By: Armbrister S.B. No. 701
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain responsibilities of the comptroller relating to
1-2 investment and management of funds.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 66.02, Education Code, is amended to read
1-5 as follows:
1-6 Sec. 66.02. AVAILABLE UNIVERSITY FUND. The dividends,
1-7 interest, and other income from the permanent university fund,
1-8 including the net income attributable to the surface of permanent
1-9 university fund land, but excluding administrative expenses, shall
1-10 constitute the available university fund. All interest, dividends,
1-11 and other income accruing and earned from the investments of
1-12 [derived from] the permanent university fund shall be deposited in
1-13 the State Treasury to the credit of the available university fund
1-14 at least once a month by the board of regents of The University of
1-15 Texas System or by the custodian or custodians of the permanent
1-16 university fund's securities [within five days after receipt by any
1-17 state officer, agent, or employee]. The University of Texas System
1-18 shall provide the information necessary for the comptroller to
1-19 accurately account for income from the permanent university fund
1-20 and to protect state revenues. The system shall provide the
1-21 information using the method, format, and frequency required by the
1-22 comptroller.
1-23 SECTION 2. Subchapter A, Chapter 66, Education Code, is
2-1 amended by adding Section 66.07 to read as follows:
2-2 Sec. 66.07. CUSTODY AND INVESTMENT OF ASSETS PENDING
2-3 TRANSACTIONS. With the approval of the comptroller, the board of
2-4 regents of The University of Texas System may appoint one or more
2-5 commercial banks, depository trust companies, or other entities, in
2-6 or outside this state, to serve as a custodian or custodians of the
2-7 permanent university fund's securities with authority to hold the
2-8 money realized from those securities pending completion of an
2-9 investment transaction if the money held is reinvested within one
2-10 business day of receipt in investments determined by the board of
2-11 regents. Money not reinvested within one business day of receipt
2-12 shall be deposited in the state treasury not later than the fifth
2-13 day after the date of receipt.
2-14 SECTION 3. Section 85.70, Education Code, is amended to read
2-15 as follows:
2-16 Sec. 85.70. CERTAIN MINERAL LEASES; DISPOSITION OF MONEY;
2-17 SPECIAL FUNDS; INVESTMENT. (a) Except as provided by Subsection
2-18 (c) of this section, all money received under and by virtue of this
2-19 subchapter shall be deposited in the state treasury to the credit
2-20 of a special fund to be known as The Texas A&M University System
2-21 Special Mineral Investment Fund. With the approval of the
2-22 comptroller, the board of regents of The Texas A&M University
2-23 System may appoint one or more commercial banks, depository trust
2-24 companies, or other entities, in or outside this state, to serve as
2-25 custodian or custodians of the Special Mineral Investment Fund's
3-1 securities with authority to hold the money realized from those
3-2 securities pending completion of an investment transaction if the
3-3 money held is reinvested within one business day of receipt in
3-4 investments determined by the board of regents. Money not
3-5 reinvested within one business day of receipt shall be deposited in
3-6 the state treasury not later than the fifth day after the date of
3-7 receipt. In the judgment of the board, this special fund may be
3-8 invested so as to produce an income which may be expended under the
3-9 direction of the board for the general use of any component of The
3-10 Texas A&M University System, including erecting permanent
3-11 improvements and in payment of expenses incurred in connection with
3-12 the administration of this subchapter. The unexpended income
3-13 likewise may be invested as herein provided.
3-14 (b) The income from the investment of the special mineral
3-15 investment fund under Subsection (a) of this section shall be
3-16 deposited to the credit of a fund to be known as The Texas A&M
3-17 University System Special Mineral Income Fund, and shall be
3-18 appropriated by the legislature exclusively for the university
3-19 system for the purposes herein provided.
3-20 (c) The board shall lease for oil, gas, sulphur, or other
3-21 mineral development, as prescribed by this subchapter, all or part
3-22 of the land under the exclusive control of the board owned by the
3-23 State of Texas and acquired for the use of Texas A&I University and
3-24 its divisions. Any money received by the board concerning such
3-25 land under this subchapter shall be deposited in the state treasury
4-1 to the credit of a special fund to be known as the Texas A&I
4-2 University special mineral fund, to be used exclusively for Texas
4-3 A&I University and its branches and divisions. Money may not be
4-4 expended from this fund except as authorized by the general
4-5 appropriations act.
4-6 SECTION 4. Subsections (a), (b), (f), (g), (h), and (i),
4-7 Section 404.024, Government Code, are amended to read as follows:
4-8 (a) The board may determine and designate the amount of
4-9 state funds to be deposited in time deposits in state depositories.
4-10 The comptroller [treasurer] shall recommend to the board a maximum
4-11 limit for state funds deposited by the comptroller [treasurer] at
4-12 approved state depositories. The percentage of state funds to be
4-13 deposited in state depositories shall be based on the interest
4-14 rates available in competing investments, the demand for funds from
4-15 Texas banks, and the state's liquidity requirements. The
4-16 comptroller [treasurer] shall provide periodic investment reports
4-17 to the board.
4-18 (b) State funds not deposited in state depositories shall be
4-19 invested by the comptroller [treasurer] in:
4-20 (1) direct security repurchase agreements;
4-21 (2) reverse security repurchase agreements;
4-22 (3) direct obligations of or obligations the principal
4-23 and interest of which are guaranteed by the United States;
4-24 (4) direct obligations of or obligations guaranteed by
4-25 agencies or instrumentalities of the United States government;
5-1 (5) bankers' acceptances that:
5-2 (A) are eligible for purchase by the Federal
5-3 Reserve System;
5-4 (B) do not exceed 270 days to maturity; and
5-5 (C) are issued by a bank that has received the
5-6 highest short-term credit rating by a nationally recognized
5-7 investment rating firm;
5-8 (6) commercial paper that:
5-9 (A) does not exceed 270 days to maturity; and
5-10 (B) except as provided by Subsection (i), has
5-11 received the highest short-term credit rating by a nationally
5-12 recognized investment rating firm;
5-13 (7) contracts written by the treasury in which the
5-14 treasury grants the purchaser the right to purchase securities in
5-15 the treasury's marketable securities portfolio at a specified price
5-16 over a specified period and for which the treasury is paid a fee
5-17 and specifically prohibits naked-option or uncovered option
5-18 trading;
5-19 (8) direct obligations of or obligations guaranteed by
5-20 the Inter-American Development Bank, the International Bank for
5-21 Reconstruction and Development (the World Bank), the African
5-22 Development Bank, the Asian Development Bank, and the International
5-23 Finance Corporation that have received the highest credit rating by
5-24 a nationally recognized investment rating firm;
5-25 (9) bonds issued, assumed, or guaranteed by the State
6-1 of Israel;
6-2 (10) obligations of a state or an agency, county,
6-3 city, or other political subdivision of a state; [and]
6-4 (11) mutual funds secured by obligations that are
6-5 described by Subdivisions (1) through (6); and
6-6 (12) foreign currency for the sole purpose of
6-7 facilitating investment by state agencies that have the authority
6-8 to invest in foreign securities.
6-9 (f) The comptroller [treasurer] by rule may define
6-10 derivative investments other than those described by Subsection
6-11 (e). The treasury may not purchase investments defined by rule
6-12 adopted under this subsection in an amount that at the time of
6-13 purchase will cause the aggregate value of the investments to
6-14 exceed five percent of the treasury's total investments.
6-15 (g) To the extent practicable, the comptroller [treasurer]
6-16 shall give first consideration to Texas banks when investing in
6-17 direct security repurchase agreements.
6-18 (h) The comptroller [treasurer] may not use state funds to
6-19 invest in or purchase obligations of a private corporation or other
6-20 private business entity doing business in Northern Ireland unless
6-21 the corporation or other entity:
6-22 (1) adheres to fair employment practices; and
6-23 (2) does not discriminate on the basis of race, color,
6-24 religion, sex, national origin, or disability.
6-25 (i) Notwithstanding Subsection (b)(6)(B), the comptroller
7-1 [treasurer] may purchase commercial paper with a rating lower than
7-2 the rating required by that paragraph to provide liquidity for
7-3 commercial paper issued by the comptroller [treasurer] or an agency
7-4 of the state.
7-5 SECTION 5. Section 404.094, Government Code, is amended by
7-6 adding Subsection (d) to read as follows:
7-7 (d) A state agency that receives money from securities
7-8 transactions under applicable law, including Chapter 815 or 825,
7-9 Government Code, Chapter 161, 162, or 164, Natural Resources Code,
7-10 and Chapter 43, Education Code, with the comptroller's approval
7-11 may, as an alternative to the deposit of the funds as provided by
7-12 Subsection (a), net funds received against purchases of securities
7-13 occurring within one business day. Any proceeds received and
7-14 available for reinvestment that are not reinvested within one
7-15 business day of receipt shall be deposited in the state treasury as
7-16 provided by Subsection (a). An agency authorized to net securities
7-17 transactions under this section is subject to the accounting and
7-18 reporting procedures established by the comptroller.
7-19 SECTION 6. Subsection (b), Section 404.103, Government Code,
7-20 is amended to read as follows:
7-21 (b) The trust company may enter into contracts and trust
7-22 agreements or other fiduciary instruments with the comptroller
7-23 [treasurer], the Federal Reserve System, a depository trust
7-24 company, and other third parties. The trust company shall be
7-25 liable under those contracts in accordance with the terms contained
8-1 in the contracts. Notwithstanding any other statute to the
8-2 contrary, to the extent permitted by the Texas Constitution and the
8-3 contracts, trust agreements, or other fiduciary instruments between
8-4 the trust company, [and] the Federal Reserve System, and a
8-5 depository trust company, the trust company's obligations shall be
8-6 guaranteed by the state, and the state expressly waives all
8-7 defenses of governmental immunity by and on behalf of the trust
8-8 company, the comptroller [treasurer], and the state and expressly
8-9 consents to sue and be sued in federal court or in any court of
8-10 competent jurisdiction. However, this provision does not alter or
8-11 affect the immunity accorded to state officials and employees under
8-12 state law. The trust company may enter into contracts with the
8-13 comptroller [treasurer] and the Federal Reserve System to provide
8-14 any services that the Federal Reserve System makes available,
8-15 including:
8-16 (1) safekeeping book-entry United States Treasury and
8-17 agency securities owned by the state and its agencies;
8-18 (2) using the federal reserve wire transfer system to
8-19 transfer money and book-entry securities and to settle securities
8-20 transactions involving book-entry United States Treasury and agency
8-21 securities owned by the state and its agencies;
8-22 (3) collecting, through the Federal Reserve System,
8-23 checks deposited with the treasury;
8-24 (4) receiving payments from and making payments to the
8-25 federal government on behalf of the state and its agencies;
9-1 (5) originating automated clearinghouse transactions
9-2 or other electronic transfers to make payments on behalf of the
9-3 state and its agencies, collecting revenues due the state and its
9-4 agencies, and transferring money between state depositories;
9-5 (6) paying warrants drawn on the treasury and
9-6 presented through the Federal Reserve System for payment; and
9-7 (7) safekeeping collateral pledged to secure deposits
9-8 of public funds.
9-9 SECTION 7. Subsection (b), Section 2.07, Article 5.76-2,
9-10 Insurance Code, is amended to read as follows:
9-11 (b) The facility shall invest its funds only in investments
9-12 authorized by law for the investment of state funds as provided in
9-13 Chapter 404, Government Code. The governing committee shall
9-14 develop an investment policy and submit the policy to the
9-15 commissioner [state treasurer] for review and approval.
9-16 SECTION 8. Subsection (d), Section 13, Article 5.76-3,
9-17 Insurance Code, is amended to read as follows:
9-18 (d) Money in the fund shall be invested, subject to a policy
9-19 developed by the board and approved by the commissioner [state
9-20 treasurer], in the types of investments authorized by law for an
9-21 insurer authorized to write workers' compensation insurance
9-22 coverage in this state.
9-23 SECTION 9. This Act takes effect September 1, 1997.
9-24 SECTION 10. The importance of this legislation and the
9-25 crowded condition of the calendars in both houses create an
10-1 emergency and an imperative public necessity that the
10-2 constitutional rule requiring bills to be read on three several
10-3 days in each house be suspended, and this rule is hereby suspended.