BILL ANALYSIS
BACKGROUND AND PURPOSE
H.B. 3459, 78th Regular Session, 2003, made amendments to Section 2257.022, Government
Code. These changes were intended to allow eligible financial institutions to pledge declining
balance securities (e.g., mortgage backed securities and collateralized mortgage options) at 110
percent of the balance to secure public school deposits. This goal was accomplished; however,
the unintended consequence was to include other United States and Texas government agency
and instrumentality securities under this new requirement.
SB 1693 clarifies that only declining balance securities are subject to the higher requirement by
amending Section 45.201(4)(D), Education Code, to include only declining balance securities,
and adding a new Subsection (4)(E) to include "all other obligations" of the United States or
Texas governments, thus reinstating the existing requirement to fully secure - but not "oversecure"- public school deposits. Additionally, S.B. 1693 addresses redundant language in Section 45.201(2), Education Code, by providing for only one definition of "bank."
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
SECTION 1. Reenacts Section 45.201(2), Education Code, as amended by Chapters 62 and 344,
Acts of the 76th Legislature, Regular Session, 1999, to define "bank."
SECTION 2. Amends Section 45.201(4), Education Code, to redefine "approved securities."
EFFECTIVE DATE
This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005.