January 31, 2019 Committee on School Finance/Permanent School Fund

THURSDAY

January 31, 2019

9 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: Tom Maynard; Lawrence A. Allen, Jr.; Patricia Hardy; Ken Mercer; Matt Robinson. 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. Election of Chair

State Board of Education (SBOE) operating rules call for each committee to elect a chair from among its members. This item provides an opportunity the Committee on School Finance/Permanent School Fund to elect a chair at this meeting if the SBOE retains the existing committee structure. The chair may then appoint a vice chair. If the board changes the committee structure, the committee may elect a member to preside over this first meeting only. Statutory authority for this action is the Texas Education Code, §7.107(b).

 COMMITTEE – ACTION
SBOE – NO ACTION


2. Review of 19 TAC Chapter 129, Student Attendance, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting

Texas Government Code (TGC), §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 129, Student Attendance, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting. Subchapter A addresses free attendance in general, and Subchapter B addresses requirements for student attendance accounting for state funding purposes. The statutory authority for the rule review is TGC, §2001.039. Statutory authority for 19 TAC Chapter 129, Subchapters A and B, is Texas Education Code (TEC), §42.004 and §12.106.
 
COMMITTEE – DISCUSSION
SBOE – NO ACTION


3. Discussion of Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter C, Adoptions By Reference, §109.41, Financial Accountability System Resource Guide

This item provides the opportunity for the committee to discuss a proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter C, Adoptions By Reference, §109.41, Financial Accountability System Resource Guide. The proposed amendment would adopt by reference the updated Financial Accountability System Resource Guide (FASRG) and remove language relating to the commissioner's role in amending the FASRG. Statutory authority is the Texas Education Code (TEC), §§7.055(b)(32), 7.102(c)(32), 44.001(a) and (b), 44.007(a)-(d), and 44.008(b).

COMMITTEE – DISCUSSION
SBOE – NO ACTION

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 2018 in the investment portfolio of the Texas Permanent School Fund. Statutory authority for this item is Texas Education Code (TEC), §§43.003 and 43.007 and the Texas Constitution, Article VII, §5(f).

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 2018

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 October and November 2018. Statutory authority for this item is Texas Education Code (TEC), §§43.003 and 43.007 and the Texas Constitution, Article VII, §5(f).
 
COMMITTEE – ACTION
SBOE - CONSENT


6. Annual Reporting 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. Statutory authority for this item is Texas Education Code (TEC), §§43.003, 43.004 and 43.007, and Texas Constitution, Article VII, §5(f).
 
COMMITTEE – DISCUSSION
SBOE – NO ACTION


7. Third Quarter 2018 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 third calendar quarter 2018 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. Statutory authority for this item is (TEC), §§43.004 and the Texas Constitution, Article VII, §5(f).
 
COMMITTEE – DISCUSSION
SBOE – NO ACTION


8. 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 related to U.S. Security and Exchange Commission (SEC) amended rule changes for the Bond Guarantee program disclosure (SEC Rule 15c2-12).

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 item is (TEC), §§43.003 and 43.007 and the Texas Constitution, Article VII, §5(f).
 
COMMITTEE – ACTION
SBOE - CONSENT


10. Presentation on the Risk Parity Asset Class for the Permanent School Fund

This item provides an opportunity for the committee to receive presentations on the risk parity asset class and services provided to the Permanent School Fund. Statutory authority for this item is Texas Education Code (TEC), §43.003 and the Texas Constitution, Article VII, §5(f).

COMMITTEE – DISCUSSION
SBOE – NO ACTION


11. Report of the Permanent School Fund 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 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 Texas Education Code (TEC), §§43.003, 43.004 and 43.007, and Texas Constitution, Article VII, §5(f).
 
COMMITTEE – DISCUSSION
SBOE – NO ACTION