September 2020 Committee on School Finance/Permanent School Fund

TUESDAY
September 1, 2020

11 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND (Virtual Meeting)

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. Per Capita Apportionment Rate for the 2020-2021 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 2020-2021 school year. Statutory authority for this action is the Texas Education Code (TEC), §48.004, §48.251(c), and §43.001(b).

COMMITTEE – ACTION
SBOE – CONSENT

2. Review of the Study of the Permanent School Fund Distributions as defined in House Bill 4388, 86th Legislature, 2019

This item provides an opportunity for the board to discuss the study on the Permanent School Fund (PSF) Distributions as defined in House Bill (HB) 4388, 86th Legislature, 2019. Statutory authority for this item is House Bill 4388, Section 5(b), 86th Legislature, 2019.

COMMITTEE – DISCUSSION
SBOE – NO ACTION


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 2020 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, Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION

4. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of May and June 2020

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 May and June 2020.  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

5. Second Quarter 2020 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 second calendar quarter 2020 and cumulative investment performance of the various portfolios of the Fund. This item will allow the committee to discuss in depth various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code, Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION

6. Determination as to Whether Transfers May be Made from the Permanent School Fund to the Available School Fund


This item provides an opportunity for the committee and board to review the requirement in Article VII, §5(a)(2) that 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 2021. 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

7.
 Discussion of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules

This item provides the opportunity for the committee to discuss 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules. Statutory authority for this item is the  Texas Constitution, Article VII, §2 and §5; Texas Government Code (TGC) §2001.039, 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 Investment Procedures Manual. 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

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

This item provides an opportunity for the committee and board to review the real estate policy and annual tactical plan.   The committee and board will also receive an update on the real estate program.  The committee may take an action based on this information. 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. Authorization to Issue a Request for Proposals for Emerging Manager Investment Management in the Private Equity and Real Estate Asset Classes for the Permanent School Fund

This item provides the opportunity for the committee and board to approve the issuance of a request for proposals for emerging manager investment management in the private equity and real estate asset classes for 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.

COMMITTEES – ACTION
SBOE – CONSENT


11. 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 for this item is Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION