June 2021 Committee on School Finance/Permanent School Fund

THURSDAY
June 24, 2021

9:00 a.m.

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

Members: Tom Maynard, chair; Lawrence A. Allen, Jr., vice chair; Keven Ellis; Patricia Hardy; Marisa Perez-Diaz. 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 Repeal of 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, §105.1, Rules for the Definition of Tax Levy and Tax Collection
(Second Reading and Final Adoption)


This item presents for second reading and final adoption the proposed repeal of 19 Texas Administrative Code (TAC) Chapter 105, Foundation School Program, Subchapter A, Definitions, §105.1, Rules for the Definition of Tax Levy and Tax Collection. The proposed repeal would implement House Bill (HB) 3, 86th Texas Legislature, 2019, which removed the State Board of Education's (SBOE's) rulemaking authority related to the definitions of tax levy and tax collection for the Foundation School Program (FSP). No changes are recommended since approved for first reading. Statutory authority for is the Texas Education Code (TEC), §48.004.

COMMITTEE – ACTION
SBOE – CONSENT

2. Per Capita Apportionment Rate for the 2020-2021 School Year


A per capita apportionment rate for each school year is set based on an estimate of the amount available for expenditure from the Available School Fund (ASF). A preliminary 2020–2021 per capita apportionment rate of $411.574 was set in September 2020. A final per capita apportionment rate is set by the commissioner of education based on actual funds available for expenditure. Agency staff will present the final rate for the 2020–2021 school year at the June 2021 meeting of the Committee on School Finance/Permanent School Fund. Statutory authority is the Texas Education Code (TEC), §§48.004, §48.251(c), and §43.001(b).

COMMITTEE – DISCUSSION
SBOE – NO ACTION

3. Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.25, State Compensatory Education Program Reporting and Auditing System
(First Reading and Filing Authorization)


This item presents for first reading and filing authorization a proposed amendment to 19 Texas Administrative Code (TAC) Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.25, State Compensatory Education Program Reporting and Auditing System. The proposed amendment would update references to statutory citations that were renumbered by House Bill (HB) 3, 86th Texas Legislature, 2019. Statutory authority is the Texas Education Code (TEC), §48.104, as redesignated and amended by HB 3, 86th Texas Legislature, 2019.

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 March and April 2021 in the investment portfolio of the Texas Permanent School Fund. Statutory authority 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 March and April 2021

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 (PSF) for the months of March and April 2021. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

6. Report on the Permanent School Fund Liquid Account

This item provides an opportunity for the committee and  board to receive a status update report on the liquid account and ratify transactions. Statutory authority is the Texas Constitution, Article VII, §5 and §2; Natural Resources Code (NRC), §51.414; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

7. 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 is the Texas Constitution, Article VII, §5 and §2; Texas Education Code (TEC), §45.0532; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

8. First Quarter 2021 Permanent School Fund Performance Report

The performance measurement consultant to the Permanent School Fund (PSF), BNY Mellon Asset Servicing, will report on the investment performance during the first calendar quarter of 2021 and the cumulative investment performance of various portfolios of the PSF. This item provides the opportunity for the committee to discuss in depth, various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes. Statutory authority is the Texas Constitution, Article VII, §5 and §2; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION

9. Review of the Permanent School Fund Real Estate Asset Class and Real Estate Policy and Tactical Plan

This item provides an opportunity for the committee and board to review the real estate asset class and the real estate policy and annual tactical plan.  The committee may take action based on this information. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

10. Selection of Qualified Respondents to the Request for Qualifications (RFQ) for Outside Legal Counsel for the State Board of Education and the Texas Permanent School Fund: Fiduciary, Investment Contracting, Real Estate, Tax and Disclosure Counsel

This item provides an opportunity for the committee and board to review and approve a list of qualified candidates who responded to the request for qualification (RFQ) 701-21-004 for outside legal counsel for the State Board of Education (SBOE) and the Texas Permanent School Fund fiduciary, investment contracting, real estate, tax and disclosure counsel. Statutory authority is the Texas Constitution, Article VII, §2 and §5; Texas Education Code (TEC); and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

11. Approval of the Selection of a Firm(s) to Provide Services Related to U.S. High Yield Fixed Income Discretionary Investment Managers for the Texas Permanent School Fund and the State Board of Education as outlined in Request for Proposal (RFP) 701-21-002 and Authorization for Contract Execution by the Commissioner of Education

This item provides an opportunity for the committee and board to approve the selection of a firm(s) to provide services related to U.S. High Yield Fixed Income Discretionary Investment Managers for the Texas Permanent School Fund (PSF) and the State Board of Education (SBOE) as outlined in request for proposal (RFP) 701-21-002 and authorization for contract execution by the commissioner of education. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

12. Selection of State Board Member Nominees for Statewide Board Positions

This item provides an opportunity for the committee and board to select state board member nominees for statewide board positions. Statutory authority is the Texas Constitution, Article VII, §5 and §2; and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

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

The Permanent School Fund (PSF) executive administrator will report to the committee on matters relating to the management of the PSF 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 PSF. Statutory authority is the Texas Constitution, Article VII, §5 and §2; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION