September 2014 Committee on School Finance Permanent School Fund
THURSDAY
September 18, 2014
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. Proposed Amendment to 19 TAC Chapter 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes
(First Reading and Filing Authorization)
This item presents proposed amendment to 19 TAC Chapter 129, Student Attendance, Subchapter B, Student Attendance Accounting, §129.21, Requirements for Student Attendance Accounting for State Funding Purposes, for first reading and filing authorization. The proposed amendment would update statutory references in the rule text to reflect changes from the 83rd Texas Legislature, Regular Session, 2013. Statutory authority for this action is the Texas Education Code (TEC), §25.087 and §42.004.
COMMITTEE - ACTION
SBOE - ACTION
2. 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. Agency staff members will propose the recommended rate for the 2014-2015 school year at the September 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 - 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, §33.65, 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, for first reading and filing authorization. The proposed amendment would add a definition of bond to the rule to define more precisely the types of debt that are eligible for guarantee. The proposed amendment would also modify the rule to require that each issuance of bonds approved for the guarantee be approved by the attorney general. In addition, the proposed amendment would add a definition of nationally recognized investment rating firm to provide consistency with the charter school bond guarantee rules. 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. 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, for first reading and filing authorization. The proposed amendment would add a definition of bond to the rule to define more precisely the types of debt that are eligible for guarantee. The proposed amendment would also add a definition of nationally recognized investment rating firm. In addition, the proposed amendment would modify the rule to require that each issuance of bonds approved for the guarantee be approved by the attorney general. Finally, the proposed amendment would clarify language regarding the treatment of charter schools that apply for the guarantee within 12 months of the date that their charter is due to expire. 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
5. Discussion of 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
This item provides the opportunity for the committee to discuss the proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audit and Agreed-Upon Procedures. At the request of a State Board of Education (SBOE) member, the proposed amendment would address provisions relating to a school district or other educational entity hiring an independent auditor, including the length of time the same auditor may be retained. The proposed amendment would also add and clarify other administrative provisions and make technical edits. Statutory authority is the Texas Education Code (TEC), §§7.102(c)(32), 44.001, 44.007, and 44.008.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
6. Texas Education Agency Administrative and Program Strategic Budget for Fiscal Year 2015 and the Proposed Legislative Appropriations Request for the 2016-2017 Biennium
Staff will review the Texas Education Agency administrative and program budget for fiscal year 2015 as per the appropriations set by the 83rd Texas Legislature in Senate Bill 1, Regular Session. Additionally, staff will review the 2016-2017 Legislative Appropriations Request which will be presented to the 84th Texas Legislature. The committee will be provided an opportunity to comment on the proposed budgets. Statutory authority is the Texas Education Code (TEC), §7.055(c).
COMMITTEE - DISCUSSION
SBOE - NO ACTION
7. Review of Permanent School Fund Securities Transactions and the Investment Portfolio
Investment staff will report on the transactions executed during the months of June and July 2014 in the investment portfolio of the Texas Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
8. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of June and July 2014
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 June and July 2014. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
9. Second Quarter 2014 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 second calendar quarter 2014 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
10. Determination as to Whether Transfers May be Made from the Permanent School Fund to the Available School Fund
This item provides an opportunity for the committee and board to review the requirement in Article VII, §5(a)(2) that the total amount distributed over ten years cannot exceed the total return on all investment assets of the PSF over the same ten-year period. The board will determine whether transfers may be made from the Permanent School Fund to the Available School Fund in fiscal year 2015. Statutory authority for this action is the Texas Constitution, Article VII, §5.
COMMITTEE - ACTION
SBOE - CONSENT
11. Proposed Amendments to the Investment Procedures Manual
This item provides an opportunity for the committee and board to review and adopt proposed amendments to the Investment Procedures Manual. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
12. 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
This item provides an opportunity for The Bank of New York Mellon to review the custody and securities lending services provided to the Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
14. Presentation on the Commodities Discretionary Investment Management Services Provided to the Permanent School Fund
This item provides an opportunity for the committee to receive presentations and to review the commodities discretionary investment management services provided to the Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
15. Presentations by Finalist Candidates for Emerging Market Equity Discretionary Investment Managers for the Permanent School Fund and Authorization for Contract Execution by the Commissioner of Education
The committee will receive presentations by finalist candidates for emerging market equity discretionary investment managers 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
16. 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