SRC-MKV S.B. 983 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 983
77R2316 SMJ-DBy: Duncan
Finance
3/20/2001
As Filed


DIGEST AND PURPOSE 

Currently, most agencies that invest state funds are authorized to use
outside money managers to invest some portion of those funds.  State
investment experts advise that utilization of outside managers enhances
portfolio diversity thus providing a greater level of insulation from the
swings of the market. The Employees' Retirement System (ERS) and the
Teacher Retirement System (TRS) currently have authority to utilize outside
advisors, but not managers.  The Senate Finance Interim Subcommittee on
Major State Investments recommended that these agencies be given explicit
authority to use outside money managers if so desired.  As proposed, S.B.
983 provides ERS and TRS with that authority. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 815.301, Government Code, by amending
Subsections (b) and (c) and adding Subsection (g), as follows: 

(b) Adds language to authorize an investment manager with whom the board of
trustees of the Employees' Retirement System or the Teacher Retirement
System (board) contracts under Subsection (c) to invest and reinvest any of
the retirement system's assets and commingle assets of the trust fund and
the law enforcement and custodial officer supplemental retirement fund with
the assets of the Judicial Retirement System of Texas Plan Two for
investment purposes, as long as proportionate ownership records are
maintained and credited. 

(c) Adds language to authorize the board to contract with private
professional investment managers to invest on behalf of the board. 

(g) Requires the board, in a contract entered into under Subsection (c) for
investing system assets on behalf of the board, to specify any policies,
requirements, or restrictions, including criteria for determining the
quality of investments and for the use of standard rating services, that
the board adopts for investments of the system. Authorizes the board at any
time, and requires the board at frequent intervals, to monitor the
investments made by the investment manager and authorizes the board to
contract for professional evaluation services to fulfill this requirement. 

SECTION 2.  Amends Section 825.301, Government Code, by amending Subsection
(b) and adding Subsection (f), to make conforming changes. 

SECTION 3.  Amends Section 840.301, Government Code, by adding Subsection
(d), to authorize the board to contract with private professional
investment managers for the purposes and in the manner provided by Section
815.301 for the investment of assets under Chapter 815. 

SECTION 4.  Effective date: upon passage or September 1, 2001.