77R8899 ESH-D                          
         By Keel, Gallego, Uher, Bonnen                        H.J.R. No. 74
         Substitute the following for H.J.R. No. 74:
         By Olivo                                          C.S.H.J.R. No. 74
                                 A JOINT RESOLUTION
 1-1     proposing a constitutional amendment relating to the investment and
 1-2     management of the permanent school fund.
 1-3           BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 4, Article VII, Texas Constitution, is
 1-5     amended to read as follows:
 1-6           Sec. 4.  (a)  The lands herein set apart to the permanent
 1-7     school [Public Free School] fund[,] shall be sold under such
 1-8     regulations, at such times, and on such terms as may be prescribed
 1-9     by law.  The [; and the] Legislature shall not have power to grant
1-10     any relief to purchasers of that land [thereof].
1-11           (b)  The proceeds of [such] sales of land of the permanent
1-12     school fund must be used to acquire other land for the [Public Free
1-13     School] fund as provided by law or [the proceeds shall be] invested
1-14     [by the comptroller of public accounts, as may be directed] by the
1-15     Permanent School Fund Investment Board [of Education herein]
1-16     provided for by Section 5(d) of this article[, in the bonds of the
1-17     United States, the State of Texas, or counties in said State, or in
1-18     such other securities, and under such restrictions as may be
1-19     prescribed by law; and the State shall be responsible for all
1-20     investments].
1-21           SECTION 2.  Section 5, Article VII, Texas Constitution, is
1-22     amended by amending Subsection (d) and adding Subsection (e) to
 2-1     read as follows:
 2-2           (d)  The Permanent School Fund Investment Board shall invest
 2-3     and manage the assets of the permanent school fund.  The board
 2-4     consists of three members appointed by the governor, three members
 2-5     appointed by the lieutenant governor, and three members appointed
 2-6     by the speaker of the house of representatives in the manner
 2-7     provided by law, which may provide that Section 12, Article IV, of
 2-8     this constitution, does not apply.  To be eligible for appointment
 2-9     to the board, a person must have appropriate expertise in investing
2-10     institutional funds, as determined by the appointing authority.
2-11     For purposes of this subsection, "institutional funds" means funds
2-12     held by an incorporated or unincorporated organization organized
2-13     and operated exclusively for educational, religious, or charitable
2-14     purposes, an educational institution, or a foundation chartered for
2-15     the benefit of an educational institution.  Members of the board
2-16     serve staggered terms of six years, with the term of one member
2-17     appointed by each appointing authority expiring February 1 of each
2-18     odd-numbered year.
2-19           (e)  In [Notwithstanding any other provision of this
2-20     constitution, in] managing the assets of the permanent school fund,
2-21     the Permanent School Fund Investment Board [State Board of
2-22     Education] may acquire, exchange, sell, supervise, manage, or
2-23     retain, through procedures and subject to restrictions it
2-24     establishes and in amounts it considers appropriate, any kind of
2-25     investment, including investments in the Texas growth fund created
2-26     by Article XVI, Section 70, of this constitution, that prudent
2-27     investors, exercising reasonable care, skill, and caution, would
 3-1     acquire or retain in light of the purposes, terms, distribution
 3-2     requirements, and other circumstances of the fund then prevailing,
 3-3     taking into consideration the investment of all the assets of the
 3-4     fund rather than a single investment [persons of ordinary prudence,
 3-5     discretion, and intelligence, exercising the judgment and care
 3-6     under the circumstances then prevailing, acquire or retain for
 3-7     their own account in the management of their affairs, not in regard
 3-8     to speculation but in regard to the permanent disposition of their
 3-9     funds, considering the probable income as well as the probable
3-10     safety of their capital].
3-11           SECTION 3. Article VII, Texas Constitution, is amended by
3-12     adding the following temporary provision to read as follows:
3-13           TEMPORARY PROVISION. In making the initial appointments to
3-14     the Permanent School Fund Investment Board under Section 5(d) of
3-15     this article, the governor, lieutenant governor, and speaker of the
3-16     house of representatives shall each appoint one person to a term
3-17     expiring February 1, 2003, one person to a term expiring February
3-18     1, 2005, and one person to a term expiring February 1, 2007.
3-19     Thereafter, members of the Permanent School Fund Investment Board
3-20     serve six-year terms, as provided by Section 5(d) of this article.
3-21     This temporary provision expires January 1, 2003.
3-22           SECTION 4. This proposed constitutional amendment shall be
3-23     submitted to the voters at an election to be held November 6, 2001.
3-24     The ballot shall be printed to permit voting for or against the
3-25     proposition:  "The constitutional amendment providing for the
3-26     transfer of authority to invest and manage the permanent school
3-27     fund from the State Board of Education to the Permanent School Fund
 4-1     Investment Board and modifying the standard used to determine
 4-2     appropriate investment and management decisions."