By: Fraser S.B. No. 1611
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the structure of the Texas Treasury Safekeeping Trust
1-3 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 safekeeping
1-9 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) [(1)] "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:
2-1 (b) The trust company may enter into contracts, [and] trust
2-2 agreements or other fiduciary instruments with the comptroller, the
2-3 Federal Reserve System, a depository trust company, and other third
2-4 parties. The trust company shall be liable under those contracts
2-5 in accordance with the terms contained in the contracts.
2-6 Notwithstanding any other statute to the contrary, to the extent
2-7 permitted by the Texas Constitution and the contracts, trust
2-8 agreements, or other fiduciary instruments between the trust
2-9 company, the Federal Reserve System, and a depository trust
2-10 company, the trust company's obligations shall be guaranteed by the
2-11 state, and the state expressly waives all defenses of governmental
2-12 immunity by and on behalf of the trust company, the comptroller,
2-13 and the state and expressly consents to sue and be sued in federal
2-14 court or in any court of competent jurisdiction. However, this
2-15 provision does not alter or affect the immunity accorded to state
2-16 officials and employees under state law. The trust company may
2-17 enter into contracts with the comptroller and the Federal Reserve
2-18 System to provide any services that the Federal Reserve System
2-19 makes available, including:
2-20 (1) safekeeping book-entry United States Treasury and agency
2-21 securities owned by the state and its agencies;
2-22 (2) using the federal reserve wire transfer system to
2-23 transfer money and book-entry securities and to settle securities
2-24 transactions involving book-entry United States Treasury and agency
2-25 securities owned by the state and its agencies;
2-26 (3) collecting, through the Federal Reserve System, checks
3-1 deposited with the treasury;
3-2 (4) receiving payments from and making payments to the
3-3 federal government on behalf of the state and its agencies;
3-4 (5) originating automated clearinghouse transactions or
3-5 other electronic transfers to make payments on behalf of the state
3-6 and its agencies, collecting revenues due the state and its
3-7 agencies, and transferring money between state depositories;
3-8 (6) paying warrants drawn on the treasury and presented
3-9 through the Federal Reserve System for payment; and
3-10 (7) safekeeping collateral pledged to secure deposits of
3-11 public funds.
3-12 (e) The trust company may hire employees, fix their
3-13 compensation and prescribe their duties or may contract with the
3-14 comptroller's office for staff support.
3-15 (f) The trust company shall develop a fee schedule in the
3-16 amount necessary to recover costs of service and to retain adequate
3-17 reserves to support the operations of the trust company.
3-18 (g) The trust company is exempt from other state laws
3-19 regulating or limiting state purchasing or a purchasing decision if
3-20 the trust company determines the purchase or decision relates to
3-21 the fiduciary duties of the trust company. The trust company shall
3-22 make all purchases of goods and services using purchasing methods
3-23 that ensure the best value to the trust company and its
3-24 participants. In determining best value, the trust company may
3-25 consider the best value standards applicable to state agencies as
3-26 enumerated in Section 2155.0074, Texas Government Code. The trust
4-1 company shall develop a plan of operation that includes procedures
4-2 and standards for the purchases of goods and services using best
4-3 value methods.
4-4 SECTION 3. Subsection (c), Section 404.104, Government Code,
4-5 is amended to read as follows:
4-6 (c) The comptroller shall submit to the Legislative Budget
4-7 Board an audited report regarding the operations of the trust
4-8 company. The trust company may contract with the comptroller's
4-9 office, a certified public accountant, or state auditor to [shall]
4-10 conduct an independent audit of the operations of the trust company
4-11 [in accordance with Chapter 321].
4-12 SECTION 4. Section 404.105, Government Code, is amended to
4-13 read as follows:
4-14 Sec. 404.105. CAPITAL OR RESERVE [REQUIREMENTS]. The trust
4-15 company shall hold [have] capital stock and [or] reserve balances
4-16 outside the treasury in an amount required by applicable regulatory
4-17 bodies for eligibility for federal reserve services, for
4-18 participation in a depository trust company, and as necessary to
4-19 achieve its purposes under Section 404.103. [, but the amount may
4-20 not be more than $1 million]. The stock of the trust company is an
4-21 authorized investment for state funds and shall be held by the
4-22 comptroller, but the amount may not be more than $1 million.
4-23 SECTION 5. Section 404.106, Government Code, is amended by
4-24 amending subsection (a) and adding subsection (d) to read as
4-25 follows:
4-26 (a) Any net earnings of the trust company attributable to
5-1 capital stock or investments of capital stock shall be credited
5-2 annually to the account of the treasury and shall be allocated
5-3 annually to the funds held and managed by the comptroller in
5-4 accordance with Section 404.071(a).
5-5 (d) The trust company may hold reserve balances or
5-6 securities as required by the Federal Reserve System or as required
5-7 for participation in a depository trust company.
5-8 SECTION 6. Section 404.107, Government Code, is amended to
5-9 read as follows:
5-10 Sec. 404.107. FEES. (a) Any fees or assessments imposed by
5-11 state law for the incorporation, regulation, or operation of trust
5-12 companies do not apply to the Texas Treasury Safekeeping Trust
5-13 Company.
5-14 (b) Agencies and local political subdivisions of the state,
5-15 and nonprofit corporations, foundations, and other charitable
5-16 organizations created on behalf of the state or an agency or local
5-17 political subdivision of the state that are authorized or required
5-18 to deposit money and securities with the trust company shall pay
5-19 the fees established on the trust company's fee schedule.
5-20 SECTION 7. Subchapter G, Chapter 404, Government Code, is
5-21 amended by adding section 404.108 to read as follows:
5-22 Sec. 404.108. TRUST COMPANY INVESTMENT ADVISORY BOARD.
5-23 (a) The comptroller may appoint an investment advisory board to
5-24 advise the comptroller with respect to managing the assets held by
5-25 the Trust Company. The advisory board shall provide the
5-26 comptroller guidance on the investment philosophy that should be
6-1 pursued in managing the assets under the trust company's control.
6-2 The advisory board serves in an advisory capacity only and is not a
6-3 fiduciary with respect to the assets held by the trust company.
6-4 (b) The advisory board is composed of 7 members appointed by
6-5 the comptroller with the advice of the governor, lieutenant
6-6 governor and speaker of the house. Members serve at the will of
6-7 the comptroller and may be removed at the comptroller's discretion.
6-8 (c) The members must have knowledge of or experience in
6-9 finance, including the management of funds or business operations.
6-10 (d) Appointments to the advisory board shall be made without
6-11 regard to the race, color, handicap, sex, religions, 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 SECTION 8. Subchapter G, chapter 404, Government Code, is
6-20 amended by adding section 404.109 to read as follows:
6-21 Sec. 404.109. RESTRICTIONS ON ADVISORY BOARD APPOINTMENT,
6-22 MEMBERSHIP, AND EMPLOYMENT. (a) A person is not eligible for
6-23 appointment to the advisory board if the person or person's spouse:
6-24 (1) is employed by or participates in the management
6-25 of a business entity or other organization receiving funds from the
6-26 trust company;
7-1 (2) owns or controls, directly or indirectly, more
7-2 than a 10 percent interest in a business entity or other
7-3 organization receiving funds from the trust company; or
7-4 (3) receives money from the business entity or other
7-5 organization receiving funds from the trust company that exceeds
7-6 five percent of the person's gross income for the preceding
7-7 calendar year.
7-8 SECTION 9. Subchapter G, chapter 404, Government Code, is
7-9 amended by adding section 404.110 to read as follows:
7-10 Sec. 404.110. ADVISORY BOARD MEMBER TRAINING. (a) Before a
7-11 member of the advisory board may assume the member's duties, the
7-12 member must complete at least once course of the training program
7-13 established under this section.
7-14 (b) A training program established under this section shall
7-15 provide information regarding:
7-16 (1) the role and functions of the trust company;
7-17 (2) the assets managed by and programs operated by the
7-18 trust company;
7-19 (3) the statutes applicable to the trust company,
7-20 including chapters 551, 552, and 2001, Texas Government Code.
7-21 SECTION 10. Subchapter G, chapter 404, Government Code, is
7-22 amended by adding section 404.111 to read as follows:
7-23 Sec. 404.111. COMPENSATION; EXPENSES. Members of the
7-24 advisory board serve without compensation but are entitled to
7-25 reimbursement for actual and necessary expenses in attending
7-26 meetings of the advisory board or performing other official duties
8-1 authorized by the comptroller.
8-2 SECTION 11. Subchapter G, chapter 404, Government Code, is
8-3 amended by adding section 404.112 to read as follows:
8-4 Sec. 404.112. MEETINGS. (a) The advisory board may meet as
8-5 often as necessary, but shall meet at least twice a year.
8-6 (b) Advisory board meetings are subject to chapter 551,
8-7 Government Code.
8-8 SECTION 12. Subchapter G, chapter 404, Government Code, is
8-9 amended by adding section 404.113 to read as follows:
8-10 Sec. 404.113. 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 SECTION 13. Subchapter G, chapter 404, Government Code, is
8-19 amended by adding section 404.114 to read as follows:
8-20 Sec. 404.114. PERSONNEL. (a) The comptroller may appoint a
8-21 person to serve as chief executive officer in managing the trust
8-22 company and carrying out the policies of the trust company. The
8-23 chief executive officer and employees of the trust company serve at
8-24 the will of the comptroller.
8-25 (b) The comptroller may delegate any of the comptroller's
8-26 duties to the chief executive officer and trust company employees.
9-1 (c) The chief executive officer or chief executive officer's
9-2 designee shall develop a career ladder program and a system of
9-3 compensation necessary to retain qualified staff.
9-4 (d) The chief executive officer or chief executive officer's
9-5 designee shall develop a system of annual performance evaluations.
9-6 Merit pay for trust company employees must be based on the system
9-7 established under this subsection.
9-8 (e) The chief executive officer or chief executive officer's
9-9 designee shall prepare and maintain a written policy statement to
9-10 assure implementation of a program of equal employment opportunity
9-11 under which all personnel decisions are made without regard to
9-12 race, color, handicap, religion, age, or national origin.
9-13 (f) The chief executive officer shall appoint an internal
9-14 auditor for the corporation. The appointment of the internal
9-15 auditor must be approved by the comptroller. The comptroller may
9-16 require the internal auditor to submit certain reports directly to
9-17 the comptroller.
9-18 (g) Except as provided by this section and subsection
9-19 404.103(e), Trust company employees hired under this subchapter are
9-20 state employees for all purposes, including accrual of leave time,
9-21 insurance benefit, retirement benefits, and travel regulations,
9-22 Chapter 104, Civil Practice and Remedies Code, and Chapter 501,
9-23 Labor Code.
9-24 SECTION 14. Subchapter G, Chapter 404, Government Code, is
9-25 amended by adding section 404.115 to read as follows:
9-26 Sec. 404.115. LIABILITY INSURANCE FOR CERTAIN BOARD MEMBERS,
10-1 OFFICIALS, AND STAFF. (a) The trust company may purchase or
10-2 otherwise acquire insurance to protect members of the advisory
10-3 board and the trust company staff.
10-4 (b) Insurance purchased or acquired by a state agency under
10-5 this section may:
10-6 (1) protect against any type of liability to third
10-7 persons that might be incurred while conducting trust company
10-8 business; and
10-9 (2) provide for all costs of defending against that
10-10 liability, including court costs and attorney's fees.
10-11 (c) This section does not authorize the purchase or
10-12 acquisition of insurance to protect against liability not described
10-13 in Subsection (b).
10-14 SECTION 15. This Act takes effect September 1, 2001.