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A BILL TO BE ENTITLED
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AN ACT
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relating to authorized investments for governmental entities and a |
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study of the investment and management of funds by public schools. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 2256.011(a) and (b), Government Code, |
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are amended to read as follows: |
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(a) A fully collateralized repurchase agreement is an |
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authorized investment under this subchapter if the repurchase |
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agreement: |
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(1) has a defined termination date; |
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(2) is secured by a combination of cash and |
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obligations described by Section 2256.009(a)(1) or 2256.013 or, if |
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applicable, Section 2256.0204; [and] |
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(3) requires the securities being purchased by the |
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entity or cash held by the entity to be pledged to the entity, held |
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in the entity's name, and deposited at the time the investment is |
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made with the entity or with a third party selected and approved by |
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the entity; and |
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(4) is placed through a primary government securities |
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dealer, as defined by the Federal Reserve, or a financial |
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institution doing business in this state. |
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(b) In this section, "repurchase agreement" means a |
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simultaneous agreement to buy, hold for a specified time, and sell |
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back at a future date obligations described by Section |
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2256.009(a)(1) or 2256.013 or, if applicable, Section 2256.0204, at |
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a market value at the time the funds are disbursed of not less than |
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the principal amount of the funds disbursed. The term includes a |
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direct security repurchase agreement and a reverse security |
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repurchase agreement. |
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SECTION 2. Section 2256.013, Government Code, is amended to |
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read as follows: |
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Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER. |
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Commercial paper is an authorized investment under this subchapter |
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if the commercial paper: |
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(1) has a stated maturity of 365 [270] days or fewer |
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from the date of its issuance; and |
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(2) is rated not less than A-1 or P-1 or an equivalent |
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rating by at least: |
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(A) two nationally recognized credit rating |
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agencies; or |
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(B) one nationally recognized credit rating |
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agency and is fully secured by an irrevocable letter of credit |
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issued by a bank organized and existing under the laws of the United |
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States or any state. |
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SECTION 3. Sections 2256.016(e) and (f), Government Code, |
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are amended to read as follows: |
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(e) In this section, for purposes of an investment pool for |
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which a $1.00 net asset value is maintained, "yield" shall be |
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calculated in accordance with regulations governing the |
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registration of open-end management investment companies under the |
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Investment Company Act of 1940, as promulgated from time to time by |
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the federal Securities and Exchange Commission. |
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(f) To be eligible to receive funds from and invest funds on |
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behalf of an entity under this chapter: |
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(1) [,] a public funds investment pool that uses |
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amortized cost or fair value accounting must mark its portfolio to |
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market daily; [,] and |
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(2) if the investment pool uses amortized cost: |
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(A) the investment pool must, to the extent |
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reasonably possible, stabilize at a $1.00 net asset value, when |
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rounded and expressed to two decimal places; |
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(B) the governing body of the investment pool |
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must, if [. If] the ratio of the market value of the portfolio |
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divided by the book value of the portfolio is less than 0.995 or |
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greater than 1.005, [the governing body of the public funds
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investment pool shall] take action as the body determines necessary |
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to eliminate or reduce to the extent reasonably practicable any |
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dilution or unfair result to existing participants, including a |
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sale of portfolio holdings to attempt to maintain the ratio between |
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0.995 and 1.005; and |
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(C) the investment pool must, in [. In] addition |
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to the requirements of its investment policy and any other forms of |
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reporting, [a public funds investment pool that uses amortized cost
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shall] report yield to its investors in accordance with regulations |
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of the federal Securities and Exchange Commission applicable to |
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reporting by money market funds. |
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SECTION 4. Subchapter A, Chapter 2256, Government Code, is |
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amended by adding Section 2256.0208 to read as follows: |
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Sec. 2256.0208. LOCAL GOVERNMENT INVESTMENT OF BOND |
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PROCEEDS AND PLEDGED REVENUE. (a) In this section, "pledged |
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revenue" means money pledged to the payment of or as security for: |
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(1) bonds or other indebtedness issued by a local |
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government; |
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(2) obligations under a lease, installment sale, or |
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other agreement of a local government; or |
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(3) certificates of participation in a debt or |
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obligation described by Subdivision (1) or (2). |
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(b) The investment officer of a local government may invest |
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bond proceeds or pledged revenue only to the extent permitted by |
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this chapter, in accordance with: |
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(1) statutory provisions governing the debt issuance |
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or the agreement, as applicable; and |
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(2) the local government's investment policy regarding |
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the debt issuance or the agreement, as applicable. |
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SECTION 5. Section 2256.0204(g), Government Code, is |
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repealed. |
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SECTION 6. (a) The Texas Education Agency shall conduct a |
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study regarding the investment and management of funds by school |
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districts and open-enrollment charter schools. On request of the |
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agency, a district or school or the entity that invests or manages |
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funds for the district or school, as appropriate, shall provide the |
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agency information regarding: |
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(1) the district's or school's investments, including |
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asset allocations, fees, and risks; and |
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(2) the district's or school's cash flow, fund |
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balances, and other revenue sources. |
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(b) Not later than June 1, 2020, the Texas Education Agency |
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shall deliver a report to the governor, the lieutenant governor, |
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the speaker of the house of representatives, and each standing |
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committee of the legislature having primary jurisdiction over |
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primary and secondary education that includes: |
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(1) the findings of the study; and |
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(2) any recommendations for legislative action based |
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on the findings of the study. |
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(c) This section expires September 1, 2021. |
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SECTION 7. This Act takes effect September 1, 2019. |
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* * * * * |