By Patterson, Marchant                                H.B. No. 1579
       74R5829 RJA-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to reports to the bond review board of investments of the
    1-3  state and of local government investment pools and investment
    1-4  services provided by the bond review board.
    1-5        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-6        SECTION 1.  Chapter 2256, Government Code, is amended by
    1-7  adding Subchapter D to read as follows:
    1-8              SUBCHAPTER D.  BOND REVIEW BOARD MONITORING
    1-9        Sec. 2256.121.  DEFINITIONS.  In this subchapter:
   1-10              (1)  "Bond review board" means the bond review board
   1-11  created under Chapter 1078, Acts of the 70th Legislature, Regular
   1-12  Session, 1987 (Article 717k-7, Vernon's Texas Civil Statutes).
   1-13              (2)  "Institution of higher education" has the meaning
   1-14  assigned by Section 61.003, Education Code.
   1-15              (3)  "Public funds investment pool" means a pool
   1-16  created under Chapter 791.
   1-17              (4)  "Public retirement system" has the meaning
   1-18  assigned by Section 802.001.
   1-19              (5)  "State agency" means a board, commission,
   1-20  department, office, or other agency in the executive, judicial, or
   1-21  legislative branch of state government.
   1-22        Sec. 2256.122.  APPLICABILITY.  This subchapter applies only
   1-23  to the investment of public funds by:
   1-24              (1)  the state treasurer;
    2-1              (2)  a state agency;
    2-2              (3)  a public retirement system;
    2-3              (4)  an institution of higher education; or
    2-4              (5)  a public funds investment pool.
    2-5        Sec. 2256.123.  BOND REVIEW BOARD RULES.  The bond review
    2-6  board shall adopt rules to administer this subchapter.
    2-7        Sec. 2256.124.  REPORT TO BOND REVIEW BOARD.  Each subject
    2-8  entity shall at least quarterly report the details of its
    2-9  investments and investment policies to the bond review board.
   2-10        Sec. 2256.125.  BOARD REVIEW OF INVESTMENTS.  (a)  The bond
   2-11  review board shall review the investment practices and policies of
   2-12  each subject entity.  In its review the board shall consider
   2-13  whether the investments yield an acceptable rate of return and
   2-14  whether the risks the investments are subject to are reasonable for
   2-15  a public entity.
   2-16        (b)  The board shall determine whether an entity is:
   2-17              (1)  exercising prudent business judgment in its
   2-18  investments; and
   2-19              (2)  investing funds in compliance with the entity's
   2-20  investment policies and constitutional and statutory provisions
   2-21  governing the entity's investments.
   2-22        (c)  The board shall notify the entity, the legislature,  and
   2-23  the governor of any investments the board considers not authorized
   2-24  or not prudent.
   2-25        Sec. 2256.126.  DEVELOPMENT OF INVESTMENT POLICIES.  On
   2-26  request of a subject entity, the bond review board shall assist the
   2-27  entity in developing an investment policy for the entity.
    3-1        Sec. 2256.127.  CONTINUING EDUCATION.  The bond review board
    3-2  shall coordinate and assist governing bodies of subject entities
    3-3  and public investment pools in continuing education training in
    3-4  investment controls, associated risks, and potential liability for
    3-5  the entities.
    3-6        Sec. 2256.128.  INVESTMENT ADVISORS AND SERVICES.  The bond
    3-7  review board shall assist governing bodies of subject entities in
    3-8  securing, selecting, and monitoring outside investment advisors and
    3-9  investment services.
   3-10        Sec. 2256.129.  ATTORNEY GENERAL INVESTIGATION.  (a)  The
   3-11  bond review board shall report to the attorney general any
   3-12  irregularity the board discovers in the investments of a subject
   3-13  entity.
   3-14        (b)  The attorney general shall investigate investment
   3-15  irregularities reported under this section.
   3-16        Sec. 2256.130.  REPORT TO LEGISLATURE.  The bond review board
   3-17  shall report to the legislature any statutory changes it considers
   3-18  necessary because of the board's investment recommendations to
   3-19  subject entities.
   3-20        Sec. 2256.131.  STAFF.  The bond review board may employ
   3-21  staff to perform the duties required by this subchapter.
   3-22        SECTION 2.  This Act takes effect September 1, 1995.  The
   3-23  provisions of Subchapter D, Chapter 2256, Government Code, as added
   3-24  by this Act, relating to bond review board review of investment
   3-25  practices apply regardless of whether the investments were made
   3-26  before, on, or after that date.
   3-27        SECTION 3.  The importance of this legislation and the
    4-1  crowded condition of the calendars in both houses create an
    4-2  emergency and an imperative public necessity that the
    4-3  constitutional rule requiring bills to be read on three several
    4-4  days in each house be suspended, and this rule is hereby suspended.