WEDNESDAY
November 14, 2012
9 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 the 2012-2013 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 board set the rate at $373.878 at its July 2012 meeting. Since that meeting, there has been a significant increase in the amount estimated as available for expenditures from the Available School Fund, allowing for a corresponding increase in the per capita rate. A revised rate of $390.743 for the 2012-2013 school year is recommended. Statutory authority for this action is the Texas Education Code, (TEC) §42.004 and §43.001(b).
COMMITTEE - ACTION
SBOE - ACTION
2. Texas Education Agency Administrative and Program Strategic Budget for Fiscal Year 2013
Staff will review the Texas Education Agency administrative and program budget for fiscal year 2013 as per the appropriations set by the 82nd Texas Legislature in House Bill 1, Regular Session. Additionally, staff will review the 2014-2015 Legislative Appropriations Request to the 83rd 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
3. Approval of Costs of Administering the 2012-2013 State of Texas Assessments of Academic Readiness (STAAR™) and the Exit-Level Texas Assessment of Knowledge and Skills (TAKS) to Private School Students
Texas Education Code (TEC), §39.033, provides for the voluntary assessment of Texas private school students with the State of Texas Assessments of Academic Readiness (STAAR) and the exit-level Texas Assessment of Knowledge and Skills (TAKS). The State Board of Education (SBOE) is charged with determining the per-student cost to private schools, which may not exceed the cost of administering the same assessment to a student enrolled in a public school district. This item requests approval of these costs for the 2012-2013 school year. Statutory authority for this action is the TEC, §39.033.
COMMITTEE - ACTION
SBOE - CONSENT
4. Review of 19 TAC Chapter 30, Administration, Subchapter B, State Board of Education: Purchasing and Contracts
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 30, Administration, Subchapter B, State Board of Education: Purchasing and Contracts. The rules in Subchapter B address the historically underutilized business (HUB) program and procedures relating to protest for purchasing issues and dispute resolution, in accordance with Texas Government Code requirements. The statutory authority for the rule review is Texas Government Code, §2001.039. The statutory authority for 19 TAC Chapter 30, Subchapter B, is Texas Government Code, §§2161.003, 2155.076, and 2260.052.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
5. Review of Permanent School Fund Securities Transactions and the Investment Portfolio
Investment staff will report on the transactions executed during the months of June, July, August and September 2012 in the investment portfolio of the Texas Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
6. Ratification of the Purchases and Sales of the Investment Portfolio of the Permanent School Fund for the Months of June, July, August and September 2012
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, July, August and September 2012. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
7. Third Quarter of 2012 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 third calendar quarter of 2012 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 fiscal year 2013. Statutory authority for this action is the Texas Constitution, Article VII, §5.
COMMITTEE - ACTION
SBOE - CONSENT
9. 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
10. 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
11. 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
12. Presentation on the Global Risk Control Strategies Management Services Provided to the Permanent School Fund
This item provides an opportunity for the committee to receive a presentation on global risk control strategies management services provided to the Permanent School Fund.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
13. Decision on the Private Equity Structure of the Permanent School Fund
This item provides an opportunity for the committee and board to consider the current private equity structure of the Permanent School Fund and to consider alternative structures. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - CONSENT
14. Decision on Absolute Return Investments
This item provides an opportunity for the committee and board to review the current allocations within the absolute return asset class and consider rebalancing of assets. The board will consider termination of absolute return fund of fund managers, contract extensions and ratification of fees, terms and responsibilities where appropriate. Statutory authority for this action is the Texas Constitution, Article VII, §5(f).
COMMITTEE - ACTION
SBOE - ACTION
15. Education on Emerging Market Debt
The State Board of Education (SBOE) approved an allocation of 5% to emerging market debt at the July 2012 meeting. This item will be an education session on the asset class.
COMMITTEE - DISCUSSION
SBOE - NO ACTION
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