January 2021 Committee on School Finance/Permanent School Fund Item 10

Approval of an Extension of the Standard Contract with BNY Mellon and Authorization for Contract Execution by the Commissioner of Education

January 29, 2021

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

SUMMARY:  This item provides an opportunity for the committee and board to extend the standard contract with BNY Mellon, and authorize contract execution by the commissioner of education.

STATUTORY AUTHORITY:  Texas Constitution, Article VII, §2 and §5; Natural Resources Code (NRC), §51.414; 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.

NRC, §51.414 establishes the Permanent School Fund (PSF) Liquid Account as an account in the permanent school fund in the State Treasury to be managed by the SBOE.

19 TAC Chapter 33 codifies administrative rules that provide a statement of investment objectives, policies, and guidelines of the Texas PSF and Bond Guarantee Program 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 February 2017 meeting, the board selected BNY Mellon to provide Global Custody and Securities Lending Services for the PSF with the option to extend for two (2) additional three-year terms. The initial term of the contract will expire on August 31, 2021. 

BACKGROUND INFORMATION AND JUSTIFICATION:  None

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