The Committee on School Finance/Permanent School Fund (PSF) and the School Land Board met on November 16th to discuss the allocation of the assets of the PSF, the investment of the fund, and the PSF distribution to the Available School Fund (ASF). The archive of the meeting can be found here.
This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Joint meeting of the State Board of Education’s Committee on School Finance/Permanent School Fund and the School Land Board – Work Session
- Rusty Martin, Texas General Land Office – Targeting 3 sectors:
- Energy/minerals/real assets, target 31% of total net asset value, reduced from last year’s 35% due to volatility of energy market, includes renewable energy
- Real estate, 33% of total net asset value, unchanged from last year; commercial real estate assets, diversified; focus on niche opportunities
- Infrastructure, 34% of total net asset value
- For year, 16.26% net return, 13.98% gross return
- Explains procedures for determining releases from RESFA to SBOE or ASF; target 6% in market value of portfolio, then make recommendation about how much to release
- Holland Timmins, Texas Permanent School Fund – Reviews total fund asset allocation and valuation; $50 billion portfolio, 29% private markets, 33% public equities, 38% mineral ownership/fixed income portfolios
- Concern with frequency of withdrawals from account, will consider reducing cash allocation substantially
- Maynard – Can you address concern that there might be an overlap in investments, might be overweight in certain things? Particularly in area of real estate
- Timmins – Very little overlap between the two real estate portfolios; concern is a limited and minor issue
- Martin – Only invest in private market transactions, not doing the same things, particularly if you look at energy and infrastructure sectors
- Keven Ellis, SBOE member – Can you speak to schedule of diversification of funds?
- Timmins – There was some concern about dumping money into equities rapidly; using a two-year phase-in to get all of the assets
- Timmins – Taskforce to deal with transition for the PSF Corporation to manage the PSF according to SB 1232
- John Grubenman, Texas Permanent School Fund – Will merge GLO and SLB assets with TEA and SBOE assets; SLB’s investment authority over PSF will change with Corporation’s authority
- General Appropriations Act required GLO and TEA to submit a plan to implement SB 1232; plan submitted
- Next steps include filing paperwork with Secretary of State to form Corporation; then appointment of 6 of 9 members by Governor’s office, adoption of bylaws, etc.