January 2022 Committee on School Finance/Permanent School Fund Item 10

Review of the Real Return Asset Class for the Permanent School Fund

January 27, 2022

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

SUMMARY: This item provides an opportunity for the committee to receive an overview of the real return asset class.

STATUTORY AUTHORITY: Texas Constitution, Article VII, §2 and §5; 19 Texas Administrative Code (TAC) Chapter 33.

The Texas Constitution, Article VII, §2 and §5 establish the permanent school fund, the assets that comprise the permanent school fund, the bond guarantee program, the available school fund, and authorize the State Board of Education (SBOE) to manage and invest the permanent school fund in accordance with the prudent person standard.

19 TAC Chapter 33 codifies administrative rules that provide a statement of investment objectives, policies, and guidelines of the Texas Permanent School Fund as adopted by the SBOE.

The full text of statutory citations can be found in the statutory authority section of this agenda.

PREVIOUS BOARD ACTION: At the January 2021 meeting, the board terminated Credit Suisse and PIMCO and allocated the remaining funds to the Permanent School Fund (PSF) internally-managed commodities portfolio to align the allocation with the asset allocation approved by the SBOE in June 2020. At the June 2020 meeting, the board approved the PSF Long-Term Strategic Asset Allocation Plan with an allocation of 4% to the real return asset class.

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