By:  Duncan                                           S.B. No. 1545
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the investment and use of the assets of certain
 1-3     endowment funds of certain institutions of higher education.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subsection (d), Section 51.0031, Education Code,
 1-6     is amended to read as follows:
 1-7           (d)  As used in this section, "prudent person standard" is
 1-8     the standard of care described in Article VII, Section 11b, of the
 1-9     Texas Constitution, and means that standard of judgment and care
1-10     that prudent investors, exercising reasonable care, skill, and
1-11     caution, would acquire or retain in light of the purposes, terms,
1-12     distribution requirements, and other circumstances of the fund then
1-13     prevailing, taking into consideration the investment of all the
1-14     assets of the fund rather than a single investment [persons of
1-15     ordinary prudence, discretion, and intelligence exercise in the
1-16     management of their affairs in regard to the investments of their
1-17     funds considering probable income as well as probable safety of
1-18     their capital].
1-19           SECTION 2.  Subsection (a), Section 163.004, Property Code,
1-20     is amended to read as follows:
1-21           (a)  A [Except as provided by Subsection (e), the] governing
1-22     board may appropriate for expenditure, for the uses and purposes
1-23     for which the fund is established, the net appreciation, realized
1-24     and unrealized, in the fair market value of the assets of an
1-25     endowment fund over the historic dollar value of the fund to the
 2-1     extent prudent under the standard provided by Section 163.007.
 2-2           SECTION 3.  Subsection (e), Section 163.004, Property Code,
 2-3     is repealed.
 2-4           SECTION 4.  This Act takes effect immediately if it is
 2-5     enacted, as required by Section 39, Article III, Texas
 2-6     Constitution, by a vote of two-thirds of all the members elected to
 2-7     each house.  If this Act does not receive the votes required for
 2-8     immediate effect, this Act takes effect on August 27, 2001.