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HB 735 removes the outdated investment list of possible investments from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.