WEDNESDAY
September 14, 2011
10 a.m.
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND - Room 1-104
Members: Pat Hardy, Chair; Lawrence A. Allen, Jr.; David Bradley; Bob Craig; and 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 at http://www.tea.state.tx.us/index4.aspx?id=2147497741.
1. Per Capita Apportionment Rate for 2011-2012 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 recommended rate for the 2011-2012 school year will be proposed 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
2. Proposed Amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost
(First Reading and Filing Authorization)
This item presents proposed amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost, for first reading and filing authorization. The proposed amendment would update the rule to reflect a change to the use of special program allotments for indirect or administrative expenses, in accordance with Senate Bill (SB) 1, 82nd Texas Legislature, First Called Session, 2011. Statutory authority for this action is the Texas Education Code (TEC), §§42.1541, 42.152(c), 42.151(h), 42.153(b), 42.154(a-1) and (c), and 42.156(b).
COMMITTEE - ACTION
SBOE - ACTION
3. Texas Education Agency Administrative and Program Strategic Budget for Fiscal Year 2012
Staff will review the Texas Education Agency administrative and program strategic budget for fiscal year 2012 as per the appropriations set by the 82nd Texas Legislature in House Bill 1, Regular Session. 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
4. 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 2011 in the investment portfolio of the Texas Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
5. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of June and July 2011
This item provides an opportunity for the committee and board to consider approval of the purchases and sales of securities executed in the portfolio of the Permanent School Fund for the months of June and July 2011. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
6. Presentation by Mellon Bank on the Custody and Securities Lending Services Provided to the Permanent School Fund
This item provides an opportunity for Mellon Bank to review the custody and securities lending services provided to the Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
7. Second Quarter of 2011 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 of 2011 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
8. Determination as to Whether Transfers May be Made from the Permanent School Fund to the Available School Fund
This item provides the opportunity for the 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 FY2012. Statutory authority for this action is the Texas Constitution, Article VII, §5.
COMMITTEE - ACTION
SBOE - CONSENT
9. Review of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund
Texas Government Code, §2001.039, establishes a four-year rule review cycle for all state agency rules, including State Board of Education (SBOE) rules. This item presents the review of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund. The rules being reviewed establish definitions, requirements, and procedures for the investment of the Permanent School Fund. The statutory authority for the rule review is Texas Government Code, §2001.039. The statutory authority for 19 TAC Chapter 33 is Texas Education Code (TEC), §§7.102(c)(31) and (33), 43.0031-43.0034, 43.004, and 45.063; Texas Government Code, §2263.004; and Texas Constitution, Article VII, §5(a)(2), (d), and (f).
COMMITTEE - DISCUSSION
SBOE - NO ACTION
10. Consideration of the Removal of the Charter School Asset Class in the Permanent School Fund Long Term Strategic Asset Allocation Plan and in the Investment Procedures Manual
This item provides an opportunity for the committee and board to consider the removal of the charter school asset class in the Permanent School Fund Long Term Strategic Asset Allocation Plan and in the Investment Procedures Manual. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
11. Approval of a Pool of Qualified Respondents to the RFQ for Real Estate Investment Managers for the Permanent School Fund and Approval of Investments in Real Estate Funds
This item provides an opportunity for the committee and board to approve a pool of qualified respondents to the RFQ for real estate investment managers for the Permanent School Fund and approval of investments in real estate funds. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - ACTION
12. Presentation and Review of the Absolute Return Portfolios Managed for the Permanent School Fund
This item provides an opportunity for the committee and board to receive a presentation and to review the absolute return portfolios managed for the Permanent School Fund. Consideration will be given to potential structural and allocation changes within the investments. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - ACTION
13. Discussion on the Structure of the Commodity Investment in the Real Return Asset Class
This item provides an opportunity for the committee to review and discuss the structure of the commodity investment in the real return asset class.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
14. 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, historical and current Fund performance and compliance. The administrator will update the board on the PSF distribution, 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 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
* If the Committee on School Finance/Permanent School Fund does not complete its agenda Wednesday, it will resume its meeting in Room 1-100 upon adjournment of the Committee of the Full Board on Thursday.
NOTE: The chair may permit the board to take up and discuss any of the discussion items on a committee agenda, including hearing any invited presentations to a committee, based upon a recommendation from the committee or inability of the committee to complete its agenda on a preceding day.