June 2022 Committee on School Finance/Permanent School Fund Item 7

Review and Adoption of the Long-Term Strategic Asset Allocation Plan of the Permanent School Fund of the State Board of Education and the Permanent School Fund Liquid Account

June 17, 2022

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

SUMMARY: This item provides an opportunity for the board to review and adopt the long-term strategic asset allocation plan of the Permanent School Fund (PSF) of the State Board of Education (SBOE) and the PSF Liquid Account.

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

PREVIOUS BOARD ACTION: In July 2020, the board reviewed and adopted the PSF long-term strategic asset allocation plan.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: One of the primary duties of the board in its oversight of the PSF 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. 

House Bill (HB) 4388, 86th Texas Legislature, 2019 provided the authority to the PSF to manage the PSF Liquid Account.

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