September 2016 Committee on School Finance Permanent School Fund

THURSDAY
September 15, 2016

9 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 online.

1. Per Capita Apportionment Rate for the 2016-2017 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 revised rate for the 2016-2017 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

2. Texas Education Agency Legislative Appropriation Comparison by Major Component FY 2016-2017 Compared to FY 2018-2019 Legislative Appropriation Request

Staff will review and compare the Texas Education Agency’s Administrative and Program Budget for the FY 2016-2017 biennium to the FY 2018-2019 Legislative Appropriation Request. The committee will be provided an opportunity to comment on the proposed budgets. Statutory authority is the Texas Education Code (TEC), §7.055(c).

COMMITTEE - DISCUSSION
SBOE - NO ACTION

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

Investment staff will report on the transactions executed during the months of June and July 2016 in the investment portfolio of the Texas Permanent School Fund.

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 June and July 2016

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 June and July 2016. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

5. Second Quarter 2016 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 2016 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

6. 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 2017. Statutory authority for this action is the Texas Constitution, Article VII, §5.

COMMITTEE - ACTION
SBOE - CONSENT

7. Proposed Amendments to the Investment Procedures Manual

This item provides an opportunity for the committee and board to review and adopt proposed amendments to the Investment Procedures Manual. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

8. Authorization to Issue a Request for Proposals for Passive International Equities Management Services for the Permanent School Fund

This item provides an opportunity for the board to approve the issuance of a request for proposals for passive investing of the international equities portfolio of the Permanent School Fund through a managed account, a commingled fund, a fund of one, or some other vehicle. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

9. 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

10. Overview of the Permanent School Fund Real Estate Policy

This item provides an opportunity for the committee and board to review the real estate policy. The committee may take action based on this information. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

11. 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