By Burnam                                              H.J.R. No. 9
         76R7834 GCH-D                           
                                 A JOINT RESOLUTION
 1-1     proposing a constitutional amendment relating to investment of the
 1-2     Texas growth fund and by statewide public retirement systems.
 1-3           BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 67(a)(3), Article XVI, Texas
 1-5     Constitution, is amended to read as follows:
 1-6                 (3)  Each statewide benefit system must have a board of
 1-7     trustees to administer the system and to invest the funds of the
 1-8     system in such investments [securities] as the board may consider
 1-9     prudent investments.  In making investments, a board shall exercise
1-10     the judgment and care under the circumstances then prevailing that
1-11     persons of ordinary prudence, discretion, and intelligence exercise
1-12     in the management of their own affairs, not in regard to
1-13     speculation, but in regard to the permanent disposition of their
1-14     funds, considering the probable income therefrom as well as the
1-15     probable safety of their capital.  The legislature by law may
1-16     further restrict the investment discretion of a board.
1-17           SECTION 2.  Sections 70(a)(1) and (2), Article XVI, Texas
1-18     Constitution, are amended to read as follows:
1-19                 (1)  "Board of trustees" means the board of trustees of
1-20     the Texas growth fund and Texas growth fund II.
1-21                 (2)  "Fund" means the Texas growth fund or Texas growth
1-22     fund II.
1-23           SECTION 3.  Sections 70(b), (g), (j), and (k), Article XVI,
1-24     Texas Constitution, are amended to read as follows:
 2-1           (b)  The [Texas growth] fund is created as a trust fund.
 2-2     Except as otherwise provided by this section, the fund is subject
 2-3     to the general laws of this state governing private sector trusts.
 2-4     The governing boards of the permanent university fund, the
 2-5     permanent school fund, the Teacher Retirement System of Texas, the
 2-6     Employees Retirement System of Texas, and any other pension system
 2-7     created under this constitution or by statute of this state in
 2-8     their sole discretion may make investments in the fund.
 2-9           (g)  In making investments, including venture capital
2-10     investments, the board of trustees shall exercise the judgment and
2-11     care under the circumstances then prevailing that persons of
2-12     ordinary prudence, discretion, and intelligence exercise in the
2-13     management of their own affairs, not in regard to speculation but
2-14     in regard to the permanent disposition of their funds, considering
2-15     the probable income as well as the probable safety of the capital
2-16     of the fund.  All investments of the fund shall be directly related
2-17     to the creation, retention, or expansion of employment opportunity
2-18     and economic growth in Texas, except as provided by Subsection (j)
2-19     of this section.  In making venture capital investments, all other
2-20     material matters being equal, the board of trustees shall invest in
2-21     technological advances that could be expected to result in the
2-22     greatest increase in employment opportunity and economic growth in
2-23     Texas.
2-24           (j)  The board of trustees shall establish criteria for the
2-25     investment of not more than 10 percent of the fund in venture
2-26     capital investments.  Not more than 25 percent of the funds
2-27     available for venture capital investments may be used for
 3-1     unilateral investment.  Investments of the remainder of the funds
 3-2     available for venture capital investments must be matched at least
 3-3     equally by funds from sources other than the fund, with matching
 3-4     amounts established by the board of trustees.  The board of
 3-5     trustees shall also establish criteria for the investment of not
 3-6     less than 50 percent of the fund in equity or debt security, or a
 3-7     combination of equity and debt security, for the initial
 3-8     construction, expansion, or modernization of business or industrial
 3-9     facilities in Texas.  The board of trustees shall also establish
3-10     criteria for the investment of not more than one percent of the
3-11     fund in low-income housing.  The board of trustees may invest in
3-12     money funds whose underlying investments are consistent and
3-13     acceptable under the investment policy of the fund.
3-14           (k)  On a quarterly basis, the amount of income realized on
3-15     investments under this section shall be distributed to each of the
3-16     systems and funds investing in the [Texas growth] fund in
3-17     proportion to the number of participating shares of each investing
3-18     system and fund.  Capital appreciation becomes a part of the corpus
3-19     of the [Texas growth] fund and shall be distributed in accordance
3-20     with the investment contracts.
3-21           SECTION 4.  This proposed constitutional amendment shall be
3-22     submitted to the voters at an election to be held November 2, 1999.
3-23     The ballot shall be printed to permit voting for or against the
3-24     proposition: "The constitutional amendment to permit investment of
3-25     the Texas growth fund and investment by statewide public retirement
3-26     systems in investments under the prudent person standard of care,
3-27     which may include low-income housing and other real estate."