Bill not drafted by TLC or Senate E&E.

      Line and page numbers may not match official copy.

      By Williams                                    H.J.R. No. 111

                                 A JOINT RESOLUTION

 1-1     proposing a constitutional amendment with respect to the powers and

 1-2     duties of trustees of statewide public employee pension funds.

 1-3           BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Section 67(a)(3), Article XVI, Texas Constitution

 1-5     is amended to read as follows:

 1-6           (a)(3).  Each statewide benefit system must have a board of

 1-7     trustees to administer the system [and to invest the funds of the

 1-8     system in such securities as the board may consider prudent

 1-9     investments.]  In managing the assets of the fund the board may

1-10     acquire, exchange, sell, supervise, manage, or retain, through

1-11     procedures and subject to restrictions it establishes and in

1-12     amounts it considers appropriate, any kind of investment, [In making

1-13     investments, a board shall exercise the judgment and care under the

1-14     circumstances then prevailing] that persons of ordinary prudence,

1-15     discretion and intelligence, exercising the judgment and care under

1-16     the circumstances then prevailing, acquire or retain for their own

1-17     account [exercise] in the management of their own affairs, not in

1-18     regard to speculation, but in regard to the permanent disposition

1-19     of their funds, considering the probable income therefrom as well

1-20     as the probable safety of their capital.  Whether a trustee has

1-21     exercised prudence with respect to an investment decision shall be

1-22     determined not in isolation but in the context of the trust

1-23     portfolio and as a part of an overall investment strategy, which

1-24     should incorporate risk and return objectives reasonably suited to

 2-1     the trust.  The legislature by law may further restrict the

 2-2     investment discretion of a board.

 2-3           SECTION 2.  This proposed constitutional amendment shall be

 2-4     submitted to the voters at an election to be held November 4, 1997.

 2-5     The ballot shall be printed to permit voting for or against the

 2-6     proposition:  "The constitutional amendment providing that trustees

 2-7     are to supervise and manage the investment of statewide public

 2-8     employee pension funds in any kind of investment under standards of

 2-9     care used by prudent persons that take into consideration the

2-10     overall objectives and strategy for the entire trust portfolio."