Amend HB 585 on third reading by adding the following appropriately numbered sections to the bill to read as follows and by renumbering the existing sections of the bill accordingly: SECTION _____. Chapter 441, Government Code, is amended by adding Subchapter E to read as follows: SUBCHAPTER E. PUBLIC LIBRARY ENDOWMENT AND OPERATING FUNDS Sec. 441.071. TEXAS PUBLIC LIBRARY ENDOWMENT FUND. (a) The Texas public library endowment fund is a trust fund outside the state treasury held by a bank or depository trust company and administered by the commission for the benefit of the public as provided by this section. (b) The fund consists of donations accepted by the commission under Section 441.074. (c) The corpus of the endowment fund may not be spent for any purpose. (d) Not later than September 1 of each year, the commission shall remit all or part of the interest and income earned on money in the endowment fund to the comptroller for deposit in the state treasury to the credit of the Texas public library fund. The commission shall credit to the corpus of the endowment fund any portion of the interest and income not credited to the public library fund in the treasury. Sec. 441.072. INVESTMENT AND MANAGEMENT OF ENDOWMENT FUND. (a) The commission shall appoint investment managers for the management and investment of the Texas public library endowment fund by contracting for professional investment management services with one or more organizations that are in the business of managing investments. (b) In choosing and contracting for professional investment management services and in continuing the use of an investment manager, the commission shall act prudently and in the interest of the beneficiaries of the endowment fund. (c) In making and supervising investments of the endowment fund, an investment manager and the commission shall discharge their respective duties solely in the interest of the beneficiaries of the fund: (1) for the exclusive purposes of providing benefits for the beneficiaries of the fund and defraying reasonable expenses of administering this chapter; (2) with the care, skill, prudence, and diligence under the prevailing circumstances that a prudent person acting in a similar capacity and familiar with matters of the type would use in the conduct of an enterprise with a similar character and aims; (3) by diversifying the investments of the fund to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (4) in accordance with the documents and instruments governing the fund to the extent that the documents and instruments are consistent with this section. (d) To be eligible for appointment under this section, an investment manager must be: registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.), as amended; (2) a bank as defined by that Act that has a trust department; or (3) an insurance company qualified to perform investment services under the laws of more than one state. (e) in a contract made under this section, the commission shall specify any policies, requirements, or restrictions, including criteria for determining the quality of investments and for the use of standard rating services, that the commission adopts for investments of the endowment fund. (f) A member of the commission is not liable for the acts or omissions of an investment manager appointed under Subsection (a). A member of the commission is not permitted or obligated to invest or otherwise to manage any asset of the fund subject to management by the investment manager. (g) An investment manager appointed under Subsection (a) shall acknowledge in writing the manager's fiduciary responsibilities to the endowment fund. (h) The commission may at any time and shall frequently monitor the investments made by each investment manager for the endowment fund. The commission may contract for professional evaluation services to fulfill this requirement. (i) The commission shall enter into an investment custody account agreement designating a bank or a depository trust company to serve as custodian for all assets allocated to or generated under a contract for professional investment management services. (j) Under a custody account agreement, the commission shall require the designated custodian to perform the duties and assume responsibilities for the endowment fund that are performed and assumed, in the absence of a contract, by the custodian of the endowment fund. The custodian shall furnish to the commission, annually or more frequently if required by commission rule, a sworn statement of the amount of the endowment fund assets in the custodian's custody. (k) For purposes of this section, the beneficiaries of the Texas public library endowment fund are the persons who use public libraries, public library facilities, and public library collections and the public libraries that benefit from the performance of the commission's powers and duties under this chapter. Sec. 441.073. TEXAS PUBLIC LIBRARY FUND. (a) The Texas public library fund is a special fund in the state treasury outside the general revenue fund. (b) The fund consists of money credited to the fund under Section 441.071(d) and proceeds from sales under Section 441.074(d). (c) Money in the fund may be appropriated only to the commission to perform the commission's powers and duties concerning public library development under this chapter and to pay the commission's expenses incurred under this subchapter. (d) The fund is exempt from the application of Sections 403.095 and 404.071. Interest and income from deposit and investment of money in the fund shall be allocated to the fund monthly. Sec. 441.074. DONATIONS, APPROPRIATIONS, AND SALES. (a) The commission may solicit and accept on behalf of the state donations of money, securities, and other property as it determines best further the orderly development of public library resources of the state. Money paid to the commission under this subsection shall be deposited in the Texas public library endowment fund. (b) The commission by rule shall establish an acquisition policy for accepting donations of money, securities, and other property. (c) The legislature may make appropriations to the commission to carry out the purposes of this chapter. (d) The commission may purchase and resell items it determines appropriate for the promotion of public libraries in Texas. The value of commission inventory, as determined by generally accepted accounting principles, may not exceed $50,000 at the end of any fiscal year. The net profits from those sales shall be deposited in the Texas public library fund. Sec. 441.075. PUBLIC LIBRARY FUND GRANT PROGRAM. (a) The commission shall make grants to public libraries from the Texas public library fund for facility construction projects, acquisition of books and other collection development materials and payment of actual and reasonable general and administrative expenses. The commission shall allocate amounts from the fund to direct and matching grant programs. (b) The commission shall adopt rules: (1) establishing methods for participation by local governments in a matching grant program for facility construction projects; and (2) providing allocations for a direct grant program for acquisition of books and other collection development materials according to a formula that allocates a base grant to each participating public library plus an amount that is proportional to the size of the population served. (c) To participate in a grant program under this section, a public library must maintain a level of local public library funding equal to or greater than the average funding for the three years preceding participation. The commission shall adopt rules to implement this requirement. SECTION _____. Section 404.093(b), Government Code, is amended to read as follows: (b) This subchapter does not apply to: (1) funds pledged to the payment of bonds, notes, or other debts if the funds are not otherwise required to be deposited in the treasury; (2) funds held in trust or escrow for the benefit of a person or entity other than a state agency; (3) funds set apart out of earnings derived from investment of funds held in trust for others, as administrative expenses of the trustee agency; (4) funds, grants, donations, and proceeds from funds, grants, and donations, given in trust to the Texas State Library and Archives Commission for the establishment and maintenance of regional historical resource depositories and libraries in accordance with Section 441.154 441.074 ; or (5) funds under the management of the secretary-treasurer of the Anatomical Board of the State of Texas, as provided by Section 691.008, Health and Safety Code.