Amend CSHB 3009 by striking all below the enacting clause and
substituting the following:
SECTION 1. Section 2256.002(10), Government Code, is amended
to read as follows:
(10) "Qualified representative" means a person who
holds a position with a business organization, who is authorized to
act on behalf of the business organization, and who is one of the
following:
(A) for a business organization doing business
that is regulated by or registered with a securities commission, a
person who is registered under the rules of the National
Association of Securities Dealers;
(B) for a state or federal bank, a savings bank,
or a state or federal credit union, a member of the loan committee
for the bank or branch of the bank or a person authorized by
corporate resolution to act on behalf of and bind the banking
institution; <or>
(C) for an investment pool, the person
authorized by the elected official or board with authority to
administer the activities of the investment pool to sign the
written instrument on behalf of the investment pool; or
(D) for an investment management firm registered
under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1
et seq.) or, if not subject to registration under that Act,
registered with the State Securities Board, a person who is an
officer or principal of the investment management firm.
SECTION 2. Section 2256.003, Government Code, is amended to
read as follows:
Sec. 2256.003. AUTHORITY TO INVEST FUNDS; ENTITIES SUBJECT
TO THIS CHAPTER. (a) Each governing body of the following
entities may purchase, sell, and invest its funds and funds under
its control in investments authorized under this subchapter in
compliance with investment policies approved by the governing body
and according to the standard of care prescribed by Section
2256.006:
(1) a local government;
(2) a state agency;
(3) a nonprofit corporation acting on behalf of a
local government or a state agency; or
(4) an investment pool acting on behalf of two or more
local governments, state agencies, or a combination of those
entities.
(b) Except as provided by Subsection (c), in the exercise of
its powers under Subsection (a), the governing body of an investing
entity may contract with an investment management firm registered
under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1
et seq.) or with the State Securities Board to provide for the
investment and management of its public funds or other funds under
its control. A contract made under authority of this subsection
may not be for a term longer than two years. A renewal or
extension of the contract must be made by the governing body of the
investing entity by order, ordinance, or resolution.
(c) In a county having an elected county treasurer, the
treasurer has the sole discretion to enter into a contract
described by Subsection (b).
SECTION 3. Section 2256.004, Government Code, as amended by
Chapters 505 and 1421, Acts of the 75th Legislature, Regular
Session, 1997, is amended to read as follows:
Sec. 2256.004. APPLICABILITY. (a) This subchapter does not
apply to:
(1) a public retirement system as defined by Section
802.001;
(2) state funds invested as authorized by Section
404.024;
(3) an institution of higher education having total
endowments of at least $95 million in book value on May 1, 1995;
(4) funds invested by the Veterans' Land Board as
authorized by Chapter 161, 162, or 164, Natural Resources Code;
<or>
(5) registry funds deposited with the county or
district clerk under Chapter 117, Local Government Code; or<.>
(6) <(5)> a deferred compensation plan that qualifies
under either Section 401(k) or 457 of the Internal Revenue Code of
1986 (26 U.S.C. Section 1 et seq.), as amended.
(b) This subchapter does not apply to an investment donated
to an investing entity for a particular purpose or under terms of
use specified by the donor.
SECTION 4. Section 2256.005, Government Code, is amended by
amending Subsections (f), (k), and (m) and adding Subsections (n)
and (o) to read as follows:
(f) Each investing entity shall designate, by rule, order,
ordinance, or resolution, as appropriate, one or more officers or
employees of the state agency, local government, or investment pool
as investment officer or contract with an investment management
firm under Section 2256.003(b) or (c) to be responsible for the
investment of its funds consistent with the investment policy
adopted by the entity. If the governing body of an investing
entity has contracted with another investing entity to invest its
funds, the investment officer of the other investing entity is
considered to be the investment officer of the first investing
entity for purposes of this chapter. Authority granted to a
fiduciary <person> to invest an entity's funds is effective until
rescinded by the investing entity, <or> until the expiration of the
officer's term or the termination of the person's employment by the
investing entity, or if an investment management firm, until the
expiration of the contract with the investing entity. In the
administration of the duties of an investment officer, the
fiduciary <person> designated as investment officer shall exercise
the judgment and care, under prevailing circumstances, that a
prudent person would exercise in the management of the person's own
affairs, but the governing body of the investing entity retains
ultimate responsibility as fiduciaries of the assets of the entity.
Unless authorized by law, a person may not deposit, withdraw,
transfer, or manage in any other manner the funds of the investing
entity.
(k) A written copy of the investment policy shall be
presented to any person offering to engage in an investment
transaction with an investing entity or to an investment management
firm under contract with an investing entity to invest or manage
the entity's investment portfolio. For purposes of this
subsection, a business organization includes investment pools and
an investment management firm under contract with an investing
entity to invest or manage the entity's investment portfolio.
Nothing in this subsection relieves the investing entity of the
responsibility for monitoring the investments made by the investing
entity to determine that they are in compliance with the investment
policy. The qualified representative of the business organization
offering to engage in an investment transaction with an investing
entity shall execute a written instrument in a form acceptable to
the investing entity and the business organization substantially to
the effect that the business organization has:
(1) received and reviewed the investment policy of the
entity; and
(2) acknowledged that the business organization has
implemented reasonable procedures and controls in an effort to
preclude investment transactions conducted between the entity and
the organization that are not authorized by the entity's investment
policy, except to the extent that this authorization is dependent
on an analysis of the makeup of the entity's entire portfolio or
requires an interpretation of subjective investment standards.
(m) An investing entity other than a state agency, in
conjunction with its annual financial audit, shall perform a
compliance audit of management controls on investments and
adherence to the entity's established investment policies. <State
agencies shall report the results of the audit performed under this
subsection to the state auditor. The state auditor shall compile
the results of reports received under this subsection and annually
report those results to the legislative audit committee.>
(n) Except as provided by Subsection (o), at least once
every two years a state agency shall arrange for a compliance audit
of management controls on investments and adherence to the agency's
established investment policies. The compliance audit shall be
performed by the agency's internal auditor or by a private auditor
employed in the manner provided by Section 321.020. Not later than
January 1 of each even-numbered year, a state agency shall report
the results of the most recent audit performed under this
subsection to the state auditor. A state agency also shall report
to the state auditor other information the state auditor determines
necessary to assess compliance with laws and policies applicable to
state agency investments. A report under this subsection shall be
prepared in a manner the state auditor prescribes.
(o) The audit requirements of Subsection (n) do not apply to
assets of a state agency that are invested by the comptroller under
Section 404.024.
SECTION 5. Section 2256.007(c), Government Code, is amended
to read as follows:
(c) Training under this section must include education in
investment controls, security risks, strategy risks, market risks,
diversification of investment portfolio, and compliance with this
chapter.
SECTION 6. Section 2256.008, Government Code, is amended to
read as follows:
Sec. 2256.008. INVESTMENT TRAINING; LOCAL GOVERNMENTS. (a)
Except as provided by Subsection (b), the <The> treasurer, the
chief financial officer if the treasurer is not the chief financial
officer, and the investment officer of a local government shall:
(1) attend at least one training session under a
curriculum approved by the state auditor and containing at least 10
hours of instruction relating to the treasurer's or officer's
responsibilities under this subchapter within 12 months after
taking office or assuming duties; and
(2) except as provided by Subsection (b), attend an
investment training session not less than once in a two-year period
and receive not less than 10 hours of instruction relating to
investment responsibilities under this subchapter under a
curriculum approved by the state auditor and <from an independent
source> approved by the governing body of the local government or a
designated investment committee advising the investment officer as
provided for in the investment policy of the local government.
(b) An investing entity created under authority of Section
52(b), Article III, or Section 59, Article XVI, Texas Constitution,
that has contracted with an investment management firm under
Section 2256.003(b) and has fewer than five full-time employees or
an investing entity that has contracted with another investing
entity to invest the entity's funds may satisfy the training
requirement provided by Subsection (a)(2) by having an officer of
the governing body attend four hours of appropriate instruction in
a two-year period.
(c) Training under this section must include education in
investment controls, security risks, strategy risks, market risks,
diversification of investment portfolio, and compliance with this
chapter.
SECTION 7. Section 2256.009(a), Government Code, is amended
to read as follows:
(a) Except as provided by Subsection (b), the following are
authorized investments under this subchapter:
(1) obligations of the United States or its agencies
and instrumentalities;
(2) direct obligations of this state or its agencies
and instrumentalities;
(3) collateralized mortgage obligations directly
issued by a federal agency or instrumentality of the United States,
the underlying security for which is guaranteed by an agency or
instrumentality of the United States;
(4) other obligations, the principal and interest of
which are unconditionally guaranteed or insured by, or backed by
the full faith and credit of, this state or the United States or
their respective agencies and instrumentalities; <and>
(5) obligations of states, agencies, counties, cities,
and other political subdivisions of any state rated as to
investment quality by a nationally recognized investment rating
firm not less than A or its equivalent; and
(6) bonds issued, assumed, or guaranteed by the State
of Israel.
SECTION 8. Section 2256.014(c), Government Code, is amended
to read as follows:
(c) An entity is not authorized by this section to:
(1) invest in the aggregate more than 15 <80> percent
of its monthly average fund balance, excluding bond proceeds and
reserves and other funds held for debt service, in <money market
mutual funds described in Subsection (a) or> mutual funds described
in Subsection (b)<, either separately or collectively>;
(2) <invest in the aggregate more than 15 percent of
its monthly average fund balance, excluding bond proceeds and
reserves and other funds held for debt service, in mutual funds
described in Subsection (b);>
<(3)> invest any portion of bond proceeds, reserves
and funds held for debt service, in mutual funds described in
Subsection (b); or
(3) <(4)> invest its funds or funds under its control,
including bond proceeds and reserves and other funds held for debt
service, in any one mutual fund described in Subsection (a) or (b)
in an amount that exceeds 10 percent of the total assets of the
mutual fund.
SECTION 9. The heading for Section 2256.015, Government Code,
is amended to read as follows:
Sec. 2256.015. AUTHORIZED INVESTMENTS <FOR STATE AGENCIES>:
GUARANTEED INVESTMENT CONTRACTS.
SECTION 10. Section 2256.015(a), Government Code, is amended
to read as follows:
(a) A guaranteed investment contract is an authorized
investment <for state agencies> for bond proceeds under this
subchapter if the guaranteed investment contract:
(1) has a defined termination date;
(2) is secured by obligations described by Section
2256.009(a)(1), excluding those obligations described by Section
2256.009(b), in an amount at least equal to the amount of bond
proceeds invested under the contract; and
(3) is pledged to the entity and deposited with the
entity or with a third party selected and approved by the entity.
SECTION 11. This Act takes effect September 1, 1999.
SECTION 12. The importance of this legislation and the
crowded condition of the calendars in both houses create an
emergency and an imperative public necessity that the
constitutional rule requiring bills to be read on three several
days in each house be suspended, and this rule is hereby suspended.