76R13292 JSA-F
By Junell, Cuellar H.J.R. No. 58
Substitute the following for H.J.R. No. 58:
By Junell C.S.H.J.R. No. 58
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."