SBW C.S.H.B. 1429 75(R)BILL ANALYSIS


PENSIONS & INVESTMENTS
C.S.H.B. 1429
By: Stiles
3-4-97
Committee Report (Substituted)



BACKGROUND 

Section 66.08 of the Texas Education Code, amended in 1995, authorizes the
board of regents of the University of Texas System to contract with a
nonprofit corporation to invest funds under the control and management of
the board. The primary purpose of Section 66.08 was to allow the board to
delegate investment authority of the permanent university fund, worth
approximately $9.0 billion, to a nonprofit corporation which would be
better suited to compete with the private sector in generating higher
returns on the fund's investments.  

The board contracted with The University of Texas Investment Management
Company ("UTIMCO") on March 1, 1996 to manage the investments of the
permanent university fund. However, a restrictive provision governing the
standard of conduct by UTIMCO directors, officers and employees have
hindered the ability of UTIMCO to retain top-quality senior personnel and
management. The provision prohibits an employee from going to work for a
private invest company for two years after leaving UTIMPCO.  This, in
turn, has inhibited UTIMCO's ability to recruit employees.  This
legislation seeks to amend Section 66.08's "revolving-door" provisions to
conform with other state governmental regulatory agencies. Section
572.054, Government Code, allows a person to go to work with a company
doing business with the state, but prohibits the employee from contacting
his or her former employer for two years.   

PURPOSE

This legislation makes the standard of conduct for former directors,
officers, and employees of a nonprofit corporation under contract with the
board of regents of the University of Texas System to invest the permanent
university fund or certain other university funds compatible to those
standards of conduct required of other governmental regulatory agencies. 

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 66.08, Education Code, by amending Subsection
(i), adding Subsections (l)-(n), and redesignating the existing Subsection
(l) as Subsection (o). 

(i) is amended by striking (3) and (4) which broadens the definition of
whom the corporation may enter into an agreement or transaction. 

(l) is amended by the addition of the language which specifies that a
former director of the corporation cannot, before the second anniversary
of the last day he was director, speak with a director, officer, or
employee of the corporation to give influence and on behalf of any person
seeking action with the corporation. 

(m) is amended by the addition of the language to clarify that a person
may not be represented by or give compensation to a former officer or
employee of the corporation for services rendered  that correspond to a
matter in which the former employee participated in while employed whether
through personal matters or job-related responsibility. 

(n) is amended by the addition of the language to define any violation of
Subsection (l) or (m) as a Class A misdemeanor. 

(o) is amended by the redesignation of the original Subsection (l) as (o)
and by the addition of the language to define the term "Participated",
which describes the term as taking action through "decision, approval,
disapproval, recommendation, giving advice, investigation, os similar
action" as an officer or employee.   Also, the section adds the definition
of the phrase, "Particular matter" which describes the term as "a specific
investigation, application, request for a ruling or determination,
rulemaking proceeding, contract, claim, charge, accusation, arrest, or
judicial or other proceeding." 

SECTION 2.  Emergency clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

In the substitute, the definitions for "participated" and "particular
matter" use the language for those definitions as found in the Government
Code rather than referencing the Government Code. 

The substitute allows for immediate effect instead of the September 1,
1997 effective date provided for in HB 1429.