LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 5, 1995



 TO:     Honorable Ken Armbrister, Chair        IN RE:  Senate BillNo. 1128
         Committee on State Affairs                     By: Ellis
         Senate
         Austin, Texas






FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No.
1128 (Relating to the deposit, investment, safekeeping, and
records and reports of, and collateral requirements for the
deposit of, funds held by the state treasurer.) this office has
determined the following:

The bill would abolish the State Depository Board and transfer
the responsibilities to the state treasurer.

The bill would require financial institutions to enter into
depository agreements with the state treasurer to hold state
deposits.  The bill would also require the treasurer to charge a
processing fee of $25 for each eligible depository and deposit
the revenue into the general revenue fund.

The bill would require the state treasurer to limit the amount of
derivatives purchased to no more than five percent of the
treasury's total investments.  The bill would authorize the
treasurer to contract with registered investment advisors and
other consultants to assist in investment management and to pay
fees directly from investment earnings.  The bill would remove
the investment limitation of $500,000 a day with a maximum risk
of loss of $5 million for hedging transactions, and removes the
expiration of the program is cumulative losses exceed $5 million.

The bill would require certain state agencies to impose a penalty
if eligible payments are not remitted by electronic funds
transfer, however the penalty may be waived, if appropriate.    




 The fiscal implication to the State cannot be determined.

No fiscal implication to units of local government is
anticipated.





Source:   Treasury Department
          LBB Staff: JK, MS, DF