THURSDAY
April 12, 2018

9 a.m.

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: David Bradley, chair; Tom Maynard, vice chair; Lawrence A. Allen, Jr.;
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 the State Board of Education committee meetings and general board meetings are provided online.

1. Review of Permanent School Fund Securities Transactions and the Investment Portfolio

Investment staff will report on the transactions executed during the months of December 2017, January and February 2018 in the investment portfolio of the Texas Permanent School Fund.

SBOE - NO ACTION

2. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of December 2017, January and February 2018 

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 December 2017, January and February 2018. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

3. 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, 2017

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 Bond Guarantee Program for the Fiscal Year Ending August 31, 2017.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

4. 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, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

5. Fourth Quarter 2017 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 fourth calendar quarter 2017 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

6. 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

7. Approval of an Extension of the Standard Contract with NEPC, LLC and Authorization for Contract Execution by the Commissioner of Education

This item provides an opportunity for the committee and board to extend the standard contract with NEPC, LLC and authorization 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

8. 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, §33.5, Code of Ethics
(Second Reading and Final Adoption)

This item presents for second reading and final adoption 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, §33.5, Code of Ethics. The proposed amendment would improve and clarify how the rule applies to investments of the Permanent School Fund (PSF) in investment funds. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031-43.0034, and 43.004; Texas Government Code, §2263.004; and the Texas Constitution, Article VII, §5(a)(2), (d), and (f).

COMMITTEE - ACTION
SBOE - ACTION

9. Proposed Amendments 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, §33.15, Objectives, and §33.20, Responsible Parties and Their Duties
(Second Reading and Final Adoption)

This item presents for second reading and final adoption proposed amendments 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, §33.15, Objectives, and §33.20, Responsible Parties and Their Duties. The proposed amendments would update the rate of return objective of the Permanent School Fund (PSF) and clarify roles and responsibilities for providing advice to the State Board of Education (SBOE) on benchmark and performance reporting. Statutory authority for this action is the Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031, 43.0033, and 43.004; Texas Government Code, §2263.004; and the Texas Constitution, Article VII, §5(d), and (f).

COMMITTEE - ACTION
SBOE - ACTION

10. Review of Permanent School Fund Benchmarks

This item provides an opportunity for the committee and board to review the Permanent School Fund benchmarks. The actions may include amendment to the Investment Procedures Manual. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

11. Consider a Process to Obtain a PSF Logo and Potential Solution for Donations

This item provides an opportunity for the committee and board to consider a process to obtain a Permanent School Fund (PSF) logo and potential solution for donations. Statutory authority is the Texas Constitution, Article VII, §5(f).

COMMITTEE - ACTION
SBOE - CONSENT

 12. 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.

COMMITTEE - DISCUSSION
SBOE - NO ACTION

13. Discussion on SB 253 of the 85th Legislative Session

This item provides an opportunity for the committee and board to discuss SB 253 of the 85th Legislature, Regular Session, related to restrictions on certain investments of public money.

COMMITTEE - DISCUSSION
SBOE - NO ACTION