H.B. No. 1877
1-1 AN ACT
1-2 relating to the authority of the board of regents of The University
1-3 of Texas System to delegate certain powers and duties of the board.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 65.31, Education Code, is amended by
1-6 adding Subsection (g) to read as follows:
1-7 (g) The board by rule may delegate a power or duty of the
1-8 board to a committee, officer, employee, or other agent of the
1-9 board.
1-10 SECTION 2. Section 65.34, Education Code, is amended to read
1-11 as follows:
1-12 Sec. 65.34. Contracts. A contract must <(a) All contracts
1-13 with architects, plan makers, landscapers, or draftsmen, or with
1-14 any other person, firm, or corporation of whatever name or
1-15 designation shall> be <absolutely void unless> approved by the
1-16 <signed written vote of a majority of the> board or otherwise
1-17 entered into in accordance with rules of the board relating to
1-18 contracting authority <in regular or called meeting assembled>.
1-19 SECTION 3. Section 66.08, Education Code, is amended to read
1-20 as follows:
1-21 Sec. 66.08. <EXTERNAL> INVESTMENT MANAGEMENT <MANAGERS>.
1-22 (a) The board <of regents of The University of Texas System> may
1-23 delegate investment authority and contract for the investment of
2-1 the permanent university fund to the same extent as the governing
2-2 board of an institution of higher education with respect to an
2-3 institutional fund under Chapter 163, Property Code <with private
2-4 professional investment managers to assist the board in making
2-5 investments of the permanent university fund>.
2-6 (b) The board may enter into a contract with a nonprofit
2-7 corporation for the corporation to invest funds under the control
2-8 and management of the board, including the permanent university
2-9 fund, as designated by the board. The corporation may not engage
2-10 in any business other than investing funds designated by the board
2-11 under the contract.
2-12 (c) The board must approve the:
2-13 (1) articles of incorporation and bylaws of the
2-14 corporation and any amendment to the articles of incorporation or
2-15 bylaws;
2-16 (2) investment policies of the corporation, including
2-17 changes to those policies;
2-18 (3) audit and ethics committee of the corporation; and
2-19 (4) code of ethics of the corporation.
2-20 (d) The board of directors of the corporation shall have
2-21 nine members. The board shall appoint and remove all members of
2-22 the board of directors of the corporation. At least three members
2-23 of the board and the chancellor of The University of Texas System
2-24 shall be appointed as directors.
2-25 (e) The board shall select one or more of the members of the
3-1 board of directors of the corporation from a list of candidates
3-2 with substantial background and expertise in investments that is
3-3 submitted to the board by the board of regents of The Texas A&M
3-4 University System.
3-5 (f) If an investment contract entered into under Subsection
3-6 (b) includes the permanent university fund within the scope of
3-7 funds under the control and management of the board to be invested
3-8 by the corporation, the board shall provide for an annual financial
3-9 audit of the permanent university fund. The audit shall be
3-10 performed by the auditors of The University of Texas System and The
3-11 Texas A&M University System and presented to the board.
3-12 (g) The corporation shall file quarterly reports with the
3-13 board concerning matters required by the board.
3-14 (h) The corporation is subject to the Texas Non-Profit
3-15 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
3-16 Statutes).
3-17 (i) The corporation may not enter into an agreement or
3-18 transaction with a:
3-19 (1) director, officer, or employee of the corporation
3-20 acting in other than an official capacity on behalf of the
3-21 corporation;
3-22 (2) business entity in which a director, officer, or
3-23 employee of the corporation has an interest;
3-24 (3) former director, officer, or employee of the
3-25 corporation on or before the second anniversary of the date the
4-1 person ceased to be a director, officer, or employee of the
4-2 corporation; or
4-3 (4) business entity in which a former director,
4-4 officer, or employee of the corporation has an interest on or
4-5 before the second anniversary of the date the person ceased to be a
4-6 director, officer, or employee of the corporation.
4-7 (j) An agreement or transaction entered into in violation of
4-8 Subsection (i) is void.
4-9 (k) For purposes of this section, a person has an interest
4-10 in a business entity if:
4-11 (1) the person owns five percent or more of the voting
4-12 stock or shares of the business entity;
4-13 (2) the person owns five percent or more of the fair
4-14 market value of the business entity; or
4-15 (3) money received by the person from the business
4-16 entity exceeds five percent of the person's gross income for the
4-17 preceding calendar year.
4-18 (l) In this section:
4-19 (1) "Board" means the board of regents of The
4-20 University of Texas System.
4-21 (2) "Governing board," "institutional fund," and
4-22 "institution of higher education" have the meanings assigned by
4-23 Chapter 163, Property Code.
4-24 SECTION 4. Before implementing the first contract entered
4-25 into by it that includes the permanent university fund within the
5-1 scope of funds under the management and control of the board to be
5-2 invested by a corporation pursuant to the authority granted by
5-3 Section 66.08, Education Code, as amended by this Act, the board of
5-4 regents of The University of Texas System shall retain an
5-5 independent accounting firm to perform a financial audit of the
5-6 permanent university fund.
5-7 SECTION 5. If any provision of this Act or its application
5-8 to any circumstance is held invalid, the invalidity does not affect
5-9 other provisions or applications of this Act that can be given
5-10 effect without the invalid provision or application, and to this
5-11 end the provisions of this Act are declared severable.
5-12 SECTION 6. The importance of this legislation and the
5-13 crowded condition of the calendars in both houses create an
5-14 emergency and an imperative public necessity that the
5-15 constitutional rule requiring bills to be read on three several
5-16 days in each house be suspended, and this rule is hereby suspended,
5-17 and that this Act take effect and be in force from and after its
5-18 passage, and it is so enacted.