January 2016 Committee on School Finance Permanent School Fund Item 8

Decision on Absolute Return Investments

January 29, 2016

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

SUMMARY: This item provides an opportunity for the board to review the absolute return portfolio. The committee will consider a contract extension with Mesirow Advanced Strategies as well as the structure for the next phase of the absolute return program.

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

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

PREVIOUS BOARD ACTION: None.

FUTURE ACTION EXPECTED: None.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: Mesirow Advanced Strategies was selected in January 2008 to provide investment management services for the absolute return fund of funds asset class for the Permanent School Fund. At the July 18, 2014 meeting, the board approved a contract extension with Mesirow Advanced Strategies. The contract with Mesirow Advanced Strategies expires on February 29, 2016. At the November 19, 2015 meeting, the committee asked staff to work with NEPC to bring a proposal to develop a Raven 8 to the January meeting.

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