Jan-Feb 2018 Committee on School Finance Permanent School Fund
THURSDAY
February 1, 2018
9 a.m.
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: David Bradley, chair; Tom Maynard, vice chair; Lawrence A. Allen, Jr.;
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. Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms
(Second Reading and Final Adoption)
This item presents for second reading and final adoption a proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms. The proposed amendment would update the depository contract adopted in rule to reflect changes made by Senate Bill (SB) 754, 85th Texas Legislature, Regular Session, 2017. No changes are recommended since approved for first reading. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(34); 45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017; 45.206; and 45.208.
COMMITTEE - ACTION
SBOE - ACTION
This item presents for second reading and final adoption a proposed amendment to 19 TAC Chapter 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes. The proposed amendment would update the rule to reflect changes made by Senate Bill (SB) 1152, 85th Texas Legislature, Regular Session, 2017. No changes are recommended since approved for first reading. Statutory authority for this action is the Texas Education Code (TEC), §§12.106; 25.087, as amended by SB 1152, 85th Texas Legislature, Regular Session, 2017; and 42.004.
COMMITTEE - ACTION
SBOE - ACTION
Texas Government Code, §2001.039, establishes a four-year rule review cycle for all state agency rules, including State Board of Education (SBOE) rules. This item presents the adoption of the review of 19 TAC Chapter 105, Foundation School Program, Subchapter A, Definitions, and Subchapter B, Use of State Funds. The rules being reviewed provide for the use of Foundation School Program (FSP) funds. The statutory authority for the rule review is the Texas Government Code, §2001.039. The statutory authority for 19 TAC Chapter 105, Subchapter A, is the Texas Education Code (TEC), §42.004. The statutory authority for 19 TAC Chapter 105, Subchapter B, §105.11, is the TEC, §§42.151(h), 42.152(c), 42.153(b), 42.154(c), 42.1541, and 42.156(b). The statutory authority for 19 TAC Chapter 105, Subchapter B, §105.12, is the TEC, §42.004.
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 October and November 2017 in the investment portfolio of the Texas Permanent School Fund.
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 October and November 2017
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 October and November 2017. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
6. Annual Reporting Requirement of the Internally Managed Permanent School Fund Investment Portfolio
This item provides an opportunity for the Executive Administrator and Chief Investment Officer of the Permanent School Fund to report on various items required by 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
7. Third Quarter 2017 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 third calendar quarter 2017 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.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
8. Decision on Real Estate Investments
This item provides an opportunity for the committee and board to review and consider possible real estate investments. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
9. Presentation on the Commodities Asset Class for the Permanent School Fund
This item provides an opportunity for the committee to receive a presentation on the management of the asset class. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
10. Proposed Amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules,
§33.5, Code of Ethics
(First Reading and Filing Authorization)
This item presents for first reading and filing authorization proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.5, Code of Ethics. The proposed amendment would improve and clarify how the rule applies to investments of the Permanent School Fund (PSF) in investment funds. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031-43.0034, and 43.004; Texas Government Code, §2263.004; and the Texas Constitution, Article VII, §5(a)(2), (d), and (f).
COMMITTEE - ACTION
SBOE - CONSENT
11. Proposed Amendments to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools
(Second Reading and Final Adoption)
This item presents for second reading and final adoption proposed amendments to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts, and §33.67, Bond Guarantee Program for Charter Schools. The proposed amendments would adjust the bond guarantee multiplier, specify the charter district bond guarantee capacity authorized by Senate Bill (SB) 1480, and address Charter District Bond Guarantee Reserve Fund management. No changes are recommended since approved for first reading. Statutory authority for this action is the Texas Education Code (TEC), §§45.053; 45.0532 and 45.0571, as amended by SB 1480, 85th Texas Legislature, Regular Session, 2017; 45.063; and the Texas Constitution, Article VII, Education, §5(d).
COMMITTEE - ACTION
SBOE - ACTION
12. Proposed Amendments to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.15, Objectives, and §33.20, Responsible Parties and Their Duties
(First Reading and Filing Authorization)
This item presents for first reading and filing authorization proposed amendments to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.15, Objectives, and §33.20, Responsible Parties and Their Duties. The proposed amendments would update the rate of return objective of the Permanent School Fund (PSF) and clarify roles and responsibilities for providing advice to the State Board of Education (SBOE) on benchmark and performance reporting. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031, 43.0033, and 43.004; Texas Government Code, §2263.004; and the Texas Constitution, Article VII, §5(d), and (f).
COMMITTEE - ACTION
SBOE - ACTION
13. Review of Permanent School Fund Benchmarks
This item provides an opportunity for the committee and board to review the Permanent School Fund Benchmarks. The actions may include amendment to the Investment Procedures Manual. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
14. Report of the Permanent School Fund Executive Administrator and Chief Investment Officer
The Permanent School Fund executive administrator will report to the committee on matters relating to the management of the Permanent School Fund. The report will 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 will 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 will provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION