As requested by the State Board of Education (SBOE) or Texas
Permanent School Fund (PSF) investment staff, evaluation and periodic
investment reports shall supply critical information on a continuing
basis, such as the amount of trading activity, investment performance,
cash positions, diversification ratios, rates of return, and other
perspectives of the portfolios. The reports shall address compliance
with investment policy guidelines.
(1) Performance measurements. The SBOE Committee on
School Finance/Permanent School Fund shall review the quarterly performance
of each portfolio of the PSF in terms of the provisions of this chapter.
The investment performance review shall include comparisons with representative
benchmark indices, a broad universe of investment managers, and the
consumer price index. A time-weighted return formula (which minimizes
the effect of contributions and withdrawals) shall be used for investment
return analysis. The review also may include quarterly performance
analysis and comparisons of retained firms. The services of an outside,
independent consulting firm that provides performance measurement
and evaluation shall be retained.
(2) Meeting and reports. Upon request, the SBOE Committee
on School Finance/Permanent School Fund shall meet with the PSF investment
managers and custodian to review their responsibilities, the PSF portfolio,
and investment results in terms of the provisions of this chapter.
(3) Reports to the School Land Board. Each quarter,
the SBOE shall provide the School Land Board a financial report on
the portion of the PSF assets and funds for which the SBOE is responsible
in accordance with Texas Education Code, §43.0052.
(4) Review and modification of investment policy statement.
The SBOE Committee on School Finance/Permanent School Fund shall review
the provisions of this chapter at least once a year to determine if
modifications are necessary or desirable. Upon approval by the SBOE,
any modifications shall be promptly reported to all investment managers
and other responsible parties.
(5) Compliance with this chapter and Texas statutes.
Annually, the SBOE Committee on School Finance/Permanent School Fund
shall confirm that the PSF and each of its managed portfolios have
complied with the provisions of this chapter concerning exclusions
imposed by the SBOE, proxy voting, and trading and brokerage selection.
(6) Significant events. The SBOE must be notified promptly
if any of the following events occur within the custodian or external
investment manager organizations:
(A) any event that is likely to adversely impact to
a significant degree the management, professionalism, integrity, or
financial position of the custodian or investment manager. A custodian
must report the loss of an account of $500 million or more. An investment
manager must report the loss of an account of $25 million or more;
(B) a loss of one or more key people;
(C) a significant change in investment philosophy;
(D) the addition of a new portfolio manager on the
(E) a change in ownership or control, through any means,
of the custodian or investment manager; or
(F) any violation of policy.
|Source Note: The provisions of this §33.60 adopted to be effective September 1, 1996, 21 TexReg 3937; amended to be effective September 1, 1998, 23 TexReg 7777; amended to be effective August 21, 2016, 41 TexReg 6003; amended to be effective March 15, 2020, 45 TexReg 1707; amended to be effective April 8, 2021, 46 TexReg 2231