1-1 By: Stiles (Senate Sponsor - Montford) H.B. No. 1877
1-2 (In the Senate - Received from the House April 28, 1995;
1-3 May 2, 1995, read first time and referred to Committee on
1-4 Education; May 3, 1995, rereferred to Committee on Finance;
1-5 May 4, 1995, reported favorably by the following vote: Yeas 12,
1-6 Nays 0; May 4, 1995, sent to printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to the authority of the board of regents of The University
1-10 of Texas System to delegate certain powers and duties of the board.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 65.31, Education Code, is amended by
1-13 adding Subsection (g) to read as follows:
1-14 (g) The board by rule may delegate a power or duty of the
1-15 board to a committee, officer, employee, or other agent of the
1-16 board.
1-17 SECTION 2. Section 65.34, Education Code, is amended to read
1-18 as follows:
1-19 Sec. 65.34. Contracts. A contract must <(a) All contracts
1-20 with architects, plan makers, landscapers, or draftsmen, or with
1-21 any other person, firm, or corporation of whatever name or
1-22 designation shall> be <absolutely void unless> approved by the
1-23 <signed written vote of a majority of the> board or otherwise
1-24 entered into in accordance with rules of the board relating to
1-25 contracting authority <in regular or called meeting assembled>.
1-26 SECTION 3. Section 66.08, Education Code, is amended to read
1-27 as follows:
1-28 Sec. 66.08. <EXTERNAL> INVESTMENT MANAGEMENT <MANAGERS>.
1-29 (a) The board <of regents of The University of Texas System> may
1-30 delegate investment authority and contract for the investment of
1-31 the permanent university fund to the same extent as the governing
1-32 board of an institution of higher education with respect to an
1-33 institutional fund under Chapter 163, Property Code <with private
1-34 professional investment managers to assist the board in making
1-35 investments of the permanent university fund>.
1-36 (b) The board may enter into a contract with a nonprofit
1-37 corporation for the corporation to invest funds under the control
1-38 and management of the board, including the permanent university
1-39 fund, as designated by the board. The corporation may not engage
1-40 in any business other than investing funds designated by the board
1-41 under the contract.
1-42 (c) The board must approve the:
1-43 (1) articles of incorporation and bylaws of the
1-44 corporation and any amendment to the articles of incorporation or
1-45 bylaws;
1-46 (2) investment policies of the corporation, including
1-47 changes to those policies;
1-48 (3) audit and ethics committee of the corporation; and
1-49 (4) code of ethics of the corporation.
1-50 (d) The board of directors of the corporation shall have
1-51 nine members. The board shall appoint and remove all members of
1-52 the board of directors of the corporation. At least three members
1-53 of the board and the chancellor of The University of Texas System
1-54 shall be appointed as directors.
1-55 (e) The board shall select one or more of the members of the
1-56 board of directors of the corporation from a list of candidates
1-57 with substantial background and expertise in investments that is
1-58 submitted to the board by the board of regents of The Texas A&M
1-59 University System.
1-60 (f) If an investment contract entered into under Subsection
1-61 (b) includes the permanent university fund within the scope of
1-62 funds under the control and management of the board to be invested
1-63 by the corporation, the board shall provide for an annual financial
1-64 audit of the permanent university fund. The audit shall be
1-65 performed by the auditors of The University of Texas System and The
1-66 Texas A&M University System and presented to the board.
1-67 (g) The corporation shall file quarterly reports with the
1-68 board concerning matters required by the board.
2-1 (h) The corporation is subject to the Texas Non-Profit
2-2 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
2-3 Statutes).
2-4 (i) The corporation may not enter into an agreement or
2-5 transaction with a:
2-6 (1) director, officer, or employee of the corporation
2-7 acting in other than an official capacity on behalf of the
2-8 corporation;
2-9 (2) business entity in which a director, officer, or
2-10 employee of the corporation has an interest;
2-11 (3) former director, officer, or employee of the
2-12 corporation on or before the second anniversary of the date the
2-13 person ceased to be a director, officer, or employee of the
2-14 corporation; or
2-15 (4) business entity in which a former director,
2-16 officer, or employee of the corporation has an interest on or
2-17 before the second anniversary of the date the person ceased to be a
2-18 director, officer, or employee of the corporation.
2-19 (j) An agreement or transaction entered into in violation of
2-20 Subsection (i) is void.
2-21 (k) For purposes of this section, a person has an interest
2-22 in a business entity if:
2-23 (1) the person owns five percent or more of the voting
2-24 stock or shares of the business entity;
2-25 (2) the person owns five percent or more of the fair
2-26 market value of the business entity; or
2-27 (3) money received by the person from the business
2-28 entity exceeds five percent of the person's gross income for the
2-29 preceding calendar year.
2-30 (l) In this section:
2-31 (1) "Board" means the board of regents of The
2-32 University of Texas System.
2-33 (2) "Governing board," "institutional fund," and
2-34 "institution of higher education" have the meanings assigned by
2-35 Chapter 163, Property Code.
2-36 SECTION 4. Before implementing the first contract entered
2-37 into by it that includes the permanent university fund within the
2-38 scope of funds under the management and control of the board to be
2-39 invested by a corporation pursuant to the authority granted by
2-40 Section 66.08, Education Code, as amended by this Act, the board of
2-41 regents of The University of Texas System shall retain an
2-42 independent accounting firm to perform a financial audit of the
2-43 permanent university fund.
2-44 SECTION 5. If any provision of this Act or its application
2-45 to any circumstance is held invalid, the invalidity does not affect
2-46 other provisions or applications of this Act that can be given
2-47 effect without the invalid provision or application, and to this
2-48 end the provisions of this Act are declared severable.
2-49 SECTION 6. The importance of this legislation and the
2-50 crowded condition of the calendars in both houses create an
2-51 emergency and an imperative public necessity that the
2-52 constitutional rule requiring bills to be read on three several
2-53 days in each house be suspended, and this rule is hereby suspended,
2-54 and that this Act take effect and be in force from and after its
2-55 passage, and it is so enacted.
2-56 * * * * *