June-July 2020 Committee on School Finance/Permanent School Fund
WEDNESDAY
July 1, 2020
9 a.m.
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Virtual Meeting
Members: Tom Maynard, chair; Lawrence A. Allen, Jr., vice chair; Donna Bahorich; Patricia Hardy; Ken Mercer. 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 2019-2020 School Year
A per capita apportionment rate for each school year is set based on an estimate of the amount available for expenditure from the Available School Fund. A preliminary 2019–2020 per capita apportionment rate of $ $259.207 was set in September 2019. A final per capita apportionment rate is set by the commissioner of education based on actual funds available for expenditure. Agency staff will present the final rate for the 2019–2020 school year at the June meeting of the Committee on School Finance/ Permanent School Fund. Statutory authority for this item is the Texas Education Code (TEC), §48.004, §48.251(c), and §43.001(b).
COMMITTEE – DISCUSSION
SBOE – NO ACTION
2. Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audits and Agreed-Upon Procedures
(Second Reading and Final Adoption)
This item presents for second reading and final adoption a proposed amendment to 19 Texas Administrative Code (TAC) Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audits and Agreed-Upon Procedures. The proposed amendment would reflect changes made by House Bill (HB) 1520, 86th Texas Legislature, 2019, that eliminated the requirement for out-of-state certified public accountancy (CPA) firms to be licensed in Texas. No changes are recommended since approved for first reading. Statutory authority for this action is the Texas Education Code, §§7.102(c)(32), 44.001, 44.007, 44.008, and 44.010.
COMMITTEE – ACTION
SBOE – ACTION
3. Review of Permanent School Fund Securities Transactions and the Investment Portfolio
Investment staff will report on the transactions executed during the months of March and April 2020 in the investment portfolio of the Texas Permanent School Fund. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
4. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of March and April 2020
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 and April 2020. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
5. Report by the State Auditor’s Office on the Audit of the Permanent School Fund’s Financial Statements and Certification of the Bond Guarantee Program for the Fiscal Year Ending August 31, 2019
This item provides an opportunity for representatives of the State Auditor’s Office (SAO) to make a presentation regarding the Audit of the Permanent School Fund’s Financial Statements and certification of the Bond Guarantee Program for the Fiscal Year Ending August 31, 2019. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and Texas Education Code, (TEC) §45.053(b).
COMMITTEE – DISCUSSION
SBOE – NO ACTION
6. Adoption of an Annual Report on the Status of the Bond Guarantee Program
This item provides an opportunity for the committee and board to adopt an annual report on the status of the Bond Guarantee Program. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, and Texas Education Code, (TEC) §45.053(c).
COMMITTEE – ACTION
SBOE – CONSENT
7. Review of the Bond Guarantee Program Charter Capacity
This item provides an opportunity for the committee and board to receive a presentation on bond guarantee program’s charter capacity. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5, Texas Education Code, (TEC) §45.0532; and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
8. Approval of the Selection of a Legal Counsel for the Bond Guarantee Program as outlined in RFQ 701-20-006 for the Texas Permanent School Fund and Authorization for Contract Execution by the Commissioner of Education
This item provides the opportunity for the committee and board to approve the selection of a legal counsel for the Bond Guarantee Program (BGP) of the Texas Permanent School Fund (PSF) as outlined in Request for Qualifications (RFQ) 701-20-006 and authorization for contract execution by the Commissioner of Education.Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – ACTION
SBOE – CONSENT
9. First Quarter 2020 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 2020 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. Statutory authority for this item is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION
10. 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
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 for this action is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code, Chapter 33.
COMMITTEES – ACTION
SBOE – CONSENT
11. Review of the Report on Permanent School Fund Percentage Distribution Rates Under Consideration for Fiscal Years 2022 and 2023
This item provides an opportunity for the board to evaluate and approve the report on Permanent School Fund (PSF) percentage distribution rates under consideration for fiscal years 2022 and 2023. The board will consider various factors associated with the distribution rate such as expected returns, inflation, and student growth. Additionally, this item provides the opportunity for the board to discuss anticipated instructional materials needs for the 2022-2023 biennium. Statutory authority for this action is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code, Chapter 33.
COMMITTEES – ACTION
SBOE – CONSENT
12. Report of the Permanent School Fund Executive Administrator and Chief Investment Officer
The Permanent School Fund (PSF) executive administrator will report to the committee on matters relating to the management of the PSF and the Charter District Reserve Fund. The report may 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 may 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 may provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the PSF. Statutory authority for this item is Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC) Chapter 33.
COMMITTEE – DISCUSSION
SBOE – NO ACTION