1-1     By:  Duncan                                           S.B. No. 1545
 1-2           (In the Senate - Filed March 9, 2001; March 14, 2001, read
 1-3     first time and referred to Committee on Education; April 19, 2001,
 1-4     reported favorably by the following vote:  Yeas 7, Nays 0;
 1-5     April 19, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the investment and use of the assets of certain
 1-9     endowment funds of certain institutions of higher education.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subsection (d), Section 51.0031, Education Code,
1-12     is amended to read as follows:
1-13           (d)  As used in this section, "prudent person standard" is
1-14     the standard of care described in Article VII, Section 11b, of the
1-15     Texas Constitution, and means that standard of judgment and care
1-16     that prudent investors, exercising reasonable care, skill, and
1-17     caution, would acquire or retain in light of the purposes, terms,
1-18     distribution requirements, and other circumstances of the fund then
1-19     prevailing, taking into consideration the investment of all the
1-20     assets of the fund rather than a single investment [persons of
1-21     ordinary prudence, discretion, and intelligence exercise in the
1-22     management of their affairs in regard to the investments of their
1-23     funds considering probable income as well as probable safety of
1-24     their capital].
1-25           SECTION 2.  Subsection (a), Section 163.004, Property Code,
1-26     is amended to read as follows:
1-27           (a)  A [Except as provided by Subsection (e), the] governing
1-28     board may appropriate for expenditure, for the uses and purposes
1-29     for which the fund is established, the net appreciation, realized
1-30     and unrealized, in the fair market value of the assets of an
1-31     endowment fund over the historic dollar value of the fund to the
1-32     extent prudent under the standard provided by Section 163.007.
1-33           SECTION 3.  Subsection (e), Section 163.004, Property Code,
1-34     is repealed.
1-35           SECTION 4.  This Act takes effect immediately if it is
1-36     enacted, as required by Section 39, Article III, Texas
1-37     Constitution, by a vote of two-thirds of all the members elected to
1-38     each house.  If this Act does not receive the votes required for
1-39     immediate effect, this Act takes effect on August 27, 2001.
1-40                                  * * * * *