The State Board of Education (SBOE) approved a new asset allocation for its $22.2 billion Permanent School Fund last Friday that includes, for the first time, making about a $100 million available for charter school facilities and putting $1.5 billion in a risk parity strategy.
After extensive debate, the board voted 7-6 with two members absent, to approve the new asset allocation mix that sets aside 0.5 percent of the fund for charter school facilities. Members approved a proviso that said funds would not be spent on the charter facilities unless the board received a favorable opinion from the state’s attorney general or express legislative authority.
Board Chair Gail Lowe will seek an attorney general’s opinion to clarify whether the board can invest in charter facilities and maintain its constitutional duty to meet the “prudent person standard” with all investments.
The asset allocation strategy sets spending targets for the Permanent School Fund, which is the state’s public school endowment fund.
The strategy can be viewed by visiting: http://www.tea.state.tx.us/news_release.aspx?id=2147485506
Along with overseeing the fund, the board also authorizes the creation of new charter schools. There are currently 210 charters holders.
Additionally, following the advice of its investment consultant NEPC, LLC., the board added a risk parity strategy to its investment plan. Risk parity is a term for a variety of investment techniques that attempt to take equal risk in different asset classes.