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A BILL TO BE ENTITLED
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AN ACT
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relating to the investment authority of an independent school |
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district. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2256.0204, Government Code, is amended |
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by amending Subsections (c), (d), (e), and (g) and adding |
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Subsection (c-1) to read as follows: |
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(c) In addition to authorized investments permitted by this |
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subchapter, an independent school district subject to this section |
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may purchase, sell, and invest its funds and funds under its control |
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in: |
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(1) corporate bonds that, at the time of purchase, are |
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rated by a nationally recognized investment rating firm "AA-" or |
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the equivalent and have a stated final maturity that is not later |
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than the third anniversary of the date the corporate bonds were |
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purchased; and |
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(2) any other kind of investment that a prudent |
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investor, exercising reasonable care, skill, and caution, would |
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acquire or retain in light of the purposes, terms, distribution |
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requirements, and other circumstances of the district's funds or |
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funds under its control then prevailing, taking into consideration |
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the investment of all of the district's funds and funds under its |
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control rather than a single investment. |
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(c-1) To the extent the investment standard of care provided |
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by Subsection (c)(2) conflicts with the standard of care provided |
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by Section 2256.006, the standard of care provided by Subsection |
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(c)(2) applies with regard to investments authorized by that |
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subdivision. |
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(d) An independent school district subject to this section |
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is not authorized by this section to: |
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(1) invest in the aggregate more than 15 percent of its |
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monthly average fund balance, excluding bond proceeds, reserves, |
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and other funds held for the payment of debt service, in corporate |
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bonds or other kinds of investments authorized by Subsection |
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(c)(2); or |
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(2) invest more than 25 percent of the funds invested |
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in corporate bonds in any one domestic business entity, including |
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subsidiaries and affiliates of the entity. |
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(e) An independent school district subject to this section |
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may purchase, sell, and invest its funds and funds under its control |
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in corporate bonds or other kinds of investments authorized by |
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Subsection (c)(2) if the governing body of the district: |
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(1) amends its investment policy to authorize |
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corporate bonds or other kinds of investments authorized by |
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Subsection (c)(2) as an eligible investment; |
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(2) adopts procedures to provide for: |
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(A) monitoring rating changes in corporate bonds |
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acquired with public funds; and |
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(B) liquidating the investment in corporate |
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bonds or other kinds of investments authorized by Subsection |
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(c)(2); and |
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(3) identifies the funds eligible to be invested in |
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corporate bonds or other kinds of investments authorized by |
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Subsection (c)(2). |
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(g) Corporate bonds or other kinds of investments |
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authorized by Subsection (c)(2) are not an eligible investment for |
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a public funds investment pool. |
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SECTION 2. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2019. |