By: Duncan S.B. No. 982
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to establishing uniform minimum ethics requirements for
1-3 persons involved in the management or investment of state funds.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-6 by adding Chapter 2262 to read as follows:
1-7 CHAPTER 2262. ETHICS REQUIREMENTS FOR MANAGING
1-8 OR INVESTING STATE FUNDS
1-9 Sec. 2262.001. APPLICABILITY; CONSTRUCTION WITH OTHER LAW.
1-10 (a) This chapter applies in connection with the management or
1-11 investment of any state funds managed or invested:
1-12 (1) under the Texas Constitution or other law,
1-13 including Chapters 404 and 2256; and
1-14 (2) by or for:
1-15 (A) a public retirement system as defined by
1-16 Section 802.001 that provides service retirement, disability
1-17 retirement, or death benefits for officers or employees of the
1-18 state;
1-19 (B) an institution of higher education as
1-20 defined by Section 61.003, Education Code; or
1-21 (C) another entity that is part of state
1-22 government and that manages or invests state funds or for which
1-23 state funds are managed or invested.
1-24 (b) This chapter applies in connection with the management
1-25 or investment of state funds without regard to whether the funds
2-1 are held in the state treasury.
2-2 (c) This chapter does not apply to or in connection with a
2-3 state governmental entity that does not manage or invest state
2-4 funds and for which state funds are managed or invested only by the
2-5 comptroller.
2-6 (d) To the extent of a conflict between this chapter and
2-7 another law, the law that imposes a stricter ethics requirement
2-8 controls.
2-9 Sec. 2262.002. ETHICS REQUIREMENTS. In addition to any
2-10 other requirements provided by law, the governing body of a state
2-11 governmental entity that manages or invests state funds or for
2-12 which state funds are managed or invested shall enforce an ethics
2-13 policy as provided by this chapter for members of the governing
2-14 body and for officers and employees of, consultants and advisors
2-15 to, and brokers and money managers who provide financial services
2-16 for the state governmental entity.
2-17 Sec. 2262.003. ETHICS REQUIREMENTS FOR OFFICERS AND
2-18 EMPLOYEES: FINANCIAL DISCLOSURE STATEMENT. (a) Each officer and
2-19 employee of a state governmental entity who exercises significant
2-20 decision-making or fiduciary authority in connection with the
2-21 management or investment of state funds, as determined by the
2-22 governing body of the entity, shall file a financial disclosure
2-23 statement with a person designated by the governing body and with
2-24 the state auditor.
2-25 (b) The content of the financial disclosure statement must
2-26 substantially comply with the requirements of Subchapter B, Chapter
3-1 572.
3-2 (c) The officer or employee shall file the first financial
3-3 statement not later than the 30th day after the date the person is
3-4 first employed by the state governmental entity in a position in
3-5 which the officer or employee exercises authority as described by
3-6 Subsection (a) and shall file annual statements not later than
3-7 April 30 of each subsequent year in which the officer or employee
3-8 remains employed in such a position. The filing deadline may be
3-9 postponed:
3-10 (1) by the administrative head of the state
3-11 governmental entity for not more than 60 days on written request;
3-12 and
3-13 (2) for an additional period for good cause as
3-14 determined by:
3-15 (A) the presiding officer of a multimember
3-16 governing body; or
3-17 (B) the single state official who governs the
3-18 state governmental entity.
3-19 (d) The state governmental entity shall maintain a financial
3-20 disclosure statement for at least five years after the date of its
3-21 filing.
3-22 Sec. 2262.004. ETHICS REQUIREMENTS FOR GOVERNING BODY,
3-23 OFFICERS, AND EMPLOYEES: DISCLOSURE OF CERTAIN RELATIONSHIPS.
3-24 (a) A member of the governing body of, or an officer or employee
3-25 of, a state governmental entity who has a direct or indirect
3-26 business or commercial relationship that could reasonably be
4-1 expected to diminish the person's independence of judgment in the
4-2 performance of the person's responsibilities in connection with the
4-3 management or investment of state funds shall disclose the
4-4 relationship in writing to a person designated by the governing
4-5 body and to the state auditor.
4-6 (b) A person who files a disclosure statement under
4-7 Subsection (a) or who is required to file such a statement may not
4-8 give advice or make decisions about matters affected by the
4-9 conflict of interest unless the governing body, after consultation
4-10 with the general counsel of the state governmental entity,
4-11 expressly waives this prohibition. The state governmental entity
4-12 shall maintain a written record of each waiver and the reasons for
4-13 it.
4-14 (c) The governing body may delegate the authority to waive
4-15 prohibitions under Subsection (b) that affect an officer or
4-16 employee to one or more designated officers or employees. The
4-17 governing body may adopt criteria for designated officers or
4-18 employees to use to determine the kinds of relationships that do
4-19 not constitute a material conflict of interest for purposes of
4-20 Subsection (b). A multimember governing body may delegate this
4-21 authority only by adopting an order on a vote of a majority of its
4-22 members at an open meeting called and held in compliance with
4-23 Chapter 551, and the governing body shall have the order entered
4-24 into the minutes of the meeting.
4-25 Sec. 2262.005. ETHICS REQUIREMENTS FOR GOVERNING BODY,
4-26 OFFICERS, AND EMPLOYEES: ANNUAL ETHICS COMPLIANCE STATEMENT.
5-1 (a) Each member of the governing body of a state governmental
5-2 entity that manages or invests state funds or for which state funds
5-3 are managed or invested and each officer and employee of the
5-4 governmental entity required to file a financial disclosure
5-5 statement under Section 2262.003 shall file annually a compliance
5-6 statement certifying that the person is in compliance with all
5-7 applicable requirements prescribed by or under this chapter. The
5-8 person shall file the statement with a person designated by the
5-9 governing body and with the state auditor.
5-10 (b) The governing body of the state governmental entity
5-11 shall prescribe the date by which the compliance statement must be
5-12 filed.
5-13 Sec. 2262.006. ETHICS REQUIREMENTS FOR CONSULTANTS,
5-14 ADVISORS, MONEY MANAGERS, AND BROKERS. (a) The governing body by
5-15 rule shall adopt standards of conduct applicable to consultants,
5-16 advisors, money managers, and brokers who advise the state
5-17 governmental entity or a member of the governing body of the state
5-18 governmental entity in connection with the management or investment
5-19 of state funds or provide financial services to the state
5-20 governmental entity and who:
5-21 (1) may reasonably be expected to receive more than
5-22 $10,000 in compensation from the entity during a fiscal year; or
5-23 (2) render important investment or funds management
5-24 advice to the entity or a member of the governing body of the
5-25 entity, as determined by the governing body.
5-26 (b) A consultant, advisor, money manager, or broker who
6-1 advises a state governmental entity or a member of the governing
6-2 body of the state governmental entity in connection with the
6-3 management or investment of state funds or provides financial
6-4 services to the state governmental entity shall disclose in writing
6-5 to the administrative head of the entity and to the state auditor
6-6 any relationship the consultant, advisor, money manager, or broker
6-7 has with any party to a transaction with the state governmental
6-8 entity, other than a relationship necessary to the investment or
6-9 funds management services that the consultant, advisor, money
6-10 manager, or broker performs for the state governmental entity, if
6-11 the relationship could reasonably be expected to diminish the
6-12 person's independence of judgment in the performance of the
6-13 person's responsibilities to the state governmental entity.
6-14 (c) The consultant, advisor, money manager, or broker shall
6-15 disclose a relationship described by Subsection (b) without regard
6-16 to whether the relationship is a direct, indirect, personal,
6-17 private, commercial, or business relationship.
6-18 (d) A consultant, advisor, money manager, or broker
6-19 described by Subsection (a) shall file annually a statement with
6-20 the administrative head of the applicable state governmental entity
6-21 and with the state auditor. The statement must disclose each
6-22 relationship described by Subsection (b), if any. The state
6-23 auditor by rule shall prescribe the date by which the statement
6-24 must be filed. The state auditor may prescribe a uniform date or
6-25 may prescribe different dates for statements filed in relation to
6-26 different state governmental entities. The consultant, advisor,
7-1 money manager, or broker shall file a new or amended statement with
7-2 the administrative head of the applicable state governmental entity
7-3 and with the state auditor whenever there is new information to
7-4 report under Subsection (b).
7-5 Sec. 2262.007. DISCLOSURE OF CERTAIN EXPENDITURES BY
7-6 CONSULTANTS, ADVISORS, MONEY MANAGERS, AND BROKERS. The governing
7-7 body by rule shall require consultants, advisors, money managers,
7-8 and brokers who provide investment or funds management advice to
7-9 the state governmental entity or provide financial services to the
7-10 state governmental entity to file regularly with the entity a
7-11 report detailing any expenditure of more than $250 made on behalf
7-12 of a member of the governing body or an officer or employee of the
7-13 state governmental entity.
7-14 Sec. 2262.008. PUBLIC INFORMATION. (a) Chapter 552
7-15 controls the extent to which information contained in a statement,
7-16 waiver, or report filed under this chapter is subject to required
7-17 public disclosure or excepted from required public disclosure.
7-18 (b) The governing body shall designate an employee to be the
7-19 custodian of the statements, waivers, and reports for purposes of
7-20 public disclosure under Chapter 552.
7-21 Sec. 2262.009. FORMS. The state auditor shall prescribe
7-22 forms for financial disclosure statements, annual ethics compliance
7-23 statements, disclosure statements of conflicts of interests, and
7-24 waivers of the prohibition against involvement in a matter affected
7-25 by a conflict of interest.
7-26 SECTION 2. Each state governmental entity required to adopt
8-1 rules under Chapter 2262, Government Code, as added by this Act,
8-2 shall adopt its initial rules in time for the rules to take effect
8-3 not later than January 1, 2002.
8-4 SECTION 3. This Act takes effect September 1, 2001.