June 30, 2020 Committee of the Full Board Item 3

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

July 2, 2020

COMMITTEE OF THE FULL BOARD: ACTION
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 of the State Board of Education (SBOE) and the Permanent School Fund (PSF) Liquid Account.

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

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

PREVIOUS BOARD ACTION: In July 2018, the board reviewed and adopted the PSF 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 PSF is to establish the long-term asset allocation policy of the Fund. The allocation of the Fund’s assets among various classes of securities will explain approximately 85% 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 Legislature, 2019, provided the authority to the PSF of the SBOE to manage the PSF Liquid Account.

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

PUBLIC COMMENTS: None.

OTHER COMMENTS AND RELATED ISSUES: None.

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