1-1 By: Junell (Senate Sponsor - Ratliff) H.J.R. No. 58
1-2 (In the Senate - Received from the House May 4, 1999;
1-3 May 5, 1999, read first time and referred to Committee on Finance;
1-4 May 10, 1999, reported favorably by the following vote: Yeas 11,
1-5 Nays 0; May 10, 1999, sent to printer.)
1-6 HOUSE JOINT RESOLUTION
1-7 proposing a constitutional amendment relating to the investment of
1-8 the permanent university fund and to distributions from that fund
1-9 to the available university fund.
1-10 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 11b, Article VII, Texas Constitution, is
1-12 amended to read as follows:
1-13 Sec. 11b. Notwithstanding any other provision of this
1-14 constitution, in managing the assets of the permanent university
1-15 fund, the Board of Regents of The University of Texas System may
1-16 acquire, exchange, sell, supervise, manage, or retain, through
1-17 procedures and subject to restrictions it establishes and in
1-18 amounts it considers appropriate, any kind of investment, including
1-19 investments in the Texas growth fund created by Article XVI,
1-20 Section 70, of this constitution, that prudent investors,
1-21 exercising reasonable care, skill, and caution, would acquire or
1-22 retain in light of the purposes, terms, distribution requirements,
1-23 and other circumstances of the fund then prevailing, taking into
1-24 consideration the investment of all the assets of the fund rather
1-25 than a single investment [persons of ordinary prudence, discretion,
1-26 and intelligence, exercising the judgment and care under the
1-27 circumstances then prevailing, acquire or retain for their own
1-28 account in the management of their affairs, not in regard to
1-29 speculation but in regard to the permanent disposition of their
1-30 funds, considering the probable income as well as the probable
1-31 safety of their capital. This section does not affect the
1-32 custodial responsibilities of the comptroller of public accounts
1-33 for public funds, securities, and other evidences of investment].
1-34 SECTION 2. Section 18, Article VII, Texas Constitution, is
1-35 amended by amending Subsection (e) and adding Subsection (f) to
1-36 read as follows:
1-37 (e) The available university fund consists of the
1-38 distributions made to it from the total return on all investment
1-39 assets of [dividends, interest and other income from] the permanent
1-40 university fund, [(less administrative expenses)] including the net
1-41 income attributable to the surface of permanent university fund
1-42 land. The amount of any distributions to the available university
1-43 fund shall be determined by the board of regents of The University
1-44 of Texas System in a manner intended to provide the available
1-45 university fund with a stable and predictable stream of annual
1-46 distributions and to maintain over time the purchasing power of
1-47 permanent university fund investments and annual distributions to
1-48 the available university fund. The amount distributed to the
1-49 available university fund in a fiscal year must be not less than
1-50 the amount needed to pay the principal and interest due and owing
1-51 in that fiscal year on bonds and notes issued under this section.
1-52 If the purchasing power of permanent university fund investments
1-53 for any rolling 10-year period is not preserved, the board may not
1-54 increase annual distributions to the available university fund
1-55 until the purchasing power of the permanent university fund
1-56 investments is restored, except as necessary to pay the principal
1-57 and interest due and owing on bonds and notes issued under this
1-58 section. An annual distribution made by the board to the available
1-59 university fund during any fiscal year may not exceed an amount
1-60 equal to seven percent of the average net fair market value of
1-61 permanent university fund investment assets as determined by the
1-62 board, except as necessary to pay any principal and interest due
1-63 and owing on bonds issued under this section. The expenses of
1-64 managing permanent university fund land and investments shall be
2-1 paid by the permanent university fund.
2-2 (f) Out of one-third of the annual distribution from the
2-3 permanent university fund to the available university fund, there
2-4 shall be appropriated an annual sum sufficient to pay the principal
2-5 and interest due on the bonds and notes issued by the Board of
2-6 Regents of The Texas A&M University System under this section and
2-7 prior law, and the remainder of that one-third of the annual
2-8 distribution to the available university fund shall be appropriated
2-9 to the Board of Regents of The Texas A&M University System, which
2-10 shall have the authority and duty in turn to appropriate an
2-11 equitable portion of the same for the support and maintenance of
2-12 The Texas A&M University System administration, Texas A&M
2-13 University, and Prairie View A&M University. The Board of Regents
2-14 of The Texas A&M University System, in making just and equitable
2-15 appropriations to Texas A&M University and Prairie View A&M
2-16 University, shall exercise its discretion with due regard to such
2-17 criteria as the board may deem appropriate from year to year[,
2-18 taking into account all amounts appropriated from Subsection (f) of
2-19 this section]. Out of the other two-thirds of the annual
2-20 distribution from the permanent university fund to the available
2-21 university fund there shall be appropriated an annual sum
2-22 sufficient to pay the principal and interest due on the bonds and
2-23 notes issued by the Board of Regents of The University of Texas
2-24 System under this section and prior law, and the remainder of such
2-25 two-thirds of the annual distribution to the available university
2-26 fund, shall be appropriated for the support and maintenance of The
2-27 University of Texas at Austin and The University of Texas System
2-28 administration.
2-29 SECTION 3. The following temporary provision is added to the
2-30 Texas Constitution:
2-31 TEMPORARY PROVISION. (a) The amendment of Section 18,
2-32 Article VII, of this constitution adopted in 1999 does not impair
2-33 any obligation created by the issuance of bonds or notes in
2-34 accordance with that section before January 1, 2000, and all
2-35 outstanding bonds and notes validly issued under that section
2-36 remain valid, enforceable, and binding and shall be paid in full,
2-37 both principal and interest, in accordance with their terms and
2-38 from the sources pledged to their payment. In order to ensure that
2-39 the amendment of that section does not impair any obligation
2-40 created by the issuance of those bonds and notes, there shall be
2-41 distributed from the income, investment returns, or other assets of
2-42 the permanent university fund to the available university fund
2-43 during each fiscal year an amount at least equal to the amount
2-44 necessary to pay the principal and interest due and owing during
2-45 the fiscal year on those bonds and notes.
2-46 (b) This section expires January 1, 2030.
2-47 SECTION 4. This proposed constitutional amendment shall be
2-48 submitted to the voters at an election to be held November 2, 1999.
2-49 The ballot shall be printed to permit voting for or against the
2-50 proposition: "The constitutional amendment relating to the
2-51 investment of the permanent university fund and the distribution
2-52 from the permanent university fund to the available university
2-53 fund."
2-54 * * * * *