By Junell                                       H.B. No. 3365

      75R3329 JRD-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the consolidation of state telecommunications services

 1-3     into a nonprofit corporation.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subtitle D, Title 10, Government Code, is amended

 1-6     by adding Chapter 2169 to read as follows:

 1-7                CHAPTER 2169.  TEXAS ADMINISTRATIVE SERVICES

 1-8                       TELECOMMUNICATIONS CORPORATION

 1-9     SUBCHAPTER A.  GENERAL PROVISIONS; PROVISION OF TELECOMMUNICATIONS

1-10             SERVICES TO STATE AND LOCAL GOVERNMENTAL ENTITIES 

1-11           Sec. 2169.001.  PURPOSE.  The purpose of this chapter is to

1-12     establish a nonprofit corporation that:

1-13                 (1)  is governed by a board of directors appointed by

1-14     the governor;

1-15                 (2)  is subject to certain laws that govern the conduct

1-16     of governmental entities; and

1-17                 (3)  will provide telecommunications services to state

1-18     and local governmental entities that choose to use the

1-19     corporation's services, initially using property and equipment

1-20     transferred to the corporation by certain state agencies.

1-21           Sec. 2169.002.  DEFINITIONS.  In this chapter:

1-22                 (1)  "Board" means the board of directors of the Texas

1-23     Administrative Services Telecommunications Corporation.

1-24                 (2)  "Corporation" means the Texas Administrative

 2-1     Services Telecommunications Corporation.

 2-2                 (3)  "Executive director" means the executive director

 2-3     of the corporation.

 2-4           Sec. 2169.003.  STATE AGENCY OPTIONS FOR OBTAINING

 2-5     TELECOMMUNICATIONS SERVICES.  (a)  A state agency may obtain

 2-6     telecommunications services only:

 2-7                 (1)  through the corporation;

 2-8                 (2)  from commercial sources; or

 2-9                 (3)  by providing the telecommunications services

2-10     itself, including by constructing its own telecommunications

2-11     network if necessary to the provision of its own services.

2-12           (b)  A state agency that obtains telecommunications services

2-13     from commercial sources or provides its own telecommunications

2-14     services under Subsection (a)(2) or (a)(3) must file a report with

2-15     the commission justifying any purchase the agency makes that

2-16     exceeds $5,000, that relates to obtaining or providing its own

2-17     telecommunications services, and that is made from an entity other

2-18     than the corporation.  The agency must list in the report all

2-19     reasons based on cost, performance, or other criteria for obtaining

2-20     or providing its own services under Subsection (a)(2) or (a)(3).

2-21           (c)  The commission each biennium shall report any purchases

2-22     made by a state agency under Subsection (b) to the Legislative

2-23     Budget Board at a time prescribed by the budget board.

2-24           (d)  This section does not apply to a university system or

2-25     institution of higher education as defined by Section 61.003,

2-26     Education Code.

2-27           Sec. 2169.004.  USE OF CORPORATION'S SERVICES BY

 3-1     UNIVERSITIES, LEGISLATIVE ENTITIES, AND LOCAL GOVERNMENTAL

 3-2     ENTITIES.  (a)  A university system or an institution of higher

 3-3     education as defined by Section 61.003, Education Code, may at the

 3-4     option of the system or institution obtain telecommunications

 3-5     services from the corporation.

 3-6           (b)  A house of the legislature or a legislative agency may

 3-7     at the option of the legislative entity obtain telecommunications

 3-8     services from the corporation.

 3-9           (c)  A local governmental entity may at the option of the

3-10     local governmental entity obtain telecommunications services from

3-11     the corporation.

3-12           Sec. 2169.005.  PROVISION OF TELECOMMUNICATIONS SERVICES BY

3-13     STATE AGENCY OR UNIVERSITY.  (a)  A state agency may not provide

3-14     telecommunications services to another state agency or to a local

3-15     governmental entity except as provided by Subsection (b).

3-16           (b)  A university system or an institution of higher

3-17     education as defined by Section 61.003, Education Code, may provide

3-18     telecommunications services only for itself or to another such

3-19     university system or institution of higher education.  An

3-20     institution of higher education may also allow students who reside

3-21     in the institution's housing to use for local and long-distance

3-22     services the system of telecommunications services that the

3-23     institution itself uses if the institution charges each student for

3-24     the full pro rata costs attributable to the student's use.

3-25           Sec. 2169.006.  COMPLIANCE WITH DEPARTMENT OF INFORMATION

3-26     RESOURCES' STANDARDS.  The telecommunications services provided by

3-27     the corporation must comply with the Department of Information

 4-1     Resources' statewide policies and standards established under

 4-2     Section 2054.059.

 4-3           Sec. 2169.007.  RESTRICTION ON ACTIVITIES OF CORPORATION.

 4-4     The purpose of the corporation is to carry out the public purposes

 4-5     of this chapter. The corporation's activities are limited to the

 4-6     provision of telecommunications services to state and local

 4-7     governmental entities in accordance with this chapter and to

 4-8     exercising powers incidental to or necessary for the provision of

 4-9     those services.

4-10             (Sections 2169.008-2169.050 reserved for expansion)

4-11                       SUBCHAPTER B. ESTABLISHMENT OF

4-12                   CORPORATION; ADMINISTRATIVE PROVISIONS

4-13           Sec. 2169.051.  APPLICATION OF TEXAS NON-PROFIT CORPORATION

4-14     ACT.  The Texas Non-Profit Corporation Act (Article 1396-1.01 et

4-15     seq., Vernon's Texas Civil Statutes) applies to the corporation to

4-16     the extent that the provisions of that Act are consistent with this

4-17     chapter.

4-18           Sec. 2169.052.  FORM OF CORPORATION; DISPOSITION OF EARNINGS.

4-19     (a)   The corporation is a nonmember, nonstock corporation.

4-20           (b)  The corporation is nonprofit, and no part of its net

4-21     earnings remaining after payment of its expenses may benefit any

4-22     individual, firm, or corporation, except that if the board

4-23     determines that sufficient provision has been made for the full

4-24     payment of the expenses, bonds, and other obligations of the

4-25     corporation, the additional net earnings of the corporation shall

4-26     be deposited to the credit of the general revenue fund.

4-27           (c)  The corporation shall be created as a perpetual

 5-1     corporation.

 5-2           (d)  Notwithstanding any provision of the Texas Non-Profit

 5-3     Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil

 5-4     Statutes) and the Texas Business Corporation Act, the corporation

 5-5     may not be dissolved by a vote of the board.

 5-6           Sec. 2169.053.  ARTICLES OF INCORPORATION.  The articles of

 5-7     incorporation of the corporation must state:

 5-8                 (1)  the name of the corporation;

 5-9                 (2)  that the corporation is a nonprofit corporation;

5-10                 (3)  that the duration of the corporation is perpetual;

5-11                 (4)  that the specific purpose for which the

5-12     corporation is organized is for the provision of telecommunications

5-13     services to state and local governmental entities under Chapter

5-14     2169, Government Code;

5-15                 (5)  that the corporation does not have any members and

5-16     is a nonstock corporation;

5-17                 (6)  the street address and name of the corporation's

5-18     initial registered office and its initial registered agent;

5-19                 (7)  the number of directors of the initial board as

5-20     provided by this chapter and the name and address of each director;

5-21     and

5-22                 (8)  the name and street address of the incorporator.

5-23           Sec. 2169.054.  BOARD; APPOINTMENT; TERMS OF OFFICE.  (a)

5-24     The board consists of six members appointed by the governor with

5-25     the advice and consent of the senate.

5-26           (b)  The members serve staggered six-year terms.  The terms

5-27     of one-third of the members expire February 1 of each odd-numbered

 6-1     year.

 6-2           Sec. 2169.055.  CONFLICT OF INTEREST.  (a)  A person may not

 6-3     serve as a member of the board or be the executive director or an

 6-4     employee of the corporation if the person or the person's spouse:

 6-5                 (1)  is employed by, participates in the management of,

 6-6     or is a paid consultant of a business entity that contracts with

 6-7     the corporation;

 6-8                 (2)  owns or controls, directly or indirectly, more

 6-9     than a 10 percent interest in a business entity or other

6-10     organization that contracts with the corporation;

6-11                 (3)  uses a substantial amount of tangible goods,

6-12     services, or funds obtained from the corporation or receives a

6-13     substantial amount of tangible goods, services, or funds from the

6-14     corporation, other than compensation or reimbursement authorized by

6-15     law for employee salaries and benefits or for board membership,

6-16     attendance, and expenses; or

6-17                 (4)  is an officer, employee, or paid consultant of a

6-18     trade association of businesses that contracts with the

6-19     corporation.

6-20           (b)  For the purposes of this section, a trade association is

6-21     a nonprofit, cooperative, and voluntarily joined association of

6-22     business or professional competitors designed to assist its members

6-23     and its industry or profession in dealing with mutual business or

6-24     professional problems and in promoting their common interest.

6-25           (c)  For the purposes of this section, a business entity is a

6-26     sole proprietorship, partnership, firm, corporation, holding

6-27     company, joint stock company, receivership, trust, or any other

 7-1     entity recognized in a law that governs business for profit and the

 7-2     manner in which business is conducted.

 7-3           (d)  A person may not be a member of the board or the

 7-4     executive director or an employee of the corporation if the person

 7-5     is required to register as a lobbyist under Chapter 305 due to the

 7-6     person's activities for compensation on behalf of a business entity

 7-7     that has an interest in a contract with the corporation or a

 7-8     profession related to the operation of the corporation.

 7-9           Sec. 2169.056.  OFFICERS; COMPENSATION; MEETINGS.  (a)  The

7-10     governor shall designate the presiding officer of the board. The

7-11     presiding officer serves in that capacity at the will of the

7-12     governor.

7-13           (b)  The board shall elect from among its members a

7-14     secretary.

7-15           (c)  The board shall meet at least quarterly.

7-16           (d)  A member of the board may not receive compensation for

7-17     service on the board.  A member is entitled to receive

7-18     reimbursement for actual and necessary expenses incurred in

7-19     performing services as a member of the board.

7-20           (e)  The board shall develop and implement policies that

7-21     provide the public with a reasonable opportunity to appear before

7-22     the board and to speak on any issue under the jurisdiction of the

7-23     board.

7-24           Sec. 2169.057.  OPEN MEETINGS.  (a)  The corporation is

7-25     subject to Chapter 551.

7-26           (b)  The board shall file notice of each meeting of the board

7-27     in the manner required for a state governmental body under Chapter

 8-1     551.

 8-2           Sec. 2169.058.  OPEN RECORDS.  The board is subject to

 8-3     Chapter 552.

 8-4           Sec. 2169.059.  INDEMNIFICATION.  The corporation may

 8-5     indemnify a director or an officer of the corporation for necessary

 8-6     expenses and costs, including attorney's fees, incurred by the

 8-7     director or officer in connection with any claim asserted against

 8-8     the director or officer in a court action or otherwise for

 8-9     negligence or misconduct related to corporation activities.

8-10           Sec. 2169.060.  EXECUTIVE DIRECTOR.  The board shall employ

8-11     an executive director to be chosen by a majority of the board

8-12     members who shall manage the corporation's day-to-day operations

8-13     and employ other employees necessary to carry out the corporation's

8-14     duties.

8-15           Sec. 2169.061.  EXEMPTION FROM TAXATION.  The corporation may

8-16     engage exclusively in the performance of public nonprofit functions

8-17     under this chapter and is exempt from all taxation by this state or

8-18     a municipality or other political subdivision of the state.

8-19           Sec. 2169.062.  BONDS AND NOTES.  (a)  The corporation may

8-20     issue bonds and notes to carry out its purpose.

8-21           (b)  The bonds and notes may be issued under any power or

8-22     authority available to the corporation, including the Bond

8-23     Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil

8-24     Statutes).

8-25           (c)  A bond or note issued by the corporation must state on

8-26     its face that it is not an obligation of the State of Texas.

8-27           Sec. 2169.063.  APPROVAL OF BONDS AND NOTES BY ATTORNEY

 9-1     GENERAL.  (a)  The corporation shall submit a bond or note issued

 9-2     under this chapter and a contract supporting its issuance to the

 9-3     attorney general for examination.

 9-4           (b)  If the attorney general finds that the bond or note and

 9-5     any supporting contract are authorized under this chapter, the

 9-6     attorney general shall approve them.

 9-7           (c)  After approval by the attorney general, a bond, note, or

 9-8     contract may not be contested for any reason.

 9-9           Sec. 2169.064.  ASSETS ON DISSOLUTION.  On dissolution or

9-10     liquidation of the corporation, the title to all assets, including

9-11     funds and property, shall be transferred to the commission.

9-12           Sec. 2169.065.  FUND.  Money paid to the corporation under

9-13     this chapter shall be deposited with the comptroller.

9-14           Sec. 2169.066.  REPORT.  (a)  The corporation shall file an

9-15     annual report of the financial activity of the corporation with the

9-16     governor, lieutenant governor, and speaker of the house of

9-17     representatives.  The annual report shall be filed before the 90th

9-18     day after the last day of the corporation's fiscal year and shall

9-19     be prepared in accordance with generally accepted accounting

9-20     principles.

9-21           (b)  The report must include a statement of support, revenue,

9-22     and expenses and change in fund balances, a statement of functional

9-23     expenses, and balance sheets for all funds.

9-24           Sec. 2169.067.  STATE-OWNED RENTAL SPACE.  If requested by

9-25     the corporation, the commission shall determine whether appropriate

9-26     state-owned space is available and may rent appropriate space to

9-27     the corporation at fair market value under Subchapter E, Chapter

 10-1    2165.  A rental agreement between the commission and the

 10-2    corporation is not subject to Sections 2165.204 and 2165.205.

 10-3          SECTION 2.  Section 2054.003(10), Government Code, is amended

 10-4    to read as follows:

 10-5                (10)  "Telecommunications" means any transmission,

 10-6    emission, or reception of signs, signals, writings, images, or

 10-7    sounds of intelligence of any nature by wire, radio, optical, or

 10-8    other electromagnetic systems.  The term includes all facilities

 10-9    and equipment performing those functions that are owned, leased, or

10-10    used by state agencies and branches of state government.  The term

10-11    does not include single agency point-to-point radio systems or

10-12    facilities or services of criminal justice information

10-13    communications systems.

10-14          SECTION 3.  Section 2054.051(e), Government Code, is amended

10-15    to read as follows:

10-16          (e)  The department shall provide for all interagency use of

10-17    information resources technologies by state agencies, except for

10-18    telecommunications services provided [by the General Services

10-19    Commission] under other law.  The department may provide for

10-20    interagency use of information resources technologies either

10-21    directly or by certifying another state agency to provide specified

10-22    uses of information resources technologies to other state agencies.

10-23          SECTION 4.  Section 2054.059, Government Code, is amended to

10-24    read as follows:

10-25          Sec. 2054.059.  TELECOMMUNICATIONS PLANNING AND POLICY.

10-26    (a)  [The department shall establish plans and policies for a

10-27    system of telecommunications services to be managed and operated by

 11-1    the General Services Commission.]

 11-2          [(b)  The department, comptroller, and General Services

 11-3    Commission shall develop a statewide telecommunications operating

 11-4    plan for all state agencies.  The plan shall implement a statewide

 11-5    network and include technical specifications that are binding on

 11-6    the managing and operating agency.  A representative of the Central

 11-7    Education Agency  and a representative of the Texas Higher

 11-8    Education Coordinating Board shall review and comment on the

 11-9    operating plan as part of the representatives' duties under Section

11-10    10.02(g), State Purchasing and General Services Act (Article 601b,

11-11    Vernon's Texas Civil Statutes).]

11-12          [(c)]  The department shall adopt appropriate policies and

11-13    standards that govern the cost-effective and efficient management,

11-14    operation, and use of state telecommunications services and shall

11-15    distribute those policies and standards to all state agencies.

11-16          (b) [(d)]  Each state agency shall comply with the rules,

11-17    policies, standards, and guidelines adopted under this section.

11-18          [(e)  The department shall coordinate its duties in this

11-19    section on matters relating to statewide telecommunications issues

11-20    with:]

11-21                [(1)  the comptroller to achieve the goal of a single

11-22    centralized telecommunications network; and]

11-23                [(2)  other state agencies as appropriate.]

11-24          SECTION 5.  The following laws are repealed:

11-25                (1)  Section 2054.011, Government Code; and

11-26                (2)  Chapter 2170, Government Code.

11-27          SECTION 6.  (a)  As soon as possible after the effective date

 12-1    of this Act, the governor shall appoint the members of the board of

 12-2    directors of the Texas Administrative Services Telecommunications

 12-3    Corporation in accordance with Chapter 2169, Government Code, as

 12-4    added by this Act. The governor shall appoint two members for terms

 12-5    expiring February 1, 1999, two members for terms expiring February

 12-6    1, 2001, and two members for terms expiring February 1, 2003.

 12-7          (b)  The governor shall designate one of those members as the

 12-8    presiding officer of the board of directors. The presiding officer

 12-9    shall serve as the incorporator of the corporation and begin

12-10    performing those functions in accordance with Chapter 2169,

12-11    Government Code, as added by this Act, and other applicable law.

12-12          (c)  At the time that the governor has appointed at least a

12-13    quorum to the board, the General Services Commission shall transfer

12-14    the telecommunications revolving fund account and the money in the

12-15    account, the right to receive future money payable into the

12-16    account, the financial obligations that are paid with money in the

12-17    account, and the original or a copy of all records related to the

12-18    transferred account or obligations to the Texas Administrative

12-19    Services Telecommunications Corporation. The corporation at the

12-20    time a quorum of the board is appointed is considered a legal

12-21    entity for the purpose of performing its transitional duties under

12-22    this section without regard to whether the creation of the

12-23    corporation has been completed in accordance with Chapter 2169,

12-24    Government Code, as added by this Act, and other applicable law.

12-25    Until the telecommunications equipment and other assets related to

12-26    the provision of telecommunications services are transferred to the

12-27    corporation so that the corporation may begin providing

 13-1    telecommunications services to state and local governmental

 13-2    entities, the corporation may use money from the account only:

 13-3                (1)  to pay the financial obligations paid from the

 13-4    account as those obligations become due; and

 13-5                (2)  to hire an executive director and other necessary

 13-6    staff who will see that the financial obligations are paid with

 13-7    money from the account and who will use money from the account to

 13-8    prepare the transition plan for beginning to provide services.

 13-9          (d)  The executive director of the corporation shall prepare

13-10    a transition plan for approval by the board of directors for:

13-11                (1)  consolidation of the equipment, contracts, and

13-12    other assets related to the provision of telecommunications

13-13    services from the General Services Commission's telecommunications

13-14    services division, the statewide telecommunications section of the

13-15    Department of Information Resources, and the Health and Human

13-16    Services Commission Network into the corporation; and

13-17                (2)  the corporation to begin providing services.

13-18          (e)  At the time that the board of directors certifies that

13-19    the corporation is ready to begin providing services in accordance

13-20    with Chapter 2169, Government Code, as added by this Act, all

13-21    equipment, records, other assets, contracts, and obligations of the

13-22    Department of Information Resources, the General Services

13-23    Commission, the Health and Human Services Commission, and if

13-24    applicable other health and human services agencies that are

13-25    related to the provision of local or long-distance voice or data

13-26    telecommunications services to another agency are transferred to

13-27    the Texas Administrative Services Telecommunications Corporation.

 14-1    Any money in the statewide network applications account is also

 14-2    transferred to the corporation at that time.  The corporation shall

 14-3    then begin providing telecommunications services to state and local

 14-4    governmental agencies that choose to use the corporation's

 14-5    services.

 14-6          (f)  The provisions of Chapters 2054 and 2170, Government

 14-7    Code, that are repealed or amended by this Act are continued in

 14-8    effect as they existed immediately before the effective date of

 14-9    this Act, to the extent consistent with this section, until the

14-10    board of directors certifies that the corporation is ready to begin

14-11    providing services.

14-12          SECTION 7.  The Texas Administrative Services

14-13    Telecommunications Corporation shall transfer into the general

14-14    revenue fund of the State of Texas, before the 90th day after the

14-15    last day of each of the corporation's first five fiscal years, the

14-16    following amounts:  $528,000 for 1998, $573,000 for 1999, $546,000

14-17    for 2000, $546,000 for 2001, and $546,000 for 2002.  If the

14-18    corporation lacks sufficient resources to transfer the required

14-19    amount for any of those years, the corporation shall list the

14-20    difference between the required amount and the amount paid as a

14-21    liability in its annual report to the governor, lieutenant

14-22    governor, and speaker of the house of representatives.  The

14-23    corporation must explain the reason for the deficiency in the notes

14-24    to the report and must transfer the amount of the remaining

14-25    liability into the general revenue fund as soon as possible.

14-26          SECTION 8.  On September 1, 1997, the state auditor shall

14-27    begin an audit of the General Services Commission's

 15-1    telecommunications services division, the statewide

 15-2    telecommunications section of the Department of Information

 15-3    Resources, and the Health and Human Services Commission Network.

 15-4    The purpose of the audit is to prepare an account of all assets,

 15-5    liabilities, and personnel that will be affected by the

 15-6    consolidation under  Chapter 2169, Government Code, as added by

 15-7    this Act.

 15-8          SECTION 9.  (a)  Concurrently with the transfer of the assets

 15-9    of the General Services Commission's telecommunications services

15-10    division, the statewide telecommunications section of the

15-11    Department of Information Resources, and the Health and Human

15-12    Services Commission Network to the Texas Administrative Services

15-13    Telecommunications Corporation under this Act, the corporation

15-14    shall pay into the general revenue fund an amount equal to the fair

15-15    market value of the assets transferred as determined in accordance

15-16    with applicable state law, provided that the payment shall be

15-17    spread evenly over a period not to exceed 20 years.  The amounts

15-18    paid under this subsection are in addition to the amounts paid

15-19    under Section 7 of this Act.

15-20          (b)  If any existing telecommunications network components

15-21    used by the General Services Commission, the Department of

15-22    Information Resources, or the Health and Human Services Commission

15-23    Network that are subject to transfer to the corporation under this

15-24    Act are owned by the federal government, the applicable commission

15-25    or agency shall use its best efforts to secure agreements with the

15-26    appropriate federal agencies to arrange for the orderly transfer of

15-27    telecommunications services to the corporation.

 16-1          SECTION 10.  This Act takes effect September 1, 1997.  

 16-2          SECTION 11.  The importance of this legislation and the

 16-3    crowded condition of the calendars in both houses create an

 16-4    emergency and an imperative public necessity that the

 16-5    constitutional rule requiring bills to be read on three several

 16-6    days in each house be suspended, and this rule is hereby suspended.