June 2018 Committee of the Full Board Wednesday Item 4

Review and Adoption of the Long-Term Strategic Asset Allocation Plan of the Permanent School Fund

June 15, 2018

COMMITTEE OF THE FULL BOARD: ACTION
STATE BOARD OF EDUCATION: CONSENT

SUMMARY: This item provides an opportunity for the committee and board to review and adopt the long-term strategic asset allocation plan of the Permanent School Fund.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §5(f)
 
PREVIOUS BOARD ACTION: In July 2016, the board reviewed and adopted the Permanent School Fund long-term strategic asset allocation plan.

FUTURE ACTION EXPECTED: None.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: One of the primary duties of the board in its oversight of the Permanent School Fund is to establish the long-term asset allocation policy of the Fund.  The allocation of the Fund’s assets between various classes of securities will explain approximately 90% of the Fund’s variation of returns. The overall risk assumed by the Fund is managed through the diversification of asset classes in which the Fund is invested.

FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.5 billion during the 2018-2019 biennium.  The distribution earned by the Fund is affected by the asset allocation of the Fund and the capital market environment.

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 IMPLICATIONSPUBLIC 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