Enrolled Bill Summary

            Senate Bill 512 amends the Education Code and Government Code to require the State Board of Education (SBOE) and the state auditor to enter into an agreement for the auditor to investigate any allegation of misconduct regarding the management or investment of the permanent school fund. The bill amends the Education Code to establish a nine-member permanent school fund investment advisory committee consisting of three gubernatorial appointees and three appointees of each of the legislature's presiding officers. It extends the applicability of provisions regarding an ethics policy, conflicts of interest, and spending reports to the committee members and interested persons, defined as persons who apply for or receive anything of value as a direct or indirect result of permanent school fund investments. The bill provides that the failure to report a potential conflict of interest by a person who has entered into an arrangement involving the fund's management or investment renders the arrangement voidable by the SBOE or the comptroller and allows the SBOE or the comptroller to declare the person ineligible to contract for fund management or investment business.

            The bill includes several provisions further regulating SBOE contracting for management and investment services. It requires the SBOE to maintain a website listing all interested persons; requires each SBOE contract to include a provision to ensure compliance with applicable laws and rules; requires the comptroller to report to the appropriate regulatory bodies disciplinary actions taken by the SBOE or comptroller against certain persons; allows interested persons to be barred from fund management and investment business for certain ethics or conflict of interest violations; and provides for more stringent oversight in the form of management and performance audits. The bill also repeals a provision that limited investment of the permanent school fund to specific types of securities listed in that provision, allowing for a broader range of investments for the fund.