HBA-MPM, LCA H.B. 3739 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 3739
By: Greenberg
Public Education
7/26/1999
Enrolled


BACKGROUND AND PURPOSE 

Prior to the 76th Legislature, consultants, advisors, brokers, or other
persons providing services for the permanent school fund were not required
to file expenditure reports.   

H.B. 3739 requires the State Board of Education (board) to adopt a policy
requiring the filing of expenditure reports by such persons, for
expenditures of more than $50 made on behalf of a board member, the
commissioner of education, a Texas Education Agency employee, or a
nonprofit corporation providing services under Section 43.006 (Investment
Management), Education Code. This requirement was recommended by the State
Auditor's Office, and is modeled after ethics requirements currently in
place for the Teacher Retirement System.  This bill also requires the board
to adopt and enforce an ethics policy. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 43, Education Code, by adding Sections
43.0031-43.0034,  as follows: 

Sec. 43.0031.  PERMANENT SCHOOL FUND ETHICS POLICY.  (a)  Requires the
State Board of Education (board), in addition to other requirements
provided by law, to adopt and enforce an ethics policy (policy).  Provides
that the policy must provide standards of conduct relating to the
management and investment of the permanent school fund (fund).  Provides
that the policy must include provisions that address specified issues as
they apply to the management and investment of the fund and to persons
responsible for managing and investing the fund.  Sets forth the issues the
policy must address in its provisions, including general ethics standards;
conflicts of interest; prohibited transactions and interests; the
acceptance of gifts and entertainment; compliance with applicable
professional standards; ethics training; and compliance with and
enforcement of the ethics policy. 

(b)  Provides that the policy must include provisions applicable to members
of the board, the commissioner of education (commissioner), employees of
the Texas Education Agency (agency), and any person who provides services
to the board relating to the management or investment of the fund. 

(c)  Requires the board, not later than 45 days before the date on which
the board intends to adopt a proposed policy or an amendment to or revision
of an adopted policy, to submit a copy of the proposed policy, amendment,
or revision to the Texas Ethics Commission and the state auditor for review
and comments.  Requires the board to consider such comments before adopting
the proposed policy. 

(d)  Provides that the provisions of the policy that apply to a person
providing services to the board must be based on ethics standards adopted
by an appropriate professionally recognized entity. 

 (e)  Requires the board to ensure that applicable provisions of the policy
are included in any contract with a person who provides services relating
to the management and investment of the fund. 

Sec. 43.0032.  CONFLICTS OF INTEREST.  (a) Requires a member of the board,
the commission, an employee of the agency, or a person providing services
to the board relating to the management or investment of the fund who has a
business, commercial, or other relationship that could reasonably be
expected to diminish the person's independence of judgment in the
performance of the person's responsibilities relating to the management or
investment of the fund to disclose the relationship in writing to the
board. 

(b)  Requires the board, or a designee of the board, in the policy adopted
under Section 43.0031, to define the kinds of relationships that may create
a possible conflict of interest. 

(c)  Prohibits a person who files a statement under Subsection (a)
disclosing a possible conflict of interest from giving advice or making
decisions about a matter affected by the possible conflict of interest
unless the board, after consultation with the general counsel of the
agency, expressly waives this prohibition.  Authorizes the board to
delegate the authority to waive this prohibition. 

Sec. 43.0033.  REPORTS OF EXPENDITURES.  Requires a consultant, advisor,
broker, or other person providing services to the board relating to the
management and investment of the fund to file with the board regularly, as
determined by the board, a report that describes in detail any expenditure
of more than $50 made on behalf of a member of the board, the commissioner,
or an employee of the agency or of a nonprofit corporation created under
Section 43.006 (Investment Management), Education Code.   

Sec. 43.0034.  FORMS; PUBLIC INFORMATION.  Requires the board to prescribe
forms for statements and waivers of possible conflicts of interest and
reports of expenditures required by this Act. Provides that such a
statement, waiver, or report is public information. Requires the board to
designate an employee of the agency to act as custodian of such statements,
waivers, and reports for purposes of public disclosure. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Requires the board, not later than January 1, 2000, to adopt an
ethics policy as required by Section 43.0031, Education Code, as added by
this Act, and each form described by Section 43.0034, Education Code, as
added by this Act. 

SECTION 4.  Emergency clause.