SRC-HRD H.B. 138 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 138
By: Woolley (Bivins)
Finance
4-23-97
Engrossed


DIGEST 

Article 16, Section 70, Texas Constitution, adopted in 1988, created the
Texas growth fund (fund), a trust fund that can invest in private
companies with major business interests in Texas.  The fund can make
private equity investments for the Permanent University Fund (PUF),
Permanent School Fund (PSF), and state-created pension funds, including
the Teacher Retirement System (TRS) and the Employees Retirement System
(ERS).   

The fund is a type of closed-in mutual fund to which the partipants commit
a certain amount of money, which is invested as appropriate investment
opportunities become available.  The fund has made two rounds of
investments totalling $127 million: in 1991, the PUF and TRS committed $52
million, and in 1995, the PUF, TRS, and San Antonio Fire and Police and
Pension Fund committed $75 million.   

The PUF, PSF, ERS, and TRS have a combined market value of $77.6 billion
as of August 31, 1996. These funds may invest up to 1 percent of their
fund value in the fund.  Up to 10 percent of the growth fund can be
invested in "venture capital," stocks and bonds with potential for
substantial investment returns, such as business with potential for rapid
growth and applied research leading to formation of new business.   

The 1988 constitutional amendment also provided that no further
investments from the original fund authorization could be made after
September 1, 1998.  But the amendment also provides that the Texas
Legislature can authorize a Texas growth fund II, which will extend the
fund's operations until September 1, 2008.  This bill would create a Texas
growth fund II. 

PURPOSE

As proposed, H.B. 138 authorizes the creation of the Texas growth fund II,
as provided by Section 70(m), Article XVI, Texas Constitution.

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Provides that the creation of Texas growth fund II is
authorized, as provided by Section 70(m), Article XVI, Texas Constitution. 

SECTION 2. Emergency clause.
  Effective date: upon passage.