July 2015 Committee on School Finance Permanent School Fund
THURSDAY
July 16, 2015
9 a.m.
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: Patricia Hardy, Chair; Lawrence A. Allen, Jr., Vice Chair; David Bradley;
Ken Mercer; Thomas Ratliff. A quorum of the State Board of Education may attend the committee meeting and discuss items on the committee agenda. A quorum of the Committee of Investment Advisors to the Permanent School Fund may attend the committee meeting and discuss items on the committee agenda.
Public Testimony - Individual testimony will be taken at the time the related item comes up for committee discussion or action. The procedures for registering and taking public testimony at State Board of Education committee meetings and general board meetings are provided online.
1. Per Capita Apportionment Rate for the 2014-2015 School Year
The board is responsible for setting a per capita apportionment rate for each school year based on an estimate of the amount available for expenditures from the Available School Fund. The board adopted a preliminary 2014-2015 per capita apportionment rate of $257.274 in September 2014. Agency staff members will propose a recommended revised rate for the 2014-2015 school year at the July meeting of the Committee on School Finance/Permanent School Fund. Statutory authority for this action is the Texas Education Code (TEC), §42.004 and §43.001(b).
COMMITTEE - ACTION
SBOE - CONSENT
2. Proposed Amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts
(First Reading and Filing Authorization)
This item presents proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.65, Bond Guarantee Program for School Districts. The proposed amendment would modify the definition of nationally recognized investment rating firm and exclude student and teacher housing from the projects eligible for a guarantee under the definition of new money issue. Statutory authority for this action is the Texas Education Code (TEC), §7.102(c)(33) and §45.063, and the Texas Constitution, Article VII, Section 5.
COMMITTEE - ACTION
SBOE - ACTION
3. Proposed Amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.67, Bond Guarantee Program for Charter Schools
(First Reading and Filing Authorization)
This item presents proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.67, Bond Guarantee Program for Charter Schools. The proposed amendment would modify the definition of nationally recognized investment rating firm and exclude student and teacher housing from the projects eligible for a guarantee under the definition of new money issue. The proposed amendment would also require the commissioner to maintain a 5.0% reserve so that charter school guarantees do not exceed capacity as the value of the fund changes and new guarantees in process are issued. In addition, the proposed amendment would specify additional requirements for a charter district relating to the fulfillment of financial obligations and the classification of property purchased or improved with bond proceeds that is serviced with state funds. Statutory authority for this action is the Texas Education Code (TEC), §7.102(c)(33) and §45.063, and the Texas Constitution, Article VII, Section 5.
COMMITTEE - ACTION
SBOE - ACTION
4. Review of Permanent School Fund Securities Transactions and the Investment Portfolio
Investment staff will report on the transactions executed during the months of March, April, and May 2015 in the investment portfolio of the Texas Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
This item provides an opportunity for the committee and board to consider approval of the purchases and sales of investments executed in the portfolio of the Permanent School Fund for the months of March, April, and May 2015. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
6. First Quarter 2015 Permanent School Fund Performance Report
The performance measurement consultant to the Permanent School Fund, BNY Mellon Asset Servicing, will report on the investment performance during the first calendar quarter 2015 and cumulative investment performance of the various portfolios of the Fund. This item will allow the committee to discuss in depth various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
7. Decision on Real Estate Investments
This item provides an opportunity for the committee and board to review and consider possible real estate investments. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
8. Overview on Permanent School Fund Private Equity Program
This item provides an opportunity for the committee to receive an overview of the Permanent School Fund Private Equity Program.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
This item provides an opportunity for the committee and board to approve a pool of qualified respondents to the Request for Qualifications (RFQ) for rating agencies for the Permanent School Fund. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
10. Presentation by Finalist Candidates for Investment Counsel Services for the Permanent School Fund
The committee will receive presentations by finalist candidates for investment counsel services for the Permanent School Fund and select firms for contract execution by the commissioner of education. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
11. Report of the Permanent School Fund Executive Administrator and Chief Investment Officer
The Permanent School Fund executive administrator will report to the committee on matters relating to the management of the Permanent School Fund. The report will present information on historical and current status of Fund holdings, current and proposed investment policies and procedures, and historical and current Fund performance and compliance. The administrator will update the board on the bond guarantee program, the status of requests for proposal or for qualifications and current contracts for services and other administrative activities undertaken on behalf of the board. The administrator may provide an update on the PSF distribution or on the effect of legislation impacting the PSF. The administrator will provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the Permanent School Fund. The committee will direct investment staff regarding future agenda items.
COMMITTEE - DISCUSSION
SBOE - NO ACTION