November 2020 Committee on School Finance/Permanent School Fund Item 7

Approval of an Extension of the Standard Contract with Blackrock Investment Management, LLC, and Authorization for Contract Execution by the Commissioner of Education

November 20, 2020

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: ACTION
STATE BOARD OF EDUCATION: CONSENT

SUMMARY:  This item provides an opportunity for the committee and board to extend the standard contract with Blackrock Investment Management, LLC, and authorize contract execution by the commissioner of education.

STATUTORY AUTHORITY:  Texas Constitution, Article VII, §2 and §5; Natural Resources Code (NRC), §51.414; 19 Texas Administrative Code (TAC), Chapter 33.

The Texas Constitution, Article VII, §2 and §5 establish the permanent school fund, the assets that comprise the permanent school fund, the bond guarantee program, the available school fund, and authorize the State Board of Education (SBOE) to manage and invest the permanent school fund in accordance with the prudent person standard.

NRC, §51.414 establishes the Permanent School Fund Liquid Account as an account in the permanent school fund in the State Treasury to be managed by the SBOE.

19 TAC Chapter 33 codifies administrative rules that provide a statement of investment objectives, policies, and guidelines of the Texas Permanent School Fund and Bond Guarantee Program as adopted by the SBOE.

The full text of statutory citations can be found in the statutory authority section of this agenda.

PREVIOUS BOARD ACTION:  At the July 2008 meeting, the committee authorized the issuance of the request for proposals for indexing international management services. At the November 2008 meeting, the board selected BlackRock Investment Management, LLC to provide investment management services for international index fund. During the April 2011 meeting, the board approved two consecutive two-year extensions as allowed by the contract. The first extension period occurred from September 1, 2011 through August 31, 2013 and the second extension period occurred from September 1, 2013 through August 31, 2015.  The board approved the third extension period of September 1, 2015 through August 31, 2017, at the November 2014 meeting. At the April 2017 meeting, the board selected BlackRock Investment Management to provide Investment Management Services for Long-Only Passive International Developed and Emerging Market Equity. The contract began on September 1, 2017 and expires on August 31, 2021.

BACKGROUND INFORMATION AND JUSTIFICATION:  None.

Staff Member Responsible:
Holland Timmins, Executive Administrator and Chief Investment Officer, Texas Permanent School Fund