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September 2016 Committee on School Finance Permanent School Fund Item 8

Authorization to Issue a Request for Proposals for Passive International Equities Management Services for the Permanent School Fund

September 16, 2016

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

SUMMARY:
This item provides an opportunity for the board to approve the issuance of a request for proposals for passive investing of the international equities portfolio of the Permanent School Fund through a managed account, a commingled fund, a fund of one, or some other vehicle.

STATUTORY AUTHORITY:
Texas Constitution, Article VII, §5(f).

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 at the November 2014 meeting beginning September 1, 2015 through August 31, 2017.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: The current contract for investment management services for international index fund expires on August 31, 2017.

FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.1 billion during the 2016-2017 biennium.

PUBLIC AND STUDENT BENEFIT: The income of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.

PROCEDURAL AND REPORTING IMPLICATIONS:
Not applicable.

PUBLIC COMMENTS:
None.

OTHER COMMENTS AND RELATED ISSUES:
None.

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

Separate Exhibit:
Request for Proposals for Passive International Equities Management Services for the Permanent School Fund