By: Henderson S.B. No. 709
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the management, investment, and expenditure of funds
1-2 held by public institutions of higher education.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 163.002, Property Code, is amended to
1-5 read as follows:
1-6 Sec. 163.002. Legislative Findings and Purpose. (a) The
1-7 legislature finds that:
1-8 (1) publicly and privately supported educational,
1-9 religious, and charitable organizations perform essential and
1-10 needed services in the state;
1-11 (2) uncertainty regarding legal restrictions on the
1-12 management, investment, and expenditure of endowment funds of the
1-13 organizations has in many instances precluded obtaining the highest
1-14 available return on endowment funds; and
1-15 (3) the organizations, their officers, directors, and
1-16 trustees, and the citizens of this state will benefit from removal
1-17 of the uncertainty and by permitting endowment funds to be invested
1-18 for the long-term goals of achieving growth and maintaining
1-19 purchasing power without adversely affecting availability of funds
1-20 for current expenditure.
1-21 (b) The purpose of this chapter is to provide guidelines for
1-22 the management, investment, and expenditure of endowment funds of
1-23 publicly and privately supported educational, religious, and
1-24 charitable organizations in order to eliminate the uncertainty
2-1 regarding legal restrictions on the management, investment, and
2-2 expenditure of the funds and to enable the organizations to
2-3 maximize their resources.
2-4 SECTION 2. Section 163.003, Property Code, is amended by
2-5 amending Subdivision (5) and adding Subdivision (7) to read as
2-6 follows:
2-7 (5) "Institution" means an incorporated or
2-8 unincorporated organization organized and operated exclusively for
2-9 educational, religious, or charitable purposes, an institution of
2-10 higher education, or a foundation chartered for the benefit of an
2-11 institution of higher education. The term does not include<:>
2-12 <(A) an institution of higher education as
2-13 defined by Section 61.003, Education Code, or other governmental
2-14 entity, or a foundation chartered for the benefit of that type of
2-15 institution or entity, or the benefit of a component of that type
2-16 of institution or entity; or>
2-17 <(B)> a private foundation as defined by Section
2-18 509(a) of the Internal Revenue Code of 1986.
2-19 (7) "Institution of higher education" has the meaning
2-20 assigned by Section 61.003, Education Code.
2-21 SECTION 3. Section 163.004, Property Code, is amended by
2-22 amending Subsection (a) and adding Subsection (e) to read as
2-23 follows:
2-24 (a) Except as provided by Subsection (e), the <The>
2-25 governing board may appropriate for expenditure, for the uses and
2-26 purposes for which the fund is established, the net appreciation,
2-27 realized and unrealized, in the fair market value of the assets of
3-1 an endowment fund over the historic dollar value of the fund to the
3-2 extent prudent under the standard provided by Section 163.007.
3-3 (e) The governing board of an institution of higher
3-4 education may not appropriate for expenditure the net unrealized
3-5 appreciation of the assets of an endowment fund.
3-6 SECTION 4. The importance of this legislation and the
3-7 crowded condition of the calendars in both houses create an
3-8 emergency and an imperative public necessity that the
3-9 constitutional rule requiring bills to be read on three several
3-10 days in each house be suspended, and this rule is hereby suspended,
3-11 and that this Act take effect and be in force from and after its
3-12 passage, and it is so enacted.