1-1     By:  Lucio                                             S.B. No. 691
 1-2           (In the Senate - Filed February 24, 1999; March 1, 1999, read
 1-3     first time and referred to Committee on Education; April 6, 1999,
 1-4     reported favorably by the following vote:  Yeas 8, Nays 0;
 1-5     April 6, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the financing and administration of a program for
 1-9     public library development.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Chapter 441, Government Code, is amended by
1-12     adding Subchapter E to read as follows:
1-13         SUBCHAPTER E.  PUBLIC LIBRARY ENDOWMENT AND OPERATING FUNDS
1-14           Sec. 441.071.  TEXAS PUBLIC LIBRARY ENDOWMENT FUND.  (a)  The
1-15     Texas public library endowment fund is a trust fund outside the
1-16     state treasury held by a bank or depository trust company and
1-17     administered by the commission for the benefit of the public as
1-18     provided by this section.
1-19           (b)  The fund consists of donations accepted by the
1-20     commission under Section 441.074.
1-21           (c)  The corpus of the endowment fund may not be spent for
1-22     any purpose.
1-23           (d)  Not later than September 1 of each year, the commission
1-24     shall remit all or part of the interest and income earned on money
1-25     in the endowment fund to the comptroller for deposit in the state
1-26     treasury to the credit of the Texas public library fund.  The
1-27     commission shall credit to the corpus of the endowment fund any
1-28     portion of the interest and income not credited to the public
1-29     library fund in the treasury.
1-30           Sec. 441.072.  INVESTMENT AND MANAGEMENT OF ENDOWMENT FUND.
1-31     (a)  The commission shall appoint investment managers for the
1-32     management and investment of the Texas public library endowment
1-33     fund by contracting for professional investment management services
1-34     with one or more organizations that are in the business of managing
1-35     investments.
1-36           (b)  In choosing and contracting for professional investment
1-37     management services and in continuing the use of an investment
1-38     manager, the commission shall act prudently and in the interest of
1-39     the beneficiaries of the endowment fund.
1-40           (c)  In making and supervising investments of the endowment
1-41     fund, an investment manager and the commission shall discharge
1-42     their respective duties solely in the interest of the beneficiaries
1-43     of the fund:
1-44                 (1)  for the exclusive purposes of providing benefits
1-45     for the beneficiaries of the fund and defraying reasonable expenses
1-46     of administering this chapter;
1-47                 (2)  with the care, skill, prudence, and diligence
1-48     under the prevailing circumstances that a prudent person acting in
1-49     a similar capacity and familiar with matters of the type would use
1-50     in the conduct of an enterprise with a similar character and aims;
1-51                 (3)  by diversifying the investments of the fund to
1-52     minimize the risk of large losses, unless under the circumstances
1-53     it is clearly prudent not to do so; and
1-54                 (4)  in accordance with the documents and instruments
1-55     governing the fund to the extent that the documents and instruments
1-56     are consistent with this section.
1-57           (d)  To be eligible for appointment under this section, an
1-58     investment manager must be:
1-59                 (1)  registered under the Investment Advisers Act of
1-60     1940 (15 U.S.C. Section 80b-1 et seq.), as amended;
1-61                 (2)  a bank as defined by that Act that has a trust
1-62     department; or
1-63                 (3)  an insurance company qualified to perform
1-64     investment services under the laws of more than one state.
 2-1           (e)  In a contract made under this section, the commission
 2-2     shall specify any policies, requirements, or restrictions,
 2-3     including criteria for determining the quality of investments and
 2-4     for  the use of standard rating services, that the commission
 2-5     adopts for investments of the endowment fund.
 2-6           (f)  A member of the commission is not liable for the acts or
 2-7     omissions of an investment manager appointed under Subsection (a).
 2-8     A member of the commission is not permitted or obligated to invest
 2-9     or otherwise to manage any asset of the fund subject to management
2-10     by the investment manager.
2-11           (g)  An investment manager appointed under Subsection
2-12     (a)  shall acknowledge in writing the manager's fiduciary
2-13     responsibilities to the endowment fund.
2-14           (h)  The commission may at any time and shall frequently
2-15     monitor the investments made by each investment manager for the
2-16     endowment fund.  The commission may contract for professional
2-17     evaluation services to fulfill this requirement.
2-18           (i)  The commission shall enter into an investment custody
2-19     account agreement designating a bank or a depository trust company
2-20     to serve as custodian for all assets allocated to or generated
2-21     under a contract for professional investment management services.
2-22           (j)  Under a custody account agreement, the commission shall
2-23     require the designated custodian to perform the duties and assume
2-24     the responsibilities for the endowment fund that are performed and
2-25     assumed, in the absence of a contract, by the custodian of the
2-26     endowment fund.  The custodian shall furnish to the commission,
2-27     annually or more frequently if required by commission rule, a sworn
2-28     statement of the amount of the endowment fund assets in the
2-29     custodian's custody.
2-30           (k)  For purposes of this section, the beneficiaries of the
2-31     Texas public library endowment fund are the persons who use public
2-32     libraries, public library facilities, and public library
2-33     collections and the public libraries that benefit from the
2-34     performance of the commission's powers and duties under this
2-35     chapter.
2-36           Sec. 441.073.  TEXAS PUBLIC LIBRARY FUND.  (a)  The Texas
2-37     public library fund is a special fund in the state treasury outside
2-38     the general revenue fund.
2-39           (b)  The public library fund consists of money credited to
2-40     the fund under Section 441.071(d) and proceeds from sales under
2-41     Section 441.074(d).
2-42           (c)  Money in the public library fund may be appropriated
2-43     only to the commission to perform the commission's powers and
2-44     duties concerning public library development under this chapter and
2-45     to pay the commission's expenses incurred under this subchapter.
2-46           (d)  The public library fund is exempt from the application
2-47     of Sections 403.095 and 404.071.  Interest and income from deposit
2-48     and investment of money in the fund shall be allocated to the fund
2-49     monthly.
2-50           Sec. 441.074.  DONATIONS, APPROPRIATIONS, AND SALES.
2-51     (a)  The commission may solicit and accept on behalf of the state
2-52     donations of money, securities, and other property as it determines
2-53     best further the orderly development of public library resources of
2-54     the state.  Money paid to the commission under this subsection
2-55     shall be deposited in the Texas public library endowment fund.
2-56           (b)  The commission by rule shall establish an acquisition
2-57     policy for accepting donations of money, securities, and other
2-58     property.
2-59           (c)  The legislature may make appropriations to the
2-60     commission to carry out the purposes of this chapter.
2-61           (d)  The commission may purchase and resell items it
2-62     determines appropriate for the promotion of public libraries in
2-63     Texas.  The value of commission inventory, as determined by
2-64     generally accepted accounting principles, may not exceed $50,000 at
2-65     the end of any fiscal year.  The net profits from those sales shall
2-66     be deposited in the Texas public library fund.
2-67           Sec. 441.075.  PUBLIC LIBRARY FUND GRANT PROGRAM.  (a)  The
2-68     commission shall make grants to public libraries from the Texas
2-69     public library fund for facility construction projects, acquisition
 3-1     of books and other collection development materials, and payment of
 3-2     actual and reasonable general and administrative expenses.  The
 3-3     commission shall allocate amounts from the fund to direct and
 3-4     matching grant programs.
 3-5           (b)  The commission shall adopt rules:
 3-6                 (1)  establishing methods for participation by local
 3-7     governments in a matching grant program for facility construction
 3-8     projects; and
 3-9                 (2)  providing allocations for a direct grant program
3-10     for acquisition of books and other collection development materials
3-11     according to a formula that allocates a base grant to each
3-12     participating public library plus an amount that is proportional to
3-13     the size of the population served.
3-14           (c)  To participate in a grant program under this section, a
3-15     public library must maintain a level of local public library
3-16     funding equal to or greater than the average funding for the three
3-17     years preceding participation.  The commission shall adopt rules to
3-18     implement this requirement.
3-19           SECTION 2.  Subsection (b), Section 404.093, Government Code,
3-20     is amended to read as follows:
3-21           (b)  This subchapter does not apply to:
3-22                 (1)  funds pledged to the payment of bonds, notes, or
3-23     other debts if the funds are not otherwise required to be deposited
3-24     in the treasury;
3-25                 (2)  funds held in trust or escrow for the benefit of a
3-26     person or entity other than a state agency;
3-27                 (3)  funds set apart out of earnings derived from
3-28     investment of funds held in trust for others, as administrative
3-29     expenses of the trustee agency;
3-30                 (4)  funds, grants, donations, and proceeds from funds,
3-31     grants, and donations, given in trust to the Texas State Library
3-32     and Archives Commission for the establishment and maintenance of
3-33     regional historical resource depositories and libraries in
3-34     accordance with Section 441.154 [441.074]; or
3-35                 (5)  funds under the management of the
3-36     secretary-treasurer of the Anatomical Board of the State of Texas,
3-37     as provided by Section 691.008, Health and Safety Code.
3-38           SECTION 3.  This Act takes effect September 1, 1999.
3-39           SECTION 4.  The importance of this legislation and the
3-40     crowded condition of the calendars in both houses create an
3-41     emergency and an imperative public necessity that the
3-42     constitutional rule requiring bills to be read on three several
3-43     days in each house be suspended, and this rule is hereby suspended.
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