74R10813 E
By Stiles H.B. No. 1877
Substitute the following for H.B. No. 1877:
By Gallego C.S.H.B. No. 1877
A BILL TO BE ENTITLED
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.
2-23 (e) The board shall select one or more of the members of the
2-24 board of directors of the corporation from a list of candidates
2-25 with substantial background and expertise in investments that is
3-1 submitted to the board by the board of regents of The Texas A&M
3-2 University System.
3-3 (f) If an investment contract entered into under Subsection
3-4 (b) includes the permanent university fund within the scope of
3-5 funds under the control and management of the board to be invested
3-6 by the corporation, the board shall provide for an annual financial
3-7 audit of the permanent university fund. The audit shall be
3-8 performed by the auditors of The University of Texas System and The
3-9 Texas A&M University System and presented to the board.
3-10 (g) The corporation shall file quarterly reports with the
3-11 board concerning matters required by the board.
3-12 (h) The corporation is subject to the Texas Non-Profit
3-13 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
3-14 Statutes).
3-15 (i) The corporation may not enter into an agreement or
3-16 transaction with a:
3-17 (1) director, officer, or employee of the corporation
3-18 acting in other than an official capacity on behalf of the
3-19 corporation;
3-20 (2) business entity in which a director, officer, or
3-21 employee of the corporation has an interest;
3-22 (3) former director, officer, or employee of the
3-23 corporation on or before the second anniversary of the date the
3-24 person ceased to be a director, officer, or employee of the
3-25 corporation; or
4-1 (4) business entity in which a former director,
4-2 officer, or employee of the corporation has an interest on or
4-3 before the second anniversary of the date the person ceased to be a
4-4 director, officer, or employee of the corporation.
4-5 (j) An agreement or transaction entered into in violation of
4-6 Subsection (i) is void.
4-7 (k) For purposes of this section, a person has an interest
4-8 in a business entity if:
4-9 (1) the person owns five percent or more of the voting
4-10 stock or shares of the business entity;
4-11 (2) the person owns five percent or more of the fair
4-12 market value of the business entity; or
4-13 (3) money received by the person from the business
4-14 entity exceeds five percent of the person's gross income for the
4-15 preceding calendar year.
4-16 (l) In this section:
4-17 (1) "Board" means the board of regents of The
4-18 University of Texas System.
4-19 (2) "Governing board," "institutional fund," and
4-20 "institution of higher education" have the meanings assigned by
4-21 Chapter 163, Property Code.
4-22 SECTION 4. Before implementing the first contract entered
4-23 into by it that includes the permanent university fund within the
4-24 scope of funds under the management and control of the board to be
4-25 invested by a corporation pursuant to the authority granted by
5-1 Section 66.08, Education Code, as amended by this Act, the board of
5-2 regents of The University of Texas System shall retain an
5-3 independent accounting firm to perform a financial audit of the
5-4 permanent university fund.
5-5 SECTION 5. If any provision of this Act or its application
5-6 to any circumstance is held invalid, the invalidity does not affect
5-7 other provisions or applications of this Act that can be given
5-8 effect without the invalid provision or application, and to this
5-9 end the provisions of this Act are declared severable.
5-10 SECTION 6. The importance of this legislation and the
5-11 crowded condition of the calendars in both houses create an
5-12 emergency and an imperative public necessity that the
5-13 constitutional rule requiring bills to be read on three several
5-14 days in each house be suspended, and this rule is hereby suspended,
5-15 and that this Act take effect and be in force from and after its
5-16 passage, and it is so enacted.