By: Fraser S.B. No. 1611
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the structure and functions of the Texas Treasury
1-3 Safekeeping Trust Company.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 404.101, Government Code, is amended to
1-6 read as follows:
1-7 Sec. 404.101. DEFINITIONS. In this subchapter:
1-8 (1) "Advisory board" means the Texas treasury
1-9 safekeeping trust company investment advisory board.
1-10 (2) "Participant" means the state, agencies and local
1-11 political subdivisions of the state, and nonprofit corporations,
1-12 foundations, and other charitable organizations created on behalf
1-13 of the state or an agency or local political subdivision of the
1-14 state authorized to deposit money and securities with the trust
1-15 company.
1-16 (3) "The state and its agencies" includes the
1-17 Employees Retirement System of Texas and the Teacher Retirement
1-18 System of Texas.
1-19 (4) [(2)] "Trust company" means the Texas Treasury
1-20 Safekeeping Trust Company.
1-21 SECTION 2. Section 404.103, Government Code, is amended by
1-22 amending Subsection (b) and adding Subsections (e), (f), and (g) to
1-23 read as follows:
1-24 (b) The trust company may enter into contracts, [and] trust
1-25 agreements, or other fiduciary instruments with the comptroller,
2-1 the Federal Reserve System, a depository trust company, and other
2-2 third parties. The trust company shall be liable under those
2-3 contracts in accordance with the terms contained in the contracts.
2-4 Notwithstanding any other statute to the contrary, to the extent
2-5 permitted by the Texas Constitution and the contracts, trust
2-6 agreements, or other fiduciary instruments between the trust
2-7 company, the Federal Reserve System, and a depository trust
2-8 company, the trust company's obligations shall be guaranteed by the
2-9 state, and the state expressly waives all defenses of governmental
2-10 immunity by and on behalf of the trust company, the comptroller,
2-11 and the state and expressly consents to sue and be sued in federal
2-12 court or in any court of competent jurisdiction. However, this
2-13 provision does not alter or affect the immunity accorded to state
2-14 officials and employees under state law. The trust company may
2-15 enter into contracts with the comptroller and the Federal Reserve
2-16 System to provide any services that the Federal Reserve System
2-17 makes available, including:
2-18 (1) safekeeping book-entry United States Treasury and
2-19 agency securities owned by the state and its agencies;
2-20 (2) using the federal reserve wire transfer system to
2-21 transfer money and book-entry securities and to settle securities
2-22 transactions involving book-entry United States Treasury and agency
2-23 securities owned by the state and its agencies;
2-24 (3) collecting, through the Federal Reserve System,
2-25 checks deposited with the treasury;
2-26 (4) receiving payments from and making payments to the
3-1 federal government on behalf of the state and its agencies;
3-2 (5) originating automated clearinghouse transactions
3-3 or other electronic transfers to make payments on behalf of the
3-4 state and its agencies, collecting revenues due the state and its
3-5 agencies, and transferring money between state depositories;
3-6 (6) paying warrants drawn on the treasury and
3-7 presented through the Federal Reserve System for payment; and
3-8 (7) safekeeping collateral pledged to secure deposits
3-9 of public funds.
3-10 (e) The trust company may hire employees and may fix their
3-11 compensation and prescribe their duties or may contract with the
3-12 comptroller's office for staff support.
3-13 (f) The trust company shall develop a fee schedule in the
3-14 amount necessary to recover costs of service and to retain adequate
3-15 reserves to support the operations of the trust company.
3-16 (g) The trust company is exempt from other state laws
3-17 regulating or limiting state purchasing or a purchasing decision if
3-18 the trust company determines that the purchase or decision relates
3-19 to the fiduciary duties of the trust company. The trust company
3-20 shall make all purchases of goods and services using purchasing
3-21 methods that ensure the best value to the trust company and its
3-22 participants. In determining best value, the trust company may
3-23 consider the best value standards applicable to state agencies as
3-24 enumerated in Section 2155.074. The trust company shall develop a
3-25 plan of operation that includes procedures and standards for the
3-26 purchases of goods and services using best value methods.
4-1 SECTION 3. Subsection (c), Section 404.104, Government Code,
4-2 is amended to read as follows:
4-3 (c) The comptroller shall submit to the Legislative Budget
4-4 Board an audited report regarding the operations of the trust
4-5 company. The trust company may contract with the comptroller's
4-6 office, a certified public accountant, or the state auditor to
4-7 [shall] conduct an independent audit of the operations of the trust
4-8 company [in accordance with Chapter 321].
4-9 SECTION 4. Section 404.105, Government Code, is amended to
4-10 read as follows:
4-11 Sec. 404.105. CAPITAL OR RESERVE [REQUIREMENTS]. The trust
4-12 company shall hold [have] capital stock and [or] reserve balances
4-13 outside the treasury in an amount required by applicable regulatory
4-14 bodies for eligibility for federal reserve services, for
4-15 participation in a depository trust company, and as necessary to
4-16 achieve its purposes under Section 404.103[, but the amount may not
4-17 be more than $1 million]. The stock of the trust company is an
4-18 authorized investment for state funds and shall be held by the
4-19 comptroller, but the amount may not be more than $1 million.
4-20 SECTION 5. Section 404.106, Government Code, is amended by
4-21 amending Subsection (a) and adding Subsection (d) to read as
4-22 follows:
4-23 (a) Any net earnings of the trust company attributable to
4-24 capital stock or investments of capital stock shall be credited
4-25 annually to the account of the treasury and shall be allocated
4-26 annually to the funds held and managed by the comptroller in
5-1 accordance with Section 404.071(a).
5-2 (d) The trust company may hold reserve balances or
5-3 securities as required by the Federal Reserve System or as required
5-4 for participation in a depository trust company.
5-5 SECTION 6. Section 404.107, Government Code, is amended to
5-6 read as follows:
5-7 Sec. 404.107. FEES. (a) Any fees or assessments imposed by
5-8 state law for the incorporation, regulation, or operation of trust
5-9 companies do not apply to the Texas Treasury Safekeeping Trust
5-10 Company.
5-11 (b) Agencies and local political subdivisions of the state
5-12 and nonprofit corporations, foundations, and other charitable
5-13 organizations created on behalf of the state or an agency or local
5-14 political subdivision of the state that are authorized or required
5-15 to deposit money and securities with the trust company shall pay
5-16 the fees established on the trust company's fee schedule.
5-17 SECTION 7. Subchapter G, Chapter 404, Government Code, is
5-18 amended by adding Sections 404.108 through 404.115 to read as
5-19 follows:
5-20 Sec. 404.108. TRUST COMPANY INVESTMENT ADVISORY BOARD.
5-21 (a) The comptroller may appoint an investment advisory board to
5-22 advise the comptroller with respect to managing the assets held by
5-23 the trust company. The advisory board shall provide the
5-24 comptroller guidance on the investment philosophy that should be
5-25 pursued in managing the assets under the trust company's control.
5-26 The advisory board serves in an advisory capacity only and is not a
6-1 fiduciary with respect to the assets held by the trust company.
6-2 (b) The advisory board is composed of seven members
6-3 appointed by the comptroller with the advice of the governor,
6-4 lieutenant governor, and speaker of the house of representatives.
6-5 Members serve at the will of the comptroller and may be removed at
6-6 the comptroller's discretion.
6-7 (c) The members of the advisory board must have knowledge of
6-8 or experience in finance, including the management of funds or
6-9 business operations.
6-10 (d) Appointments to the advisory board shall be made without
6-11 regard to the race, color, disability, sex, religion, age, or
6-12 national origin of appointees.
6-13 (e) Each member of the advisory board must be a Texas
6-14 resident.
6-15 (f) The creation, size, composition, and duration of the
6-16 advisory board is governed exclusively by this subchapter. Chapter
6-17 2110 does not apply to the size, composition, or duration of the
6-18 advisory board.
6-19 Sec. 404.109. RESTRICTIONS ON ADVISORY BOARD APPOINTMENT,
6-20 MEMBERSHIP, AND EMPLOYMENT. A person is not eligible for
6-21 appointment to the advisory board if the person or the person's
6-22 spouse:
6-23 (1) is employed by or participates in the management
6-24 of a business entity or other organization receiving funds from the
6-25 trust company;
6-26 (2) owns or controls, directly or indirectly, more
7-1 than a 10 percent interest in a business entity or other
7-2 organization receiving funds from the trust company; or
7-3 (3) receives money from the business entity or other
7-4 organization receiving funds from the trust company that exceeds
7-5 five percent of the person's gross income for the preceding
7-6 calendar year.
7-7 Sec. 404.110. ADVISORY BOARD MEMBER TRAINING. (a) Before a
7-8 member of the advisory board may assume the member's duties, the
7-9 member must complete at least one course of the training program
7-10 established under this section.
7-11 (b) A training program established under this section shall
7-12 provide information regarding:
7-13 (1) the role and functions of the trust company;
7-14 (2) the assets managed by and programs operated by the
7-15 trust company; and
7-16 (3) the statutes applicable to the trust company,
7-17 including Chapters 551, 552, and 2001.
7-18 Sec. 404.111. COMPENSATION; EXPENSES. Members of the
7-19 advisory board serve without compensation but are entitled to
7-20 reimbursement for actual and necessary expenses in attending
7-21 meetings of the advisory board or performing other official duties
7-22 authorized by the comptroller.
7-23 Sec. 404.112. MEETINGS. (a) The advisory board may meet as
7-24 often as necessary, but shall meet at least twice each year.
7-25 (b) Advisory board meetings are subject to Chapter 551.
7-26 Sec. 404.113. INVESTMENT MANAGEMENT. (a) The comptroller
8-1 may delegate investment authority and may contract with private
8-2 professional investment managers to manage or assist in managing
8-3 assets held by the trust company.
8-4 (b) The comptroller may delegate a power or duty relating to
8-5 the investment of assets held by the trust company to an employee
8-6 or agent of the comptroller, including professional investment
8-7 managers.
8-8 Sec. 404.114. PERSONNEL. (a) The comptroller may appoint a
8-9 person to serve as chief executive officer in managing the trust
8-10 company and carrying out the policies of the trust company. The
8-11 chief executive officer and employees of the trust company serve at
8-12 the will of the comptroller.
8-13 (b) The comptroller may delegate any of the comptroller's
8-14 duties to the chief executive officer and trust company employees.
8-15 (c) The chief executive officer or the chief executive
8-16 officer's designee shall develop a career ladder program and a
8-17 system of compensation necessary to retain qualified staff.
8-18 (d) The chief executive officer or the chief executive
8-19 officer's designee shall develop a system of annual performance
8-20 evaluations. Merit pay for trust company employees must be based
8-21 on the system established under this subsection.
8-22 (e) The chief executive officer or the chief executive
8-23 officer's designee shall prepare and maintain a written policy
8-24 statement to assure implementation of a program of equal employment
8-25 opportunity under which all personnel decisions are made without
8-26 regard to race, color, disability, religion, age, or national
9-1 origin.
9-2 (f) The chief executive officer shall appoint an internal
9-3 auditor for the trust company. The appointment of the internal
9-4 auditor must be approved by the comptroller. The comptroller may
9-5 require the internal auditor to submit certain reports directly to
9-6 the comptroller.
9-7 (g) Except as provided by this section and Section
9-8 404.103(e), trust company employees hired under this subchapter are
9-9 state employees for all purposes, including accrual of leave time,
9-10 insurance benefits, retirement benefits, and travel regulations,
9-11 Chapter 104, Civil Practice and Remedies Code, and Chapter 501,
9-12 Labor Code.
9-13 Sec. 404.115. LIABILITY INSURANCE FOR CERTAIN BOARD MEMBERS,
9-14 OFFICIALS, AND STAFF. (a) The trust company may purchase or
9-15 otherwise acquire insurance to protect members of the advisory
9-16 board and the trust company staff.
9-17 (b) Insurance purchased or acquired by the trust company
9-18 under this section may:
9-19 (1) protect against any type of liability to third
9-20 persons that might be incurred while conducting trust company
9-21 business; and
9-22 (2) provide for all costs of defending against such
9-23 liability, including court costs and attorney's fees.
9-24 (c) This section does not authorize the purchase or
9-25 acquisition of insurance to protect against liability not described
9-26 in Subsection (b).
10-1 SECTION 8. This Act takes effect September 1, 2001.