77R15323 JJT-F
By Fraser S.B. No. 1611
Substitute the following for S.B. No. 1611:
By Averitt C.S.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
2-1 agreements, or other fiduciary instruments with the comptroller,
2-2 the Federal Reserve System, a depository trust company, and other
2-3 third parties. The trust company shall be liable under those
2-4 contracts in accordance with the terms contained in the contracts.
2-5 Notwithstanding any other statute to the contrary, to the extent
2-6 permitted by the Texas Constitution and the contracts, trust
2-7 agreements, or other fiduciary instruments between the trust
2-8 company, the Federal Reserve System, and a depository trust
2-9 company, the trust company's obligations shall be guaranteed by the
2-10 state, and the state expressly waives all defenses of governmental
2-11 immunity by and on behalf of the trust company, the comptroller,
2-12 and the state and expressly consents to sue and be sued in federal
2-13 court or in any court of competent jurisdiction. However, this
2-14 provision does not alter or affect the immunity accorded to state
2-15 officials and employees under state law. The trust company may
2-16 enter into contracts with the comptroller and the Federal Reserve
2-17 System to provide any services that the Federal Reserve System
2-18 makes available, including:
2-19 (1) safekeeping book-entry United States Treasury and
2-20 agency securities owned by the state and its agencies;
2-21 (2) using the federal reserve wire transfer system to
2-22 transfer money and book-entry securities and to settle securities
2-23 transactions involving book-entry United States Treasury and agency
2-24 securities owned by the state and its agencies;
2-25 (3) collecting, through the Federal Reserve System,
2-26 checks deposited with the treasury;
2-27 (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.
3-27 SECTION 3. Subsection (c), Section 404.104, Government Code,
4-1 is amended to read as follows:
4-2 (c) The comptroller shall submit to the Legislative Budget
4-3 Board an audited report regarding the operations of the trust
4-4 company. The trust company may contract with a certified public
4-5 accountant or the state auditor to [shall] conduct an independent
4-6 audit of the operations of the trust company. This subsection does
4-7 not affect the state auditor's authority to conduct an audit of the
4-8 trust 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
4-27 accordance with Section 404.071(a).
5-1 (d) The trust company may hold reserve balances or
5-2 securities as required by the Federal Reserve System or as required
5-3 for participation in a depository trust company.
5-4 SECTION 6. Section 404.107, Government Code, is amended to
5-5 read as follows:
5-6 Sec. 404.107. FEES. (a) Any fees or assessments imposed by
5-7 state law for the incorporation, regulation, or operation of trust
5-8 companies do not apply to the Texas Treasury Safekeeping Trust
5-9 Company.
5-10 (b) Agencies and local political subdivisions of the state
5-11 and nonprofit corporations, foundations, and other charitable
5-12 organizations created on behalf of the state or an agency or local
5-13 political subdivision of the state that are authorized or required
5-14 to deposit money and securities with the trust company shall pay
5-15 the fees established on the trust company's fee schedule.
5-16 SECTION 7. Subchapter G, Chapter 404, Government Code, is
5-17 amended by adding Sections 404.108 through 404.116 to read as
5-18 follows:
5-19 Sec. 404.108. TRUST COMPANY INVESTMENT ADVISORY BOARD.
5-20 (a) The comptroller may appoint an investment advisory board to
5-21 advise the comptroller with respect to managing the assets held by
5-22 the trust company. The advisory board shall provide the
5-23 comptroller guidance on the investment philosophy that should be
5-24 pursued in managing the assets under the trust company's control.
5-25 The advisory board serves in an advisory capacity only and is not a
5-26 fiduciary with respect to the assets held by the trust company.
5-27 (b) The advisory board is composed of seven members
6-1 appointed by the comptroller with the advice of the governor,
6-2 lieutenant governor, and speaker of the house of representatives.
6-3 (c) The members of the advisory board must have knowledge of
6-4 or experience in finance, including the management of funds or
6-5 business operations.
6-6 (d) Appointments to the advisory board shall be made without
6-7 regard to the race, color, disability, sex, religion, age, or
6-8 national origin of appointees.
6-9 (e) Each member of the advisory board must be a resident of
6-10 this state.
6-11 (f) The creation, size, composition, and duration of the
6-12 advisory board is governed exclusively by this subchapter. Chapter
6-13 2110 does not apply to the size, composition, or duration of the
6-14 advisory board.
6-15 Sec. 404.109. RESTRICTIONS ON ADVISORY BOARD APPOINTMENT,
6-16 MEMBERSHIP, AND EMPLOYMENT. A person is not eligible for
6-17 appointment to the advisory board if the person or the person's
6-18 spouse:
6-19 (1) is employed by or participates in the management
6-20 of a business entity or other organization receiving funds from the
6-21 trust company;
6-22 (2) owns or controls, directly or indirectly, more
6-23 than a 10 percent interest in a business entity or other
6-24 organization receiving funds from the trust company; or
6-25 (3) receives money from the business entity or other
6-26 organization receiving funds from the trust company that exceeds
6-27 five percent of the person's gross income for the preceding
7-1 calendar year.
7-2 Sec. 404.110. REMOVAL OF ADVISORY BOARD MEMBERS. The
7-3 comptroller may remove from the advisory board an advisory board
7-4 member at will or for any of the following causes:
7-5 (1) at the time of the member's appointment, the
7-6 member did not have the qualifications prescribed by Section
7-7 404.108 or was ineligible under Section 404.109;
7-8 (2) while serving on the advisory board, the member
7-9 does not maintain the qualifications prescribed by Section 404.108
7-10 or becomes ineligible for appointment under Section 404.109;
7-11 (3) for a substantial portion of the member's term,
7-12 the member is unable to discharge the member's duties because of
7-13 illness or disability; or
7-14 (4) without being excused by a majority vote of the
7-15 advisory board, the member is absent from more than one-third of
7-16 the regularly scheduled board meetings that the member is eligible
7-17 to attend during a calendar year.
7-18 Sec. 404.111. ADVISORY BOARD MEMBER TRAINING. (a) Before a
7-19 member of the advisory board may assume the member's duties, the
7-20 member must complete at least one course of the training program
7-21 established under this section.
7-22 (b) A training program established under this section shall
7-23 provide information regarding:
7-24 (1) the role and functions of the trust company;
7-25 (2) the assets managed by and programs operated by the
7-26 trust company; and
7-27 (3) the statutes applicable to the trust company,
8-1 including Chapters 551, 552, and 2001.
8-2 Sec. 404.112. COMPENSATION; EXPENSES. Members of the
8-3 advisory board serve without compensation but are entitled to
8-4 reimbursement for actual and necessary expenses in attending
8-5 meetings of the advisory board or performing other official duties
8-6 authorized by the comptroller.
8-7 Sec. 404.113. MEETINGS. (a) The advisory board may meet as
8-8 often as necessary, but shall meet at least twice each year.
8-9 (b) Advisory board meetings are subject to Chapter 551.
8-10 Sec. 404.114. INVESTMENT MANAGEMENT. (a) The comptroller
8-11 may delegate investment authority and may contract with private
8-12 professional investment managers to manage or assist in managing
8-13 assets held by the trust company.
8-14 (b) The comptroller may delegate a power or duty relating to
8-15 the investment of assets held by the trust company to an employee
8-16 or agent of the comptroller, including professional investment
8-17 managers.
8-18 Sec. 404.115. PERSONNEL. (a) The comptroller may appoint a
8-19 person to serve as chief executive officer in managing the trust
8-20 company and carrying out the policies of the trust company. The
8-21 chief executive officer and employees of the trust company serve at
8-22 the will of the comptroller.
8-23 (b) The comptroller may delegate any of the comptroller's
8-24 duties to the chief executive officer and trust company employees.
8-25 (c) The chief executive officer or the chief executive
8-26 officer's designee shall develop a career ladder program and a
8-27 system of compensation necessary to retain qualified staff.
9-1 (d) The chief executive officer or the chief executive
9-2 officer's designee shall develop a system of annual performance
9-3 evaluations. Merit pay for trust company employees must be based
9-4 on the system established under this subsection.
9-5 (e) The chief executive officer or the chief executive
9-6 officer's designee shall prepare and maintain a written policy
9-7 statement to assure implementation of a program of equal employment
9-8 opportunity under which all personnel decisions are made without
9-9 regard to race, color, disability, religion, age, or national
9-10 origin.
9-11 (f) The chief executive officer shall appoint an internal
9-12 auditor for the trust company. The appointment of the internal
9-13 auditor must be approved by the comptroller. The comptroller may
9-14 require the internal auditor to submit certain reports directly to
9-15 the comptroller.
9-16 (g) Except as provided by this section and Section
9-17 404.103(e), trust company employees hired under this subchapter are
9-18 state employees for all purposes, including accrual of leave time,
9-19 insurance benefits, retirement benefits, and travel regulations,
9-20 Chapter 104, Civil Practice and Remedies Code, and Chapter 501,
9-21 Labor Code.
9-22 Sec. 404.116. LIABILITY INSURANCE FOR CERTAIN BOARD MEMBERS,
9-23 OFFICIALS, AND STAFF. (a) The trust company may purchase or
9-24 otherwise acquire insurance to protect members of the advisory
9-25 board and the trust company staff.
9-26 (b) Insurance purchased or acquired by the trust company
9-27 under this section may:
10-1 (1) protect against any type of liability to third
10-2 persons that might be incurred while conducting trust company
10-3 business; and
10-4 (2) provide for all costs of defending against such
10-5 liability, including court costs and attorney's fees.
10-6 (c) This section does not authorize the purchase or
10-7 acquisition of insurance to protect against liability not described
10-8 in Subsection (b).
10-9 SECTION 8. This Act takes effect September 1, 2001.