|
INTRODUCED
|
HOUSE COMMITTEE
SUBSTITUTE
|
|
SECTION 1. Subsection (a) of
Section 2256.010, Government Code, is amended by deleting "and"
at the end of clause (5), changing the period at the end of clause (6) to
"; and", and adding a new clause (7), to read as follows:
"(7)
interest-bearing banking deposits that are guaranteed or insured by the
Federal Deposit Insurance Corporation or its successor or the National
Credit Union Share Insurance Fund or its successor."
|
SECTION 1. Section
2256.009(a), Government Code, is amended to read as follows:
(a) Except as provided by
Subsection (b), the following are authorized investments under this
subchapter:
(1) obligations, including
letters of credit, of the United States or its agencies and
instrumentalities;
(2) direct obligations of
this state or its agencies and instrumentalities;
(3) collateralized mortgage
obligations directly issued by a federal agency or instrumentality of the
United States, the underlying security for which is guaranteed by an agency
or instrumentality of the United States;
(4) other obligations, the
principal and interest of which are unconditionally guaranteed or insured
by, or backed by the full faith and credit of, this state or the United
States or their respective agencies and instrumentalities, including
obligations that are fully guaranteed or insured by the Federal Deposit
Insurance Corporation or by the explicit full faith and credit of the
United States;
(5) obligations of states,
agencies, counties, cities, and other political subdivisions of any state
rated as to investment quality by a nationally recognized investment rating
firm not less than A or its equivalent; [and]
(6) bonds issued, assumed,
or guaranteed by the State of Israel; and
(7) interest-bearing
banking deposits that are guaranteed or insured by:
(A) the Federal Deposit
Insurance Corporation or its successor; or
(B) the National Credit
Union Share Insurance Fund or its successor.
|
|
SECTION 2. Section 2256.010,
Government Code, is amended by adding a new subsection (c), to read as
follows:
"(c) In addition to
the authority to invest funds in certificates of deposit under Subsections (a) and (b), an investment in
certificates of deposit made in accordance with Section 2256.020(2)
is an authorized investment under this section."
|
SECTION 2. Section 2256.010,
Government Code, is amended by adding Subsection (c) to read as follows:
(c) An investment in negotiable certificates of deposit issued by a bank that has a certificate of
deposit rating of at least 1 or the equivalent by a nationally recognized
credit rating agency, or that is associated with a holding company having a
commercial paper rating of at least A-1, P-1, or the equivalent by a
nationally recognized credit rating agency, is an authorized
investment under this subchapter.
|
|
No
equivalent provision. (But see SECTION 5 below.)
|
SECTION 3. Section 2256.011,
Government Code, is amended by adding Subsection (e) to read as follows:
(e) Section 1371.059(c)
applies to the execution of a repurchase agreement by an investing entity.
|
|
SECTION 3. Subsection (a),
Clause (4), Section 2256.014, Government Code, is amended to read as
follows:
(3) complies with Rule
2a-7, promulgated by the United States Securities and Exchange Commission has
a dollar weighted average stated maturity of 90 days or fewer; and
(4) includes in its
investment objectives the maintenance of stable net asset value of
$1 for each shares determined in accordance with Rule 2a-7, promulgated
by the United States Securities and Exchange Commission.
|
SECTION 4. Section
2256.014(a), Government Code, is amended to read as follows:
(a) A no-load money market
mutual fund is an authorized investment under this subchapter if the mutual
fund:
(1) is registered with and
regulated by the Securities and Exchange Commission;
(2) provides the investing
entity with a prospectus and other information required by the Securities
Exchange Act of 1934 (15 U.S.C. Section 78a et seq.) or the Investment
Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.);
(3) complies with federal
Securities and Exchange Commission Rule 2a-7 (17
C.F.R. Section 270.2a-7), promulgated under the Investment Company Act of
1940 (15 U.S.C. Section 80a-1 et seq.) [has a dollar-weighted
average stated maturity of 90 days or fewer]; and
(4) includes in its
investment objectives the maintenance of a [stable] net asset value determined
in accordance with federal Securities and Exchange Commission Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated under
the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
[of $1 for each share].
|
|
SECTION 4. Subsection (c),
Clause (2), Section 2256.015, Government Code, is amended to read as
follows:
"(2) the entity must
receive bids from at least two [three]separate providers with no
material financial interest in the bonds from which proceeds were
received;".
|
No
equivalent provision.
|
|
No
equivalent provision. (But see SECTION 6 below.)
|
SECTION 5. Section 2256.015,
Government Code, is amended by adding Subsection (d) to read as follows:
(d) Section 1371.059(c)
applies to the execution of a guaranteed investment contract by an
investing entity.
|
|
SECTION 5. Section 2256.011,
Government Code, is amended by adding a new subsection (e), to read as
follows:
"(e) The repurchase
agreement may provide that the investing entity may agree to waive
sovereign immunity from suit or liability for the purpose of adjudicating a
claim to enforce the repurchase agreement or for damages for breach of the
repurchase agreement."
|
No
equivalent provision. (But see SECTION 3 above.)
|
|
SECTION 6. Section 2256.015,
Government Code, is amended by adding a new subsection (d), to read as
follows:
"(d) The guaranteed
investment contract may provide that the investing entity may agree to
waive sovereign immunity from suit or liability for the purpose of
adjudicating a claim to enforce the guaranteed investment contract or for
damages for breach of the guaranteed investment contract."
|
No
equivalent provision. (But see SECTION 5 above.)
|
|
SECTION 7. Subsection (b),
Section 2256.016, Government Code, is amended to renumber current
subsections (6) through (12) as subsections (7) through (13), and to add a
new clause (6), to read as follows:
"(6) its policy as
to holding deposits in cash;"
|
SECTION 6. Sections
2256.016(b), (f), and (h), Government Code, are amended to read as follows:
(b) To be eligible to
receive funds from and invest funds on behalf of an entity under this
chapter, an investment pool must furnish to the investment officer or other
authorized representative of the entity an offering circular or other
similar disclosure instrument that contains, at a minimum, the following
information:
(1) the types of investments
in which money is allowed to be invested;
(2) the maximum average
dollar-weighted maturity allowed, based on the stated maturity date, of the
pool;
(3) the maximum stated
maturity date any investment security within the portfolio has;
(4) the objectives of the
pool;
(5) the size of the pool;
(6) the names of the members
of the advisory board of the pool and the dates their terms expire;
(7) the custodian bank that
will safekeep the pool's assets;
(8) whether the intent of
the pool is to maintain a net asset value of one dollar and the risk of
market price fluctuation;
(9) whether the only source
of payment is the assets of the pool at market value or whether there is a
secondary source of payment, such as insurance or guarantees, and a
description of the secondary source of payment;
(10) the name and address of
the independent auditor of the pool;
(11) the requirements to be
satisfied for an entity to deposit funds in and withdraw funds from the
pool and any deadlines or other operating policies required for the entity
to invest funds in and withdraw funds from the pool; [and]
(12) the performance history
of the pool, including yield, average dollar-weighted maturities, and
expense ratios; and
(13) the pool's policy
regarding holding deposits in cash.
|
|
SECTION 8. Subsections (f) and
(h), Section 2256.016, Government Code, are amended to read as follows:
"(f) To be eligible to
receive funds from and invest funds on behalf of an entity under this
chapter, a public funds investment pool created
to function as a money market mutual fund must mark its
portfolio to market daily, and, to the extent reasonably possible,
stabilize at a $1 net asset value. If the ratio of the market value of the
portfolio divided by the book value of the portfolio is less than 0.995 or
greater than 1.005, the governing body of the public funds investment
pool shall take such action as it may determine is necessary to eliminate
or reduce to the extent reasonably
practicable any dilution or unfair results to existing participants,
including the sale of portfolio holdings [shall be sold as necessary]
to attempt to maintain the ratio between 0.995 and 1.005."
"(h) To maintain
eligibility to receive funds from and invest funds on behalf of an entity
under this chapter, an investment pool must be continuously rated no lower
than the highest liquidity rating given to United States Treasury
obligations [AAA or AAA m or at an equivalent rating] by at
least one nationally recognized rating service."
|
(f) To be eligible to
receive funds from and invest funds on behalf of an entity under this
chapter, a public funds investment pool created
to function as a money market mutual fund must mark its portfolio to
market daily, and, to the extent reasonably possible, stabilize at a $1 net
asset value. If the ratio of the market value of the portfolio divided by
the book value of the portfolio is less than 0.995 or greater than 1.005, the
governing body of the public funds investment pool shall take action as the
body determines necessary to eliminate or reduce any dilution or unfair
result to existing participants, including a sale of portfolio holdings
to attempt [shall be sold as necessary] to maintain the ratio
between 0.995 and 1.005. In addition to the requirements of its investment
policy and any other forms of reporting, a public funds investment pool
created to function as a money market mutual fund shall report yield to its
investors in accordance with regulations of the federal Securities and
Exchange Commission applicable to reporting by money market funds.
(h) To maintain eligibility
to receive funds from and invest funds on behalf of an entity under this
chapter, an investment pool must be continuously rated no lower than the
highest liquidity rating given to United States Treasury obligations [AAA
or AAA-m or at an equivalent rating] by at least one nationally
recognized rating service.
|
|
SECTION 9. Section 2256.019,
Government Code, is amended to read as follows:
"A public funds
investment pool must be continuously rated no lower than the highest
liquidity rating given to United States Treasury obligations [AAA or
AAA m or at an equivalent rating] by at least one nationally recognized
rating service."
|
SECTION 7. Section 2256.019,
Government Code, is amended to read as follows:
Sec. 2256.019. RATING OF
CERTAIN INVESTMENT POOLS. A public funds investment pool must be
continuously rated no lower than the highest liquidity rating given to
United States Treasury obligations [AAA or AAA-m or at an equivalent
rating] by at least one nationally recognized rating service.
|
|
SECTION 10. Chapter 2256,
Government Code, is amended by adding a new section 2256.02015, to read as
follows:
"Sec. 2256.02015.
Authorized Investments: Eligible Entities.
(a) An eligible entity
may enter into hedging contracts, and related security and insurance
agreements, to protect against economic
loss related to price fluctuations of commodities used in the
general operations of the eligible entity or used in connection with the
acquisition or construction of capital projects by the eligible entity. A
hedging transaction must comply with the regulations of the Commodity
Futures Trading Commission and the Securities and Exchange Commission.
If there is a conflict
between the municipal charter of the eligible entity and this chapter, this chapter prevails.
(b) A payment by an
eligible entity under a hedging contract may be considered: (i) an
operation and maintenance expense of the eligible entity; (ii) an
acquisition expense of the eligible entity; or (iii) a construction expense
of the eligible entity.
The eligible entity may
credit any amount it receives under the
contract or agreement against expenses associated with commodity
purchases.
(c) The governing body of
the eligible entity may set policy
regarding hedging transactions.
(d) As used in this
section:
(1) "Eligible
entity" means those state agencies and political subdivisions described
in Section 1371.001(4), Government Code; and
(2) "Hedging"
means entering into an offsetting position in a related security or using a
financial agreement as a protection against loss due to price fluctuation."
|
SECTION 8. Subchapter A,
Chapter 2256, Government Code, is amended by adding Section 2256.0206 to
read as follows:
Sec. 2256.0206.
AUTHORIZED INVESTMENTS: HEDGING TRANSACTIONS.
(d) An eligible entity
may enter into hedging contracts and related security and insurance
agreements related to commodities investments used in the general operations
of an eligible entity or used in connection with the acquisition or
construction of a capital project by the eligible entity. A hedging transaction
must comply with the regulations of the federal Commodity Futures Trading
Commission and the federal Securities and Exchange Commission.
(b) This section prevails to the extent of any
conflict between this section and an
eligible entity's municipal charter, if
applicable.
(f) An eligible entity's
payment under a hedging contract or
agreement may be considered to be:
(1) an operation and
maintenance expense of the eligible entity;
(2) an acquisition
expense of the eligible entity; or
(3) a construction
expense of the eligible entity.
(e) An eligible entity
may credit any amount the entity receives under a hedging contract or agreement against expenses associated
with a commodity purchase.
(c) The governing body of
an eligible entity shall establish its
policy regarding hedging transactions.
(a) In this section:
(1) "Eligible
entity" means a state agency or political subdivision that is an
issuer as defined by Section 1371.001.
(2) "Hedging"
means acting to protect against economic
loss due to price fluctuation of an investment by entering into an
offsetting position in a related security or by using a financial
agreement.
|
|
No
equivalent provision.
|
SECTION 9. The changes in
law made by this Act apply only to authorized investments of public funds
governed by Chapter 2256, Government Code, as amended by this Act, that are
made on or after the effective date of this Act. An authorized investment
of public funds made before the effective date of this Act is governed by
the law in effect immediately before that date, and that law is continued
in effect for that purpose.
|
|
SECTION 11. 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, 2015.
|
SECTION 10. Same as
introduced version.
|
|