By: Duncan, Lindsay S.B. No. 512
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the investment and management of the permanent school
1-3 fund; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 43, Education Code, is amended by adding
1-6 Section 43.0011 to read as follows:
1-7 Sec. 43.0011. PERMANENT SCHOOL FUND INVESTMENT ADVISORY
1-8 COMMITTEE. (a) The permanent school fund investment advisory
1-9 committee shall advise the State Board of Education regarding
1-10 management and investment of the permanent school fund.
1-11 (b) The committee is composed of:
1-12 (1) two members appointed by the governor, who are not
1-13 subject to confirmation by the senate;
1-14 (2) one member appointed by the lieutenant governor;
1-15 (3) one member appointed by the speaker of the house
1-16 of representatives; and
1-17 (4) one member appointed by the State Board of
1-18 Education.
1-19 (c) A person appointed to the committee must have
1-20 appropriate expertise in investing institutional funds, as
1-21 determined by the appointing entity.
1-22 (d) Members of the committee serve staggered terms of six
1-23 years, with the terms of one or two members expiring February 1 of
1-24 each odd-numbered year, except that a member may be removed by the
1-25 appointing entity for good cause.
2-1 (e) For purposes of this section, "good cause" means:
2-2 (1) a serious violation of a law relating to the
2-3 member's official duties as a committee member or to the conduct of
2-4 public officials generally;
2-5 (2) gross or persistent failure to perform the
2-6 committee member's duties as a committee member;
2-7 (3) conduct that is reasonably likely to undermine the
2-8 public's trust in the committee member; or
2-9 (4) conduct that constitutes a felony or a crime of
2-10 moral turpitude, if the committee member is charged with or
2-11 convicted of a criminal offense.
2-12 (f) For purposes of Subsection (e), failure to attend any
2-13 meetings of the committee over a period of six months, if more than
2-14 one meeting is held during that period, constitutes persistent
2-15 failure to perform the member's duties as a committee member.
2-16 (g) The committee shall meet regularly to advise the State
2-17 Board of Education regarding the management and investment of the
2-18 permanent school fund.
2-19 (h) A committee member may not receive compensation for
2-20 performing duties as a committee member but is entitled to
2-21 reimbursement for travel expenses incurred by the member while
2-22 conducting the business of the committee as provided by the General
2-23 Appropriations Act.
2-24 (i) The committee is not subject to Chapter 2110, Government
2-25 Code.
2-26 SECTION 2. Subsection (b), Section 43.0031, Education Code,
3-1 is amended to read as follows:
3-2 (b) The ethics policy must include provisions applicable to:
3-3 (1) members of the State Board of Education;
3-4 (2) members of the permanent school fund investment
3-5 advisory committee;
3-6 (3) the commissioner;
3-7 (4) [(3)] employees of the agency; and
3-8 (5) [(4)] any person who provides services to the
3-9 board relating to the management or investment of the permanent
3-10 school fund.
3-11 SECTION 3. Section 43.0032, Education Code, is amended to
3-12 read as follows:
3-13 Sec. 43.0032. CONFLICTS OF INTEREST. (a) This section
3-14 applies to:
3-15 (1) a [A] member of the State Board of Education;
3-16 (2) a member of the permanent school fund investment
3-17 advisory committee;
3-18 (3) [,] the commissioner;
3-19 (4) [,] an employee of the agency; and
3-20 (5) [, or] a person who provides services to the board
3-21 that relate to the management or investment of the permanent school
3-22 fund.
3-23 (b) A person to whom this section applies who has a
3-24 business, commercial, or other relationship that a reasonable
3-25 person would find likely [could reasonably be expected] to diminish
3-26 the person's independence of judgment in the performance of the
4-1 person's responsibilities relating to the management or investment
4-2 of the fund shall disclose the relationship in writing to the
4-3 board.
4-4 (c) [(b)] The board or the board's designee shall, in the
4-5 ethics policy adopted under Section 43.0031, define the kinds of
4-6 relationships that may create a possible conflict of interest.
4-7 (d) [(c)] A person who files a statement under Subsection
4-8 (b) [(a)] disclosing a possible conflict of interest may not give
4-9 advice or make decisions about a matter affected by the possible
4-10 conflict of interest unless the board, after consultation with the
4-11 general counsel of the agency, expressly waives this prohibition.
4-12 The board may delegate the authority to waive the prohibition
4-13 established by this subsection.
4-14 SECTION 4. Section 43.0033, Education Code, is amended to
4-15 read as follows:
4-16 Sec. 43.0033. REPORTS OF EXPENDITURES. A consultant,
4-17 advisor, broker, or other person providing services to the State
4-18 Board of Education relating to the management and investment of the
4-19 permanent school fund shall file with the board regularly, as
4-20 determined by the board, a report that describes in detail any
4-21 expenditure of more than $50 made by the person on behalf of:
4-22 (1) a member of the board;
4-23 (2) a member of the permanent school fund investment
4-24 advisory committee;
4-25 (3) the commissioner; or
4-26 (4) [(3)] an employee of the agency or of a nonprofit
5-1 corporation created under Section 43.006.
5-2 SECTION 5. Chapter 43, Education Code, is amended by adding
5-3 Section 43.0035 to read as follows:
5-4 Sec. 43.0035. EMPLOYMENT OR COMPENSATION OF LOBBYIST
5-5 PROHIBITED. (a) A person who serves as a money manager, advisor,
5-6 consultant, or broker regarding the permanent school fund may not
5-7 knowingly employ or compensate a person who is or would be required
5-8 to register under Chapter 305, Government Code, to communicate
5-9 directly with a member of the legislative branch, the State Board
5-10 of Education, or the permanent school fund investment advisory
5-11 committee on a matter relating to the permanent school fund.
5-12 (b) If the State Board of Education determines that a person
5-13 has violated this section, the board shall terminate the person's
5-14 contract to provide services regarding the permanent school fund.
5-15 (c) A person who violates Subsection (a) commits an offense.
5-16 An offense under this subsection is a Class B misdemeanor.
5-17 (d) In this section, "communicate directly with" and "member
5-18 of the legislative branch" have the meanings assigned by Section
5-19 305.002, Government Code.
5-20 SECTION 6. Chapter 43, Education Code, is amended by adding
5-21 Section 43.0061 to read as follows:
5-22 Sec. 43.0061. BOARD ACTION ON INVESTMENT DECISIONS. In
5-23 considering and making investment decisions relating to the
5-24 permanent school fund, the State Board of Education must meet and
5-25 act as a body corporate. The board may not create a committee or
5-26 subcommittee to consider or make such investment decisions.
6-1 SECTION 7. Section 43.005, Education Code, is repealed.
6-2 SECTION 8. Not later than November 1, 2001, the governor,
6-3 lieutenant governor, speaker of the house of representatives, and
6-4 State Board of Education shall each appoint the initial members of
6-5 the permanent school fund investment advisory committee, as
6-6 required by Section 43.0011, Education Code, as added by this Act.
6-7 The governor shall appoint one person for a term expiring February
6-8 1, 2003, and one person for a term expiring February 1, 2007. The
6-9 person appointed by the lieutenant governor serves a term expiring
6-10 February 1, 2007. The persons appointed by the speaker of the
6-11 house of representatives and the State Board of Education serve
6-12 terms expiring February 1, 2005.
6-13 SECTION 9. This Act takes effect September 1, 2001.