January 2020 Committee on School Finance/Permanent School Fund Item 9

Discussion of 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, §33.25, Permissible and Restricted Investments and General Guidelines for Investment Managers

January 30, 2020

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

SUMMARY: This item provides an opportunity for the committee to discuss a proposed amendment to 19 Texas Administrative Code (TAC) Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules, §33.25, Permissible and Restricted Investments and General Guidelines for Investment Managers. The proposed amendment would address guidelines for investment managers related to permissible fixed income investments. 

STATUTORY AUTHORITY: Texas Constitution, Article VII, §5(a) and (f); and Texas Education Code (TEC), §43.001. 

Texas Constitution, Article VII, §5(a), authorizes the State Board of Education (SBOE) to make distributions from the Permanent School Fund (PSF) to the available school fund with certain limits. 

Texas Constitution, Article VII, §5(f), authorizes the SBOE to manage and invest the PSF according to the prudent investor standard and make investments it deems appropriate.

TEC, §43.001, describes the PSF as a perpetual endowment.

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

FUTURE ACTION EXPECTED: The proposed amendment to 19 TAC §33.25 will be presented for first reading and filing authorization at a future SBOE meeting.

BACKGROUND INFORMATION AND JUSTIFICATION: Section 33.25 outlines permissible and restricted investments of the PSF and the general guidelines for investment managers. 

This item will allow the committee to discuss and consider further proposed changes to guidelines for investment managers in addition to the proposed amendment to §33.25 presented for second reading and final adoption as a separate item in this agenda. 

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