LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 26, 1995



 TO:     Honorable Ken Armbrister, Chair        IN RE: Committee Substitute
         Committee on State Affairs                            for Senate
         Senate                                 Bill No. 1128
         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 require the state treasurer to limit the amount of
certain derivatives purchased to no more than five percent of the
treasury's total investments.

The bill would allow 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 allow certain state agencies to impose a penalty
if eligible payments are not remitted by electronic funds
transfer.

The bill would allow the state treasurer to give contingent
approval to an eligible financial institution desiring to hold
$98,000 or less in state deposits, pending final approval by the
state depository board.

The bill would allow the Treasury to invest any state funds, not
just bond proceeds, in state and local obligations and mutual
funds which have the same investment authority as the state
treasury.    




The bill would amend the statute to eliminate the current 
requirement that the interest rate on tax and revenue
anticipation notes be one percent less than the interest rate
earned by the treasury.

The probable fiscal implication of implementing the provisions of
the bill during each of the first  five years following passage
is estimated as follows:



            Fiscal   Probable Revenue 
             Year   Gain to   General 
                     Revenue Fund 001 
                                      
          1996              $2,500,000
          1997               2,500,000
                                      
          1998               2,500,000
                                      
          1999               2,500,000
          2000               2,500,000
                                      
                                      
                                      
       Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.

No fiscal implication to units of local government is
anticipated.


Source:   State Treasury, Legislative Budget Board
          LBB Staff: JK, MS, DF