SBW H.B. 735 75(R)BILL ANALYSIS PENSIONS & INVESTMENTS H.B. 735 By: Kuempel 2-26-97 Committee Report (Unamended) BACKGROUND The Texas Local Fire Fighters Retirement Act covers 37 paid fire departments and 4 part-paid volunteer fire departments throughout the state. In Section 27 of the act, the statute contains a specific list of investments in which the board of trustees can invest. Virtually every retirement system in the nation has had these specific lists of investments deleted from their statutes and replaced them with the industry standard for investment funds -- The Prudent Person Rule. The Prudent Person Rule grants the boards of trustees, who use professional fund managers, the flexibility to develop maximum portfolio returns for their retirees. PURPOSE HB 735 removes the outdated investment list of possible investments from the Texas Local Fire Fighters Retirement Act and allow the board of trustees to work under the industry standard Prudent Person Rule. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1: Amends Section 27(a), Texas Local Fire Fighters Retirement Act (Art. 6243e, Vernon's Texas Civil Statutes, by striking language to state the the Board of Trustees are required to keep a sufficient amount of cash on hand to make payments as they come due under the retirement system. The Board may invest any excess cash. Deletes the list of investments in which the board of trustees may invest. SECTION 2: Emergency clause.