November 2017 Committee on School Finance Permanent School Fund Item 14

Discussion on Permanent School Fund Benchmarks

November 9, 2017

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

SUMMARY: This item provides an opportunity for the committee to discuss the Permanent School Fund Benchmarks.

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

PREVIOUS BOARD ACTION: At the July 2010 meeting, the board approved the selection of Credit Suisse, Customized Fund Investment Group (CFIG) and NB Alternatives Advisors, LLC to serve as a private equity discretionary separate account manager with a $650 million allocation to each firm.

At the May 2008 meeting, the board selected Courtland Partners as the Permanent School Fund’s real estate counsel to provide the expertise and advice related to the investment strategy of the real estate portfolio for the Permanent School Fund. Following the RFP process in July 2013, the board approved a contract to continue with Courtland Partners as the Permanent School Fund’s real estate counsel.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: In July 2006, the board approved a strategic asset allocation plan which included a 6% allocation to private equity. At the July 2012 meeting, the board set a strategic asset allocation which included an 8% allocation to real estate.

FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.5 billion during the 2018-2019 biennium.

PUBLIC AND STUDENT BENEFIT: The distribution of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.

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