April 4, 2019 Committee on School Finance/Permanent School Fund

THURSDAY
April 4, 2019

9 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
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. Adoption of Review of 19 TAC Chapter 129, Student Attendance, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting
(Adoption of Review)

Texas Government Code (TGC), §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 review of 19 TAC Chapter 129, Student Attendance, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting. Subchapter A addresses free attendance in general, and Subchapter B addresses requirements for student attendance accounting for state funding purposes. Statutory authority for the rule review is TGC, §2001.039. Statutory authority for 19 TAC Chapter 129, Subchapters A and B, is Texas Education Code (TEC), §42.004 and §12.106.
 
COMMITTEE – ACTION
SBOE – ACTION

2. Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter C, Adoptions By Reference, §109.41, Financial Accountability System Resource Guide
(First Reading and Filing Authorization

This item presents for first reading and filing authorization proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter C, Adoptions By Reference, §109.41, Financial Accountability System Resource Guide. The proposed amendment would reference the updated Financial Accountability System Resource Guide (FASRG) and remove language relating to the commissioner's role in amending the FASRG. Statutory authority for this action is the Texas Education Code (TEC), §§7.055(b)(32), 7.102(c)(32), 44.001(a) and (b), 44.007(a)-(d), and 44.008(b).

COMMITTEE – ACTION
SBOE – 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 December 2018 and January 2019 in the investment portfolio of the Texas Permanent School Fund. 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

4. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of December 2018 and January 2019

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 December 2018 and January 2019. 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. Report by the State Auditor’s Office on the Audit of the Permanent School Fund’s Financial Statements and Certification of the Bond Guarantee Program for the Fiscal Year Ending August 31, 2018

This item provides an opportunity for representatives of the State Auditor’s Office (SAO) to make a presentation regarding the Audit of the Permanent School Fund’s Financial Statements and the certification of the Bond Guarantee Program for the Fiscal Year Ending August 31, 2018. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and Texas Education Code (TEC), §45.053(b).

COMMITTEE – DISCUSSION
SBOE – NO ACTION

6. Adoption of an Annual Report on the Status of the Bond Guarantee Program

This item provides an opportunity for the committee and board to adopt an annual report on the status of the Bond Guarantee Program. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, and Texas Education Code (TEC), §45.053(c).

COMMITTEE – ACTION

SBOE - CONSENT

7. Fourth Quarter 2018 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 fourth calendar quarter 2018 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 (TAC) Chapter 33.

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 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 may take 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. Review of the Permanent School Fund Emerging Market Debt Asset Class

This item provides an opportunity for the board to review the emerging market debt asset class. 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

11. Presentation on the Permanent School Fund Private Equity Program Structure

This item provides an opportunity for the committee and board to consider options regarding the private equity program structure. 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

12. Presentation on the Permanent School Fund Risk Parity Asset Class

This item provides an opportunity for the committee to receive presentations on the risk parity asset class and services provided to the Permanent School Fund. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.
 
COMMITTEE – DISCUSSION
SBOE – NO ACTION

13. Permanent School Fund Logo Contest Contribution

The State Board of Education will consider accepting a donation to cover part of the cost in providing replicas of the winning design in the Permanent School Fund logo contest. Statutory authority for this action is the Texas Education Code (TEC), §7.102(c)(3).

COMMITTEE – ACTION
SBOE - CONSENT

14. Report of the Permanent School Fund 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 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 Permanent School Fund.
Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION