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.