1-1  By:  Leedom                                            S.B. No. 529
    1-2        (In the Senate - Filed March 1, 1993; March 2, 1993, read
    1-3  first time and referred to Committee on Finance; March 24, 1993,
    1-4  reported favorably by the following vote:  Yeas 12, Nays 0;
    1-5  March 24, 1993, sent to printer.)
    1-6                            COMMITTEE VOTE
    1-7                          Yea     Nay      PNV      Absent 
    1-8        Montford           x                               
    1-9        Turner             x                               
   1-10        Armbrister         x                               
   1-11        Barrientos         x                               
   1-12        Bivins             x                               
   1-13        Ellis              x                               
   1-14        Haley                                         x    
   1-15        Moncrief           x                               
   1-16        Parker             x                               
   1-17        Ratliff            x                               
   1-18        Sims               x                               
   1-19        Truan              x                               
   1-20        Zaffirini          x                               
   1-21                         A BILL TO BE ENTITLED
   1-22                                AN ACT
   1-23  relating to the investment of public funds in collateralized
   1-24  mortgage obligations.
   1-25        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-26        SECTION 1.  Subsection (a), Section 2, Public Funds
   1-27  Investment Act of 1987 (Article 842a-2, Vernon's Texas Civil
   1-28  Statutes), as amended by Chapters 39, 628, 693, and 750, Acts of
   1-29  the 71st Legislature, Regular Session, 1989, is amended to read as
   1-30  follows:
   1-31        (a)  An incorporated city or town, a county, a public school
   1-32  district, a district or authority created under Article III,
   1-33  Section 52(b)(1) or (2), or Article XVI, Section 59, of the Texas
   1-34  Constitution, an institution of higher education as defined by
   1-35  Section 61.003 of the Education Code, a hospital district, a fresh
   1-36  water supply district, or any nonprofit corporation or public funds
   1-37  investment pool created under The Interlocal Cooperation Act
   1-38  (Article 4413(32c), Vernon's Texas Civil Statutes) acting on behalf
   1-39  of any of those entities, or a navigation district organized under
   1-40  Article III, Section 52, or Article XVI, Section 59, of the Texas
   1-41  Constitution may, in accordance with this Act, purchase, sell, and
   1-42  invest its funds and funds under its control in the following:
   1-43              (1)  obligations of the United States or its agencies
   1-44  and instrumentalities;
   1-45              (2)  direct obligations of the State of Texas or its
   1-46  agencies;
   1-47              (3)  other obligations, the principal of and interest
   1-48  on which are unconditionally guaranteed or insured by the State of
   1-49  Texas or the United States or its agencies and instrumentalities;
   1-50              (4)  obligations of states, agencies, counties, cities,
   1-51  and other political subdivisions of any state having been rated as
   1-52  to investment quality by a nationally recognized investment rating
   1-53  firm and having received a rating of not less than A or its
   1-54  equivalent;
   1-55              (5)  certificates of deposit issued by state and
   1-56  national banks domiciled in this state that are:
   1-57                    (A)  guaranteed or insured by the Federal Deposit
   1-58  Insurance Corporation, or its successor; or
   1-59                    (B)  secured by obligations that are described by
   1-60  Subdivisions (1)-(4) of this subsection, which are intended to
   1-61  include all direct federal agency or instrumentality issued
   1-62  mortgage backed securities that have a market value of not less
   1-63  than the principal amount of the certificates or in any other
   1-64  manner and amount provided by law for deposits of the investing
   1-65  entities;
   1-66              (6)  certificates of deposit issued by savings and loan
   1-67  associations domiciled in this state that are:
   1-68                    (A)  guaranteed or insured by the Federal Savings
    2-1  and Loan Insurance Corporation, or its successor; or
    2-2                    (B)  secured by obligations that are described by
    2-3  Subdivisions (1)-(4) of this subsection, which are intended to
    2-4  include all direct federal agency or instrumentality issued
    2-5  mortgage backed securities that have a market value of not less
    2-6  than the principal amount of the certificates or in any other
    2-7  manner and amount provided by law for deposits of the investing
    2-8  entities;
    2-9              (7)  prime domestic bankers' acceptances;
   2-10              (8)  commercial paper with a stated maturity of 270
   2-11  days or less from the date of its issuance that either:
   2-12                    (A)  is rated not less than A-1, P-1, or the
   2-13  equivalent by at least two nationally recognized credit rating
   2-14  agencies; or
   2-15                    (B)  is rated at least A-1, P-1, or the
   2-16  equivalent by at least one nationally recognized credit rating
   2-17  agency and is fully secured by an irrevocable letter of credit
   2-18  issued by a bank organized and existing under the laws of the
   2-19  United States or any state thereof; <and>
   2-20              (9)  fully collateralized repurchase agreements having
   2-21  a defined termination date, secured by obligations described by
   2-22  Subdivision (1) of this subsection, pledged with a third party
   2-23  selected or approved by the political entity, and placed through a
   2-24  primary government securities dealer, as defined by the Federal
   2-25  Reserve, or a bank domiciled in this state; and
   2-26              (10)  collateralized mortgage obligations directly
   2-27  issued by a federal agency or instrumentality of the United States,
   2-28  the underlying security for which is guaranteed by an agency or
   2-29  instrumentality of the United States.
   2-30        SECTION 2.  Section 2256.006, Government Code, as added by
   2-31  Section 1, S.B. No. 248, Acts of the 73rd Legislature, Regular
   2-32  Session, 1993, is amended to read as follows:
   2-33        Sec. 2256.006.  AUTHORIZED INVESTMENTS:  OBLIGATIONS OF, OR
   2-34  GUARANTEED BY, GOVERNMENTAL ENTITIES.  The following are authorized
   2-35  investments under this subchapter:
   2-36              (1)  obligations of the United States or its
   2-37  instrumentalities;
   2-38              (2)  direct obligations of this state or its agencies;
   2-39              (3)  collateralized mortgage obligations directly
   2-40  issued by a federal agency or instrumentality of the United States,
   2-41  the underlying security for which is guaranteed by an agency or
   2-42  instrumentality of the United States;
   2-43              (4)  other obligations, the principal and interest of
   2-44  which are unconditionally guaranteed or insured by this state or
   2-45  the United States or its instrumentalities; and
   2-46              (5) <(4)>  obligations of states, agencies, counties,
   2-47  cities, and other political subdivisions of any state rated as to
   2-48  investment quality by a nationally recognized investment rating
   2-49  firm not less than A or its equivalent.
   2-50        SECTION 3.  (a)  Except as provided by Subsections (b) and
   2-51  (c) of this section, this Act takes effect September 1, 1993.
   2-52        (b)  If S.B. No. 248, Acts of the 73rd Legislature, Regular
   2-53  Session, 1993, finally passes and is approved by the governor,
   2-54  Section 1 of this Act has no effect.
   2-55        (c)  If S.B. No. 248, Acts of the 73rd Legislature, Regular
   2-56  Session, 1993, does not finally pass or is not approved by the
   2-57  governor, Section 2 of this Act has no effect.
   2-58        SECTION 4.  The importance of this legislation and the
   2-59  crowded condition of the calendars in both houses create an
   2-60  emergency and an imperative public necessity that the
   2-61  constitutional rule requiring bills to be read on three several
   2-62  days in each house be suspended, and this rule is hereby suspended.
   2-63                               * * * * *
   2-64                                                         Austin,
   2-65  Texas
   2-66                                                         March 24, 1993
   2-67  Hon. Bob Bullock
   2-68  President of the Senate
   2-69  Sir:
   2-70  We, your Committee on Finance to which was referred S.B. No. 529,
    3-1  have had the same under consideration, and I am instructed to
    3-2  report it back to the Senate with the recommendation that it do
    3-3  pass and be printed.
    3-4                                                         Montford,
    3-5  Chairman
    3-6                               * * * * *
    3-7                               WITNESSES
    3-8                                                  FOR   AGAINST  ON
    3-9  ___________________________________________________________________
   3-10  Name:  Bill Melton, Dallas County Treasurer      x
   3-11  Representing:  Dallas County
   3-12  City:  Dallas
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   3-14  Name:  John Matthews                                           x
   3-15  Representing:  Rauscher Pierce - Dallas Co.
   3-16  City:  Dallas
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