By Greenberg H.B. No. 3739 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to ethics requirements in regard to management and 1-3 investment of the permanent school fund. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Chapter 43, Education Code, is amended by adding 1-6 Sections 43.0031-43.0034 to read as follows: 1-7 Sec. 43.0031. PERMANENT SCHOOL FUND ETHICS POLICY. (a) In 1-8 addition to any other requirements provided by law, the State Board 1-9 of Education shall adopt and enforce an ethics policy that provides 1-10 standards of conduct relating to the management and investment of 1-11 the permanent school fund. The ethics policy must include 1-12 provisions that address the following issues as they apply to the 1-13 management and investment of the permanent school fund and to 1-14 persons responsible for managing and investing the fund: 1-15 (1) general ethical standards; 1-16 (2) conflicts of interest; 1-17 (3) prohibited transactions and interests; 1-18 (4) the acceptance of gifts and entertainment; 1-19 (5) compliance with applicable professional standards; 1-20 (6) ethics training; and 1-21 (7) compliance with and enforcement of the ethics 1-22 policy. 1-23 (b) The ethics policy must include provisions applicable to: 1-24 (1) members of the State Board of Education; 2-1 (2) the commissioner; 2-2 (3) employees of the agency; and 2-3 (4) any person who provides services to the board 2-4 relating to the management or investment of the permanent school 2-5 fund. 2-6 (c) Not later than the 45th day before the date on which the 2-7 board intends to adopt a proposed ethics policy or an amendment to 2-8 or revision of an adopted ethics policy, the board shall submit a 2-9 copy of the proposed policy, amendment, or revision to the Texas 2-10 Ethics Commission and the state auditor for review and comments. 2-11 The board shall consider any comments from the commission or state 2-12 auditor before adopting the proposed policy. 2-13 (d) The provisions of the ethics policy that apply to a 2-14 person who provides services to the board relating to the 2-15 management or investment of the permanent school fund must be based 2-16 on the Code of Ethics and the Standards of Professional Conduct 2-17 prescribed by the Association for Investment Management and 2-18 Research or other ethics standards adopted by another appropriate 2-19 professionally recognized entity. 2-20 (e) The board shall ensure that applicable provisions of the 2-21 ethics policy are included in any contract under which a person 2-22 provides services to the board relating to the management and 2-23 investment of the permanent school fund. 2-24 Sec. 43.0032. CONFLICTS OF INTEREST. (a) A member of the 2-25 State Board of Education, the commissioner, an employee of the 2-26 agency, or a person who provides services to the board that relate 2-27 to the management or investment of the permanent school fund who 3-1 has a business, commercial, or other relationship that could 3-2 reasonably be expected to diminish the person's independence of 3-3 judgment in the performance of the person's responsibilities 3-4 relating to the management or investment of the fund shall disclose 3-5 the relationship in writing to the board. 3-6 (b) The board or the board's designee shall, in the ethics 3-7 policy adopted under Section 43.0031, define the kinds of 3-8 relationships that may create a possible conflict of interest. 3-9 (c) A person who files a statement under Subsection (a) 3-10 disclosing a possible conflict of interest may not give advice or 3-11 make decisions about a matter affected by the possible conflict of 3-12 interest unless the board, after consultation with the general 3-13 counsel of the agency, expressly waives this prohibition. The 3-14 board may delegate the authority to waive the prohibition 3-15 established by this subsection. 3-16 Sec. 43.0033. REPORTS OF EXPENDITURES. A consultant, 3-17 advisor, broker, or other person providing services to the State 3-18 Board of Education relating to the management and investment of the 3-19 permanent school fund shall file with the board regularly, as 3-20 determined by the board, a report that describes in detail any 3-21 expenditure of more than $50 made by the person on behalf of: 3-22 (1) a member of the board; 3-23 (2) the commissioner; or 3-24 (3) an employee of the agency or of a nonprofit 3-25 corporation created under Section 43.006. 3-26 Sec. 43.0034. FORMS; PUBLIC INFORMATION. (a) The board 3-27 shall prescribe forms for: 4-1 (1) statements of possible conflicts of interest and 4-2 waivers of possible conflicts of interest under Section 43.0032; 4-3 and 4-4 (2) reports of expenditures under Section 43.0033. 4-5 (b) A statement, waiver, or report described by Subsection 4-6 (a) is public information. 4-7 (c) The board shall designate an employee of the agency to 4-8 act as custodian of statements, waivers, and reports described by 4-9 Subsection (a) for purposes of public disclosure. 4-10 SECTION 2. This Act takes effect September 1, 1999. 4-11 SECTION 3. Not later than January 1, 2000, the State Board 4-12 of Education shall adopt an ethics policy as required by Section 4-13 43.0031, Education Code, as added by this Act, and each form for a 4-14 statement, waiver, or report described by Section 43.0034, 4-15 Education Code, as added by this Act. 4-16 SECTION 4. The importance of this legislation and the 4-17 crowded condition of the calendars in both houses create an 4-18 emergency and an imperative public necessity that the 4-19 constitutional rule requiring bills to be read on three several 4-20 days in each house be suspended, and this rule is hereby suspended.