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."