AEW Capital Management LP had qualified as one of the 68 firms that could be tapped for making future real estate investments for the $22 billion Permanent School Fund.

But on Friday, the board plucked AEW from the list and approved only 67 eligible firms.

“As a public fund, we needed someone who could be a little bit more accurate,” said Board Member David Bradley, chairman of the Permanent School Fund committee.

“At a minimum, it was sloppy,” Bradley said. “At the worst, it was intentional.”

Disclosure forms submitted as part of AEW’s application indicated the firm had given gifts to Agosto and Nunez gifts, including football tickets, golf games and meals. Agosto and Nunez disputed that they had received the gifts; AEW subsequently amended its gift report.

Several board members abstained from the AEW vote, including Geraldine Miller. Her family’s company, Henry S. Miller Realty Services LLC, has a direct business relationship with AEW, according to a document submitted to the Texas Education Agency.

Several high-profile scandals at public pension funds across the country have highlighted the potentially problematic role of placement agents. In those cases, the agents have been politically connected individuals that provided access to decision-makers.

The proposal discussed Wednesday would require the investment managers to report if they have used placement agent and how much the placement agent is paid. The board will then have to accept that arrangement.

Gary Lawson, the board’s fiduciary counsel, said the proposed rule is a middle-ground between banning the use of placement agents and doing nothing.

“It is cumbersome but it is dealing with a new reality that there has been criticism of third-party marketers,” Lawson said.

The board will vote in January on the new rule, which is part of a larger review of the board’s ethics policies.

Board Chairwoman Gail Lowe, R-Lampasas, said: “We’re in an environment where I believe these rules about placement agents are necessary.”

Last week, I wrote about an idea being kicked around at State Board of Education to invest a small portion of the Permanent School Fund in either financing or building charter school facilities.

Looks like the private sector might be beating the PSF to the punch.

The Gates Foundation announced today that it would provide $30 million to help Houston charter schools secure $300 million in financing for facilities.

The first beneficiary is KIPP Houston, which recently issued $67 million in bonds. The Gates Foundation contributed $10 million to a $20 million bond guaranty that helped the charter school land more favorable lending terms.

According to the news release, this is the first time a private foundation has backed charter school facility bonds at this scale.

A Wall Street Journal article explains that there is some accounting benefit to the move for the foundation.

The $37 billion trust stems from labor agreements with the Big Three auto makers struck before General Motors and Chrysler filed for bankruptcy last spring. The United Auto Workers controls the trust, which is called the UAW voluntary employee beneficiary association.

Henry will serve as the chief investment officer.

In August, Henry resigned from TMRS after a two-year stint as the executive director and chief investment officer of the fund that serves some 800 small and midsized Texas cities. Henry oversaw a significant transition from an all-bond portfolio to gradually embrace stocks.

The search for Henry’s replacement — or replacements, given his two titles — is underway with a decision expected perhaps early next year.

Perry also made official that R. David Kelly, a trustee since 2007, will take over as chairman. Last weekend, the American-Statesman reported that Kelly would replace Linus Wright as chairman less than a year after Wright, a retired superintendent, took the helm. Wright said he was given no reason for the abrupt change.

Though no longer chairman, Wright will remain a trustee on the nine-member board until his term ends in 2011.

The new trustees, who will each serve a six-year term, are:

—Todd Barth of Houston, a real estate investor and a former appointee to the state board that manages the real estate portion of the Permanent School Fund;

—Seth Crone of Beaumont, the vice president of business development for The Bank of New York Mellon Trust Company N.A.; and

—Nanette Sissney of Whitesboro, a school counselor for the Whitesboro Independent School District and member of the Texas Classroom Teachers Association executive board.

Kelly and Barth are both members of the finance team for Perry’s re-election effort.

The new trustees replace financial professionals Dory Wiley of Dallas and John Graham Jr. of Fredericksburg as well as Mark Henry, the superintendent of the Galena Park school district. The terms of all three outgoing trustees expired in August.

A 25-year veteran of state service, MacBride will occupy one of three seats for members of the system until 2013. She replaces Don Green, who retired in May.

MacBride now oversees administration services for the GLO but will soon head over to the Department of Public Safety where she will be the chief financial officer.

Now, they can get their fill here of the former Austin American-Statesman reporter and this blog’s founder.

A state employee for almost a year, Elder has applied to fill a vacancy on the Employees Retirement System of Texas board and has launched the blog as part of his campaign.

The board will pick the replacement for Don Green, who retired earlier this year.

Mary Jane Wardlow, an ERS spokeswoman, said she did not know who else filed for the open spot. The plan is to have someone in place by November.

The editorial refers to TRS’ performance over the past year as “less-than-mediocre” as it called into question whether Partridge’s contract, from which he could reap more than $1 million as an independent contract, was justified.

Partridge recently resigned from TRS to start a new firm, Integrity Capital LLC. The San Diego County system is the firm’s only client at this point.

Lee Partridge, deputy chief investment officer, will leave TRS later this month to launch Integrity Capital LLC. His first investor is the San Diego County Employees Retirement Association, which has outsourced its primary investment responsibilities to Partridge.

San Diego County’s $6.5 billion pension system had a tough time landing someone to fill its in-house chief investment officer job due to salary constraints, according to news accounts. Its previous CIO resigned under fire in March after the fund took a major hit from its investment in hedge funds.

In a statement released by TRS, Partidge said the following about his new endeavor:

The long-term vision is to create a cooperative organization that shares investment personnel and resources amongst sophisticated institutional investors.

In the near term my focus will be positioning SDCERA’s portfolio to take full advantage of current market conditions and for the secular forces that will be impacting the market for the next five to ten years.

I will not be seeking any additional assignments until I am comfortable with SDCERA’s strategic portfolio positioning and SDCERA is happy with the results we achieve.

Integrity Capital’s contract with San Diego could pay as much as $1.2 million with performance incentives.

Britt Harris, the TRS chief investment officer, offered ample praise to Partridge, who has been with TRS for the past eight years.

“Lee is a wonderful friend and a very high character person, as well as a strong and wise investor,” Harris said. “San Diego is very fortunate to have him, and we at Texas Teachers will miss him.”

No word yet on the TRS plans to replace Partridge.

In February, the board members modified the pension fund’s incentive policy — making the incentive payments contingent upon a positive annual return — amid a legislative firestorm over bonuses paid at the University of Texas Investment Management Company as the market plunged last fall.

The decision on Thursday keeps in place that policy.

More than 80 investment team employees were due a piece of the $2.5 million incentive pie based on the fund’s performance as of Aug. 31, 2008, even though the fund balance had fallen 27 percent.

The payments would have been delayed until 2010 anyway but, without the change, would have been paid out next year regardless of the fund’s condition.

Eventually, the employees will get last year’s share — assuming they stick around — as well anything earned based on the the 2009 performance.

Most likely, the earliest they could see that money, however, will be in 2011 given the unprecedented market declines over the past year.

The $82 billion fund as of the end of June was down about 22 percent compared to last year at the same time.

Investment results have been on the upswing of late with a 12.3 percent positive return in the second quarter of the year.

Spokesman Howard Goldman said TRS had looked at proposals by all the money managers that have been selected by the Treasury Department to help banks sell off their toxic assets and met with several of the managers.

“We do not plan to participate in this particular investment program at this time,” Goldman said. “However, we are continuing to monitor developments closely and will continue to look for opportunities to participate in what we perceive to be attractive investment opportunities in this area.”

Earlier this summer, TRS had been among the public pension funds and private equity firms invited to meet with the Federal Deposit Insurance Corp. about investing in failed banks.

And TRS recently committed $400 million to one of the firms that has been tapped by the Treasury Department as a money manager under the Public-Private Investment Program that is intended to help banks off-load some of their toxic assets.

At that time, TRS mentioned the possibility of the firm, Marathon Asset Management LP, using some TRS money to invest in the federal program.

But Goldman said there were several reasons for not investing in the federal program right now:

— TRS saw better opportunities for using their available capital;

— There was a concern about over-exposing the fund to risk since some of its existing investments are indirectly connected to the federal program; and

— The costs were relatively high compared to the expected returns.

Henry is leaving to pursue other opportunities, said TMRS spokesman Bill Wallace, adding that he had no other specifics about Henry’s next endeavor. Henry will stick around until after the board meets Aug. 20 to decide its next step.

Despite his short tenure at the $14 billion fund, Henry accomplished what he was hired to do: steer the system through a difficult transition away from an ultra-conservative investment strategy.

The 60-year old fund had been solely invested in government and corporate bonds, a unique and unsustainable approach among large public pension funds.

In 2007, the TMRS board decided to change course and diversify its investments by adding stocks to the mix.

Henry was brought in to shepherd to that process, including getting legislation approved this past session that would allow TRMR to book unrealized income — such as the rising value of stock holdings — in the same way every other pension fund accounts for the investment gains.

A group of TRS members, both retirees and working teachers, had filed the suit claiming the investment in derivatives was risky and led to significant losses.

TRS responded that members did not have standing to sue since their pension benefits are not affected by the losses.

The judge issued a one-sentence order on Friday dismissing the case.

UPDATE: Plaintiff’s lawyer Donald Wilhelm said he will appeal the decision.

Twice, Perry’s call to the Bush administration fell on deaf ears. But the hope is the Obama administration might be more willing to listen.

School districts are able to use the value of the Permanent School Fund to back bonds used to pay for new facilities and that lowers to the cost of borrowing. The state estimates that the program saves districts $100 million.

State law sets the bonding capacity at five times the value of the fund, now about $19 billion. But the federal limit is half that much.

By lifting the cap, Perry writes, “you would be helping improve Texas school facilities and protect Texas taxpayers against unnecessary costs and potential tax increases.”

Legislative budget-writers asked the attorney general to determine if the payment, which would come from the state’s general fund and not the retirement trust funds, would violate a provision of the Texas Constitution that prohibits the payment of extra compensation for services already rendered.

As expected, retiree and employee groups argue in legal briefs that the payments are not a problem.

But the ERS brief adds some additional weight to that argument since a decision against the one-time payment would actually better serve the retirement system’s obligation to both current retirees and future retirees.

If the $155 million does not go directly to the retirees, it will be split among the trust funds of ERS and the Teacher Retirement System of Texas.

“An increase in the state’s overall contributions to the trust fund will bring the fund closer to actuarial soundness, and, therefore, will increase the fund’s long-term financial stability. Such a result inures to the benefit of both annuitants and active employees,” according to the brief.

Even so, Paula Jones, the ERS general counsel, writes in a brief submitted to the attorney general that the $500 payment would not be considered compensation under federal tax law. Nor would it fit within the definition of “compensation” under state law, Jones wrote.

“ERS believes it is reasonable for the (Office of the Attorney General) to determine that the one-time payments described in the (budget) are not ‘compensation’ being paid in contravention of” the state constitution.”