September 2015 Committee on School Finance Permanent School Fund Item 12

Presentation by The Bank of New York Mellon on the Custody and Securities
Lending Services Provided to the Permanent School Fund

September 10, 2015

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION

SUMMARY: This item provides an opportunity for The Bank of New York Mellon to review the custody and securities lending services provided to the Permanent School Fund.

BOARD RESPONSE: Based on the information presented, the committee may provide guidance to the investment staff as appropriate.

PREVIOUS BOARD ACTION: None.

FUTURE ACTION EXPECTED: None.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: At the February 2004 meeting, the board selected The Bank of New York Mellon to provide custody and securities lending services. The master trust custodian maintains custody of all securities owned by the Permanent School Fund. The custodian facilitates the operational movement of securities, collects and distributes funds for transactions, collects and remits income, and provides accounting, reporting, and analytical capability for management of the Fund. As securities lending agent for the Fund, the custodian operates a securities lending program in order to earn income for the Permanent School Fund.

At the July 2013 meeting, the board approved extension of the global custody and securities lending services agreement with The Bank of New York Mellon through August 31, 2017.

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

PROCEDURAL AND REPORTING IMPLICATIONS: Not applicable.

PUBLIC COMMENTS: None.

ALTERNATIVES: None.

OTHER COMMENTS AND RELATED ISSUES: None.

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