78R4230 JRD-D
By: Duncan S.B. No. 875
A BILL TO BE ENTITLED
AN ACT
relating to establishing uniform minimum ethics requirements for
persons involved in the management or investment of state funds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 10, Government Code, is
amended by adding Chapter 2263 to read as follows:
CHAPTER 2263. ETHICS REQUIREMENTS FOR MANAGING OR INVESTING STATE
FUNDS
Sec. 2263.001. APPLICABILITY; CONSTRUCTION WITH OTHER LAW.
(a) This chapter applies in connection with the management or
investment of any state funds managed or invested:
(1) under the Texas Constitution or other law,
including Chapters 404 and 2256; and
(2) by or for:
(A) a public retirement system as defined by
Section 802.001 that provides service retirement, disability
retirement, or death benefits for officers or employees of the
state;
(B) an institution of higher education as defined
by Section 61.003, Education Code; or
(C) another entity that is part of state
government and that manages or invests state funds or for which
state funds are managed or invested.
(b) This chapter applies in connection with the management
or investment of state funds without regard to whether the funds are
held in the state treasury.
(c) This chapter does not apply to or in connection with a
state governmental entity that does not manage or invest state
funds and for which state funds are managed or invested only by the
comptroller.
(d) To the extent of a conflict between this chapter and
another law, the law that imposes a stricter ethics requirement
controls.
Sec. 2263.002. ETHICS REQUIREMENTS. In addition to any
other requirements provided by law, the governing body of a state
governmental entity that manages or invests state funds or for
which state funds are managed or invested shall enforce an ethics
policy as provided by this chapter for members of the governing body
and for officers and employees of, consultants and advisors to, and
brokers and money managers who provide financial services for the
state governmental entity.
Sec. 2263.003. ETHICS REQUIREMENTS FOR OFFICERS AND
EMPLOYEES: FINANCIAL DISCLOSURE STATEMENT. (a) Each officer and
employee of a state governmental entity who exercises significant
decision-making or fiduciary authority in connection with the
management or investment of state funds, as determined by the
governing body of the entity, shall file a financial disclosure
statement with a person designated by the governing body and with
the state auditor.
(b) The content of the financial disclosure statement must
substantially comply with the requirements of Subchapter B, Chapter
572.
(c) The officer or employee shall file the first financial
statement not later than the 30th day after the date the person is
first employed by the state governmental entity in a position in
which the officer or employee exercises authority as described by
Subsection (a) and shall file annual statements not later than
April 30 of each subsequent year in which the officer or employee
remains employed in such a position. The filing deadline may be
postponed:
(1) by the administrative head of the state
governmental entity for not more than 60 days on written request;
and
(2) for an additional period for good cause as
determined by:
(A) the presiding officer of a multimember
governing body; or
(B) the single state official who governs the
state governmental entity.
(d) The state governmental entity shall maintain a
financial disclosure statement for at least five years after the
date of its filing.
Sec. 2263.004. ETHICS REQUIREMENTS FOR GOVERNING BODY,
OFFICERS, AND EMPLOYEES: DISCLOSURE OF CERTAIN RELATIONSHIPS. (a)
A member of the governing body of, or an officer or employee of, a
state governmental entity who has a direct or indirect business or
commercial relationship that could reasonably be expected to
diminish the person's independence of judgment in the performance
of the person's responsibilities in connection with the management
or investment of state funds shall disclose the relationship in
writing to a person designated by the governing body and to the
state auditor.
(b) A person who files a disclosure statement under
Subsection (a) or who is required to file such a statement may not
give advice or make decisions about matters affected by the
conflict of interest unless the governing body, after consultation
with the general counsel of the state governmental entity,
expressly waives this prohibition. The state governmental entity
shall maintain a written record of each waiver and the reasons for
it.
(c) The governing body may delegate the authority to waive
prohibitions under Subsection (b) that affect an officer or
employee to one or more designated officers or employees. The
governing body may adopt criteria for designated officers or
employees to use to determine the kinds of relationships that do not
constitute a material conflict of interest for purposes of
Subsection (b). A multimember governing body may delegate this
authority only by adopting an order on a vote of a majority of its
members at an open meeting called and held in compliance with
Chapter 551, and the governing body shall have the order entered
into the minutes of the meeting.
Sec. 2263.005. ETHICS REQUIREMENTS FOR GOVERNING BODY,
OFFICERS, AND EMPLOYEES: ANNUAL ETHICS COMPLIANCE STATEMENT. (a)
Each member of the governing body of a state governmental entity
that manages or invests state funds or for which state funds are
managed or invested and each officer and employee of the
governmental entity required to file a financial disclosure
statement under Section 2263.003 shall file annually a compliance
statement certifying that the person is in compliance with all
applicable requirements prescribed by or under this chapter. The
person shall file the statement with a person designated by the
governing body and with the state auditor.
(b) The governing body of the state governmental entity
shall prescribe the date by which the compliance statement must be
filed.
Sec. 2263.006. ETHICS REQUIREMENTS FOR CONSULTANTS,
ADVISORS, MONEY MANAGERS, AND BROKERS. (a) The governing body of a
state governmental entity by rule shall adopt standards of conduct
applicable to consultants, advisors, money managers, and brokers
who advise the state governmental entity or a member of the
governing body of the state governmental entity in connection with
the management or investment of state funds or provide financial
services to the state governmental entity and who:
(1) may reasonably be expected to receive more than
$10,000 in compensation from the entity during a fiscal year; or
(2) render important investment or funds management
advice to the entity or a member of the governing body of the
entity, as determined by the governing body.
(b) A consultant, advisor, money manager, or broker who
advises a state governmental entity or a member of the governing
body of the state governmental entity in connection with the
management or investment of state funds or provides financial
services to the state governmental entity shall disclose in writing
to the administrative head of the entity and to the state auditor
any relationship the consultant, advisor, money manager, or broker
has with any party to a transaction with the state governmental
entity, other than a relationship necessary to the investment or
funds management services that the consultant, advisor, money
manager, or broker performs for the state governmental entity, if
the relationship could reasonably be expected to diminish the
person's independence of judgment in the performance of the
person's responsibilities to the state governmental entity.
(c) The consultant, advisor, money manager, or broker shall
disclose a relationship described by Subsection (b) without regard
to whether the relationship is a direct, indirect, personal,
private, commercial, or business relationship.
(d) A consultant, advisor, money manager, or broker
described by Subsection (a) shall file annually a statement with
the administrative head of the applicable state governmental entity
and with the state auditor. The statement must disclose each
relationship described by Subsection (b), if any. The state
auditor by rule shall prescribe the date by which the statement must
be filed. The state auditor may prescribe a uniform date or may
prescribe different dates for statements filed in relation to
different state governmental entities. The consultant, advisor,
money manager, or broker shall file a new or amended statement with
the administrative head of the applicable state governmental entity
and with the state auditor whenever there is new information to
report under Subsection (b).
Sec. 2263.007. DISCLOSURE OF CERTAIN EXPENDITURES BY
CONSULTANTS, ADVISORS, MONEY MANAGERS, AND BROKERS. The governing
body of a state governmental entity by rule shall require
consultants, advisors, money managers, and brokers who provide
investment or funds management advice to the state governmental
entity or provide financial services to the state governmental
entity to file regularly with the entity a report detailing any
expenditure of more than $250 made on behalf of a member of the
governing body or an officer or employee of the state governmental
entity.
Sec. 2263.008. PUBLIC INFORMATION. (a) Chapter 552
controls the extent to which information contained in a statement,
waiver, or report filed under this chapter is subject to required
public disclosure or excepted from required public disclosure.
(b) The governing body shall designate an employee to be the
custodian of the statements, waivers, and reports for purposes of
public disclosure under Chapter 552.
Sec. 2263.009. FORMS. The state auditor shall prescribe
forms for financial disclosure statements, annual ethics
compliance statements, disclosure statements of conflicts of
interests, and waivers of the prohibition against involvement in a
matter affected by a conflict of interest.
SECTION 2. Each state governmental entity required to
adopt rules under Chapter 2263, Government Code, as added by this
Act, shall adopt its initial rules in time for the rules to take
effect not later than January 1, 2004.
SECTION 3. This Act takes effect September 1, 2003.