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A BILL TO BE ENTITLED
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AN ACT
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relating to the evaluation of investment practices and performance |
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of certain public retirement systems. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 802.002(a), Government Code, is amended |
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to read as follows: |
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(a) Except as provided by Subsection (b), the Employees |
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Retirement System of Texas, the Teacher Retirement System of Texas, |
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the Texas County and District Retirement System, the Texas |
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Municipal Retirement System, and the Judicial Retirement System of |
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Texas Plan Two are exempt from Sections 802.101(a), 802.101(b), |
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802.101(d), 802.102, 802.103(a), 802.103(b), 802.109, 802.2015, |
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802.2016, 802.202, 802.203, 802.204, 802.205, 802.206, and |
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802.207. The Judicial Retirement System of Texas Plan One is exempt |
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from all of Subchapters B and C except Sections 802.104 and 802.105. |
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The optional retirement program governed by Chapter 830 is exempt |
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from all of Subchapters B and C except Section 802.106. |
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SECTION 2. Subchapter B, Chapter 802, Government Code, is |
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amended by adding Section 802.109 to read as follows: |
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Sec. 802.109. INVESTMENT PRACTICES AND PERFORMANCE |
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REPORTS. (a) A public retirement system shall select an |
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independent firm with substantial experience in evaluating |
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institutional investment practices and performance to evaluate the |
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retirement system's investment practices and performance. Each |
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evaluation must include: |
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(1) a detailed summary of the retirement system's |
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investment asset allocations; |
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(2) any investment policy or strategic investment plan |
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adopted by the retirement system in order to evaluate the |
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retirement system's portfolio risk, cash flow, and liquidity; |
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(3) the names of investment managers appointed by the |
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retirement system's governing body; and |
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(4) a description of the retirement system's asset |
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retention process. |
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(b) The governing body of a public retirement system shall |
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determine specific areas to be evaluated under Subsection (a), but |
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the first evaluation must be a comprehensive analysis of the |
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retirement system's investment program. |
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(c) A public retirement system shall conduct the evaluation |
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required by Subsection (a): |
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(1) biennially, if the retirement system has total |
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assets the book value of which, as of the last day of the last fiscal |
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year considered in an evaluation under this section, was at least |
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$100 million; or |
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(2) once every five years, if the retirement system |
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has total assets the book value of which, as of the last day of the |
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last fiscal year considered in an evaluation under this section, |
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was less than $100 million. |
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(d) A report of an evaluation under this section must be |
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filed with the governing body of the public retirement system not |
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later than December 1 of each year in which the system is evaluated |
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under Subsection (c). |
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(e) A public retirement system shall pay the costs of each |
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evaluation of the system under this section. |
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(f) Not later than the 45th day after the first day of a |
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public retirement system's fiscal year, the governing body of the |
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system shall submit to the board an annual investment performance |
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report. The report must include: |
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(1) a listing of all commissions and fees paid by the |
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retirement system during the system's previous fiscal year for the |
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sale, purchase, or management of system assets; and |
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(2) a copy of the retirement system's most recent |
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evaluation under Subsection (a). |
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(g) Not later than February 1 of each year, the board shall |
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submit a comprehensive investment performance report to the |
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governor, the lieutenant governor, the speaker of the house of |
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representatives, and the legislative committees having principal |
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jurisdiction over legislation governing public retirement systems. |
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The report must compile the information received under this section |
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by the board during the preceding calendar year. |
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SECTION 3. Notwithstanding Section 802.109(c), Government |
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Code, as added by this Act, a report of the first evaluation of a |
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public retirement system, as required by Section 802.109, |
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Government Code, as added by this Act, must be filed with the |
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governing body of the system not later than December 1, 2018. |
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SECTION 4. This Act takes effect September 1, 2017. |