June 2019 Committee on School Finance/Permanent School Fund

THURSDAY
June 13, 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. 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 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 school districts and charter schools flexibility for selecting an official attendance-taking time during a campus's instructional day. Statutory authority for this item is the Texas Education Code (TEC), §42.004 and §12.106.

COMMITTEE – DISCUSSION
SBOE – NO ACTION


2. Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter C, Adoptions By Reference, §109.41, Financial Accountability System Resource Guide
(Second Reading and Final Adoption)


This item presents for second reading and final adoption 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 reference the updated Financial Accountability System Resource Guide (FASRG) and remove language relating to the commissioner's role in amending the FASRG. No changes are recommended since approved for first reading. Statutory authority for this action 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 – ACTION
SBOE – ACTION


3. Per Capita Apportionment Rate for the 2018-2019 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. The board adopted a preliminary 2018–2019 per capita apportionment rate of $459.764 in September 2018. Agency staff members will propose a recommended rate of $459.764 for the 2018–2019 school year at the June 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


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

Investment staff will report on the transactions executed during the months of February, March and April 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


5. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of February, March and April 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 February, March and April 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


6. First Quarter 2019 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 first calendar quarter 2019 and cumulative investment performance of the various portfolios of the Fund. This item allows the committee in depth discussion of various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes. Statutory authority for this item is Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION


7. Permanent School Fund Pending Contract Renewals


This item provides an opportunity for the committee to review the pending Permanent School Fund contract renewals. 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


8. Review of the Bond Guarantee Program Charter Capacity

This item provides an opportunity for the committee and board to receive a presentation on bond guarantee program’s charter capacity. Statutory authority for this action is Texas Constitution, Article VII, §2 and §5, Texas Education Code (TEC) §45.053219, and Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE - CONSENT


9. Review of the Permanent School Fund Emerging Market Equities Asset Class

This item provides an opportunity for the board to review the emerging market equities asset class and to make adjustments as needed. 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


10. Permanent School Fund Related Legislation, 86th Legislature, Regular Session

This item provides an opportunity for the committee and board to review legislation related to the Permanent School Fund from the 86th Legislature, regular session, and to take action as needed. 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


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

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

COMMITTEE – DISCUSSION
SBOE – NO ACTION


12. Review of the Permanent School Fund Asset Allocation

This item provides an opportunity for the board to review the asset allocation plan of the Permanent School Fund. 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


13. 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