September 2021 Committee on School Finance/Permanent School Fund
THURSDAY
September 2, 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. Per Capita Apportionment Rate for the 2021-2022 School Year
A preliminary per capita apportionment rate for each school year is set based on an estimate of the amount available for expenditures from the Available School Fund. The per capita apportionment includes distributions from the Permanent School Fund and funds from state occupation taxes and from the motor fuels tax. Agency staff will propose a preliminary rate for the 2021-2022 school year. Statutory authority is the Texas Education Code (TEC), §§48.004, §48.251(c), and §43.001(b).
COMMITTEE – DISCUSSION
SBOE – NO ACTION
2. 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
(Second Reading and Final Adoption)
This item presents for second reading and final adoption 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. No changes are recommended since approved for first reading. 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
3. Review of Permanent School Fund Securities Transactions and the Investment Portfolio
Investment staff will report on the transactions executed during the months of May and June 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
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 May and June 2021. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
This item provides an opportunity for the committee and board to receive a status update report on the liquid account and consider approval of the purchases and sales of investments executed in the liquid account for the months of May and June 2021. The board may consider the liquid account pacing plan and adjust as needed. 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
This item provides an opportunity for the committee and board to review the requirement in Article VII, §5(a)(2) that states, the total amount distributed over ten years cannot exceed the total return on all investment assets of the Permanent School Fund (PSF) over the same ten-year period. The board will determine whether transfers may be made from the PSF to the Available School Fund (ASF) in fiscal year 2022. Statutory authority is the Texas Constitution, Article VII, §5 and §2; and 19 Texas Administrative Code (TAC), Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
7. Second 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 second 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
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 Texas Permanent School Fund Investment Procedures Manual. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
9. Review of the Permanent School Fund Emerging Market Debt Asset Class
This item provides an opportunity for the committee to review the emerging market debt asset class. Statutory authority is the Texas Constitution, Article VII, §2 and §5; Texas Education Code (TEC); and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
10. Review of the Permanent School Fund Public Equities Asset Classes
This item provides an opportunity for the committee to review the public equities asset classes. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
This item provides an opportunity for the committee to discuss Senate Bill (SB) 1232, 87th Legislature, Regular Session, 2021 and the Articles of Incorporation for the Permanent School Fund (PSF) Corporation. Statutory authority is the Texas Constitution, Article VII, §5 and §2; and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
This item provides an opportunity for the committee to discuss potential amendments to 19 Texas Administrative Code (TAC) Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules. The proposed amendments would update the rules based on changes made by Senate Bill (SB) 1232, 87th Texas Legislature, Regular Session, 2021. Statutory authority is the Texas Constitution, Article VII, §2 and §5, and Texas Education Code (TEC), Chapter 43, Subchapter B, as added by SB 1232, 87th Texas Legislature, Regular Session, 2021.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
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