A JOINT RESOLUTION
 1-1     proposing a constitutional amendment relating to the investment of
 1-2     the permanent university fund and to distributions from that fund
 1-3     to the available university fund.
 1-4           BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 11b, Article VII, Texas Constitution, is
 1-6     amended to read as follows:
 1-7           Sec. 11b.  Notwithstanding any other provision of this
 1-8     constitution, in managing the assets of the permanent university
 1-9     fund, the Board of Regents of The University of Texas System may
1-10     acquire, exchange, sell, supervise, manage, or retain, through
1-11     procedures and subject to restrictions it establishes and in
1-12     amounts it considers appropriate, any kind of investment, including
1-13     investments in the Texas growth fund created by Article XVI,
1-14     Section 70, of this constitution, that prudent investors,
1-15     exercising reasonable care, skill, and caution, would acquire or
1-16     retain in light of the purposes, terms, distribution requirements,
1-17     and other circumstances of the fund then prevailing, taking into
1-18     consideration the investment of all the assets of the fund rather
1-19     than a single investment [persons of ordinary prudence, discretion,
1-20     and intelligence, exercising the judgment and care under the
1-21     circumstances then prevailing, acquire or retain for their own
1-22     account in the management of their affairs, not in regard to
1-23     speculation but in regard to the permanent disposition of their
1-24     funds, considering the probable income as well as the probable
 2-1     safety of their capital.  This section does not affect the
 2-2     custodial responsibilities of the comptroller of public accounts
 2-3     for public funds, securities, and other evidences of investment].
 2-4           SECTION 2.  Section 18, Article VII, Texas Constitution, is
 2-5     amended by amending Subsection (e) and adding Subsection (f) to
 2-6     read as follows:
 2-7           (e)  The available university fund consists of the
 2-8     distributions made to it from the total return on all investment
 2-9     assets of [dividends, interest and other income from] the permanent
2-10     university fund, [(less administrative expenses)] including the net
2-11     income attributable to the surface of permanent university fund
2-12     land.  The amount of any distributions to the available university
2-13     fund shall be determined by the board of regents of The University
2-14     of Texas System in a manner intended to provide the available
2-15     university fund with a stable and predictable stream of annual
2-16     distributions and to maintain over time the purchasing power of
2-17     permanent university fund investments and annual distributions to
2-18     the available university fund.  The amount distributed to the
2-19     available university fund in a fiscal year must be not less than
2-20     the amount needed to pay the principal and interest due and owing
2-21     in that fiscal year on bonds and notes issued under this section.
2-22     If the purchasing power of permanent university fund investments
2-23     for any rolling 10-year period is not preserved, the board may not
2-24     increase annual distributions to the available university fund
2-25     until the purchasing power of the permanent university fund
2-26     investments is restored, except as necessary to pay the principal
2-27     and interest due and owing on bonds and notes issued under this
 3-1     section.  An annual distribution made by the board to the available
 3-2     university fund during any fiscal year may not exceed an amount
 3-3     equal to seven percent of the average net fair market value of
 3-4     permanent university fund investment assets as determined by the
 3-5     board, except as necessary to pay any principal and interest due
 3-6     and owing on bonds issued under this section.  The expenses of
 3-7     managing permanent university fund land and investments shall be
 3-8     paid by the permanent university fund.
 3-9           (f)  Out of one-third of the annual distribution from the
3-10     permanent university fund to the available university fund, there
3-11     shall be appropriated an annual sum sufficient to pay the principal
3-12     and interest due on the bonds and notes issued by the Board of
3-13     Regents of The Texas A&M University System under this section and
3-14     prior law, and the remainder of that one-third of the annual
3-15     distribution to the available university fund shall be appropriated
3-16     to the Board of Regents of The Texas A&M University System, which
3-17     shall have the authority and duty in turn to appropriate an
3-18     equitable portion of the same for the support and maintenance of
3-19     The Texas A&M University System administration, Texas A&M
3-20     University, and Prairie View A&M University.  The Board of Regents
3-21     of The Texas A&M University System, in making just and equitable
3-22     appropriations to Texas A&M University and Prairie View A&M
3-23     University, shall exercise its discretion with due regard to such
3-24     criteria as the board may deem appropriate from year to year[,
3-25     taking into account all amounts appropriated from Subsection (f) of
3-26     this section].  Out of the other two-thirds of the annual
3-27     distribution from the permanent university fund to the available
 4-1     university fund there shall be appropriated an annual sum
 4-2     sufficient to pay the principal and interest due on the bonds and
 4-3     notes issued by the Board of Regents of The University of Texas
 4-4     System under this section and prior law, and the remainder of such
 4-5     two-thirds of the annual distribution to the available university
 4-6     fund, shall be appropriated for the support and maintenance of The
 4-7     University of Texas at Austin and The University of Texas System
 4-8     administration.
 4-9           SECTION 3.  The following temporary provision is added to the
4-10     Texas Constitution:
4-11           TEMPORARY PROVISION.  (a)  The amendment of Section 18,
4-12     Article  VII, of this constitution adopted in 1999 does not impair
4-13     any obligation created by the issuance of bonds or notes in
4-14     accordance with that section before January 1, 2000, and all
4-15     outstanding bonds and notes validly issued under that section
4-16     remain valid, enforceable, and binding and shall be paid in full,
4-17     both principal and interest, in accordance with their terms and
4-18     from the sources pledged to their payment.  In order to ensure that
4-19     the amendment of that section does not impair any obligation
4-20     created by the issuance of those bonds and notes, there shall be
4-21     distributed from the income, investment returns, or other assets of
4-22     the permanent university fund to the available university fund
4-23     during each fiscal year an amount at least equal to the amount
4-24     necessary to pay the principal and interest due and owing during
4-25     the fiscal year on those bonds and notes.
4-26           (b)  This section expires January 1, 2030.
4-27           SECTION 4.  This proposed constitutional amendment shall be
 5-1     submitted to the voters at an election to be held November 2, 1999.
 5-2     The ballot shall be printed to permit voting for or against the
 5-3     proposition: "The constitutional amendment relating to the
 5-4     investment of the permanent university fund and the distribution
 5-5     from the permanent university fund to the available university
 5-6     fund."
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.J.R. No. 58 was passed by the House on May
         3, 1999, by the following vote:  Yeas 143, Nays 0, 1 present, not
         voting.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.J.R. No. 58 was passed by the Senate on May
         13, 1999, by the following vote:  Yeas 30, Nays 0.
                                             _______________________________
                                                 Secretary of the Senate
         RECEIVED:  _____________________
                            Date
                    _____________________
                      Secretary of State