Bahorich; 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 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes
(Second Reading and Final Adoption)


This item presents for second reading and final adoption proposed amendment to 19 Texas Administrative Code (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 allow districts and charter schools flexibility for selecting an official attendance-taking time during the campus's instructional day. No changes are recommended since approved for first reading. Statutory authority for this action is the Texas Education Code (TEC), §48.004 and §12.106.    

COMMITTEE - ACTION
SBOE - ACTION

2.    Approval of Costs to Administer the 2019–2020 State-Developed Assessments to Private School Students

Texas Education Code, §39.033, allows a private school to voluntarily assess its students with the State of Texas Assessments of Academic Readiness (STAAR®) and the Texas English Language Proficiency Assessment System (TELPAS) assessments. The State Board of Education (SBOE) must approve the per-student cost to private schools, which may not exceed the cost of administering the same assessment to a student enrolled in a public-school district. This item requests approval of these costs for the 2019–2020 school year. Statutory authority for this action is the Texas Education Code (TEC), §39.033.    

COMMITTEE - ACTION
SBOE - CONSENT

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

Investment staff will report on the transactions executed during the months of August and September 2019 in the investment portfolio of the Texas Permanent School Fund. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.     

COMMITTEE - DISCUSSION
SBOE - NO ACTION

4.    Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of August and September 2019

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 August and September 2019. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.     

COMMITTEE - ACTION
SBOE - CONSENT

5.    Adoption of Review 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
(Adoption of Review) 


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 adoption of review 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. The rules being reviewed establish definitions, requirements, and procedures for the investment of the Permanent School Fund (PSF).The statutory authority for the rule review is the Texas Government Code (TGC), §2001.039. The statutory authority for 19 TAC Chapter 33 is the Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031-43.004, and 45.051-45.063; TGC, §2263.004; and the Texas Constitution, Article VII, §5(f).     

COMMITTEE - ACTION
SBOE - CONSENT

6.    Proposed Amendments to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules 
(First Reading and Filing Authorization)


This item presents for first reading and filing authorization proposed amendments to 19 Texas Administrative Code (TAC) Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules. The proposed amendments would reorganize references to the Permanent School Fund (PSF) distribution policy, include references to new authority and duties assigned by the 86th Texas Legislature, 2019, and address permissible fixed income investments. Statutory authority for this action is the Texas Constitution, Article VII, §5(a) and (f); Texas Education Code (TEC), §43.001; TEC, §43.0052, as added by House Bill (HB) 4388, 86th Texas Legislature, 2019; and Texas Natural Resources Code, §32.012, as amended by Senate Bill (SB) 608, 86th Texas Legislature, 2019; §32.0161, as added by SB 608, 86th Texas Legislature, 2019; and §32.068 and §51.414, as added by HB 4388, 86th Texas Legislature, 2019.  

COMMITTEE - ACTION
SBOE - ACTION

7.    Authorization to Issue a Request for Qualifications for Bond Guarantee Program Counsel for the Permanent School Fund

This item provides the opportunity for the committee and board to approve the issuance of a request for qualifications for legal counsel for the Bond Guarantee Program (BGP) of the Permanent School Fund. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, Texas Education Code (TEC), §45.051-§45.063, and 19 Texas Administrative Code (TAC) Chapter 33.    

COMMITTEE - ACTION
SBOE - CONSENT

8.    Review of the Permanent School Fund Liquid Account

This item provides an opportunity for the committee and board to review the bill requirements contained in House Bill (HB) 4388, 86th Texas Legislature, 2019.  The committee will consider implementation of the liquid account. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, Texas Education Code (TEC), §43.0052, Natural Resource Code (NRC), §§32.068, 51.402, and 51.414, and 19 Texas Administrative Code (TAC) Chapter 33.    

COMMITTEE - ACTION
SBOE - CONSENT


9.    Review and Determine the List of Nominees for Appointment to the School Land Board

This item provides an opportunity for the committee and board to review and determine the list of nominees to be considered by the governor for appointment to the School Land Board. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, the Natural Resource Code (NRC), §32.012 and §32.013, and 19 Texas Administrative Code (TAC) Chapter 33.    

COMMITTEE - ACTION
SBOE - ACTION 

10.    Discussion of Emerging and Diverse Investment Management in Alternative Asset Classes

This item provides an opportunity for the committee to discuss the emerging and diverse investment management in alternative asset classes. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.     

COMMITTEE - DISCUSSION
SBOE - NO ACTION


11.    Review of the Absolute Return Asset Class for the Permanent School Fund

This item provides an opportunity for the committee to review the absolute return asset class.  Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.    

COMMITTEE - DISCUSSION
SBOE - NO ACTION

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

The Permanent School Fund executive administrator will report to the committee on matters relating to the management of the Permanent School Fund and the Charter District Reserve Fund.  The report may 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 may 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 may provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the Permanent School Fund. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.    

COMMITTEE - DISCUSSION
SBOE - NO ACTION