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A BILL TO BE ENTITLED
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AN ACT
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relating to the management of public school land and the investment |
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of the permanent school fund. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 51.011(a) and (a-1), Natural Resources |
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Code, are amended to read as follows: |
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(a) Any land, mineral or royalty interest, real estate |
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investment, or other interest, including revenue received from |
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those sources, that is set apart to the permanent school fund under |
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the constitution and laws of this state together with the mineral |
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estate in riverbeds, channels, and the tidelands, including |
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islands, shall be subject to the sole and exclusive management and |
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control of the school land board and the commissioner under the |
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provisions of this chapter and other applicable law. |
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(a-1) The board may acquire, sell, lease, trade, improve, |
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maintain, protect, or otherwise manage, control, or use land, |
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mineral and royalty interests, real estate investments, or other |
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interests, including revenue received from those sources, that are |
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[is] set apart to the permanent school fund in any manner, at such |
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prices, and under such terms and conditions as the board finds to be |
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in the best interest of the fund. |
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SECTION 2. Section 51.121(b), Natural Resources Code, is |
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amended to read as follows: |
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(b) Improvements [Commercial improvements] on land leased |
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under Subsection (a) [of this section] shall be removed prior to the |
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expiration of the lease unless the commissioner determines it to be |
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in the best interest of the state that removal of the improvements |
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not be required and includes a provision in the terms and conditions |
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of the lease [a renewal or an extension of the lease has been
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finalized prior to the expiration of the term of the lease. If
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commercial improvements are not removed prior to the expiration of
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the lease and if there has been no renewal or extension prior to the
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expiration of the lease, then the commercial] that the improvements |
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on the land shall become property of the state upon termination or |
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expiration of the lease. |
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SECTION 3. The heading to Section 51.401, Natural Resources |
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Code, is amended to read as follows: |
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Sec. 51.401 REAL ESTATE SPECIAL FUND ACCOUNT. |
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SECTION 4. Sections 51.401(a) and (b), Natural Resources |
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Code, are amended to read as follows: |
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(a) The board may designate funds received from any land, |
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mineral or royalty interest, real estate investment, or other |
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interest, including revenue received from those sources, that is |
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set apart to the permanent school fund under the constitution and |
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laws of this state together with the mineral estate in riverbeds, |
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channels, and the tidelands, including islands, [the sale of
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permanent school fund land under this chapter and the proceeds of
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future mineral leases and royalties generated from existing and
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future leases of permanent school fund mineral interests received
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under Chapters 52 and 53] for deposit in the real estate [a] special |
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fund account of the permanent school fund in the State Treasury to |
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be used by the board as provided by this subchapter. |
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(b) The real estate special fund account must be an |
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interest-bearing account, and the interest received on the account |
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shall be deposited in the State Treasury to the credit of the real |
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estate special fund account of the permanent school fund. |
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SECTION 5. Section 51.402, Natural Resources Code, is |
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amended by amending Subsections (a) and (b) and adding Subsection |
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(b-1) to read as follows: |
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(a) The board may use the money designated under Section |
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51.401 for any of the following purposes: |
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(1) to add to a tract of public school land to form a |
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tract of sufficient size to be manageable; |
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(2) to add contiguous land to public school land; |
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(3) to acquire, as public school land, interests in |
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real property for biological, commercial, geological, cultural, or |
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recreational purposes; |
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(4) to acquire mineral and royalty interests for the |
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use and benefit of the permanent school fund; |
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(5) to protect, maintain, or enhance the value of |
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public school land; |
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(6) to acquire interests in real estate;[ or] |
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(7) to pay reasonable fees for professional services |
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related to a permanent school fund investment; or |
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(8) to acquire, sell, lease, trade, improve, maintain, |
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protect, or use land, mineral and royalty interests, or real estate |
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investments, an investment or interest in public infrastructure, or |
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other interests, at such prices and under such terms and conditions |
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the board determines to be in the best interest of the permanent |
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school fund. |
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(b) Before using funds under Subsection (a), the board must |
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determine, using the prudent investor standard, that the use of the |
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funds for the intended purpose is authorized by Subsection (a) and |
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in the best interest of the permanent school fund. A determination |
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by the board on the use of funds under this section is conclusive |
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unless the determination was made as a result of fraud or obvious |
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error. |
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(b-1) The board may confer with one or more employees of the |
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board or with a third party regarding an investment or potential |
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investment in real estate, including the acquisition or potential |
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acquisition of interests in real estate, to the extent permitted to |
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the board of trustees of the Texas growth fund under Section |
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551.075, Government Code. |
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SECTION 6. Section 51.4021, Natural Resources Code, is |
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amended to read as follows: |
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Sec. 51.4021. APPOINTMENT OF SPECIAL FUND MANAGERS, |
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INVESTMENT CONSULTANTS, OR ADVISORS. (a) The board may appoint |
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investment managers, consultants, or advisors to invest or assist |
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the board in investing the money designated under Section 51.401 by |
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contracting for professional investment management or investment |
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advisory services with one or more organizations that are in the |
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business of managing or advising on the management of real estate |
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investments. |
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(b) To be eligible for appointment under this section, an |
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investment manager, consultant, or advisor shall agree to abide by |
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the [must be:
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[(1)
registered under the Investment Advisers Act of
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1940 (15 U.S.C. Section 80b-1 et seq.);
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[(2) a bank as defined by that Act; or
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[(3)
an insurance company qualified to perform real
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estate investment services under the laws of more than one state.
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[(c)
In a contract under this section, the board shall
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specify any] policies, requirements, or restrictions, including |
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ethical standards and disclosure policies and criteria for |
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determining the quality of investments and for the use of standard |
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rating services, that the board adopts for real estate investments |
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of the permanent school fund. Money designated under Section |
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51.401 may not be invested in a real estate investment trust, as |
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defined by Section 200.001, Business Organizations Code. |
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(c) [(d)] Compensation paid to an investment manager, |
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consultant, or advisor by the board must be consistent with the |
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compensation standards of the investment industry and compensation |
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paid by similarly situated institutional investors. |
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(d) [(e)] Chapter 2263, Government Code, applies to |
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investment managers, consultants, or advisors appointed under this |
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section. The board by rule shall adopt standards of conduct for |
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investment managers, consultants, or advisors appointed under this |
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section as required by Section 2263.004, Government Code, and shall |
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implement the disclosure requirements of Section 2263.005 of that |
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code. |
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SECTION 7. Section 51.412(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) Not later than September 1 of each even-numbered year, |
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the board shall submit to the legislature a report that, |
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specifically and in detail, assesses the direct and indirect |
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economic impact, as anticipated by the board, of the investment of |
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funds designated under Section 51.401 for deposit in the real |
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estate special fund account of the permanent school fund. The board |
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may not disclose information under this section that is |
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confidential under applicable state or federal law. The report |
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must include the following information: |
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(1) the total amount of money designated by Section |
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51.401 for deposit in the real estate special fund account of the |
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permanent school fund that the board intends to invest; |
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(2) the rate of return the board expects to attain on |
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the investment; |
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(3) the amount of money the board expects to |
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distribute to the available school fund or the State Board of |
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Education for investment in the permanent school fund after making |
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the investments; |
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(4) the distribution of the board's investments by |
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county; |
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(5) the effect of the board's investments on the level |
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of employment, personal income, and capital investment in the |
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state; and |
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(6) any other information the board considers |
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necessary to include in the report. |
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SECTION 8. Subchapter I, Chapter 51, Natural Resources |
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Code, is amended by adding Section 51.413 to read as follows: |
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Sec. 51.413. TRANSFERS FROM THE REAL ESTATE SPECIAL FUND |
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ACCOUNT TO THE AVAILABLE SCHOOL FUND AND THE PERMANENT SCHOOL FUND. |
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The board may, by a resolution adopted at a regular meeting, release |
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from the real estate special fund account funds previously |
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designated under Section 51.401 of this chapter or managed, used or |
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encumbered under Section 51.402 or Section 51.4021 of this chapter |
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to be deposited in the State Treasury to the credit of: |
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(a) the available school fund; or |
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(b) the State Board of Education for investment in the |
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permanent school fund. |
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SECTION 9. Chapter 43, Education Code, is amended to add a |
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new section 43.0051 that reads as follows: |
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§ 43.0051. TRANSFERS TO REAL ESTATE SPECIAL FUND ACCOUNT OF |
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THE PERMANENT SCHOOL FUND. The State Board of Education may |
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transfer funds from the portion of the permanent school fund |
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managed by the State Board of Education to the real estate special |
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fund account of the permanent school fund if the State Board of |
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Education determines, using the standard of care set forth in |
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subsection (f), Section 5, Article VII, Texas Constitution, that |
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such transfer is in the best interest of the permanent school fund. |
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SECTION 10. Sections 51.401(c) and (d), Natural Resources |
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Code, are repealed. |
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SECTION 11. This Act takes effect immediately if this Act |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2007. |
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