89R919 MLH-F

By: Hinojosa S.B. No. 440

A BILL TO BE ENTITLED

AN ACT

relating to audits of and reports by self-directed and semi-independent financial regulatory agencies.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 16.004, Finance Code, is amended to read as follows:

Sec. 16.004. AUDITS. (a) This chapter does not affect the duty of the state auditor to audit a financial regulatory agency. The state auditor shall enter into a contract and schedule with each financial regulatory agency to conduct audits, including a financial audit, an effectiveness audit, [reports] and a performance audit at least once every six years, unless the state auditor determines that the auditor may rely on an independent audit of the agency conducted during the same period [audits].

(b) The state auditor may conduct a risk-based audit of a financial regulatory agency at any time.

(c) The financial regulatory agency shall reimburse the state auditor for all costs incurred in performing the audits and shall provide to the governor a copy of any audit performed.

SECTION 2. Sections 16.005(b) and (c), Finance Code, are amended to read as follows:

(b) Before the beginning of each regular session of the legislature, each financial regulatory agency shall submit to the legislature and the governor a report describing all of the agency's activities in the previous biennium. The report must include:

(1) an audit as required by Section 16.004;

(2) a financial report of the previous fiscal year, including reports on financial condition and results of operations;

(3) a description of all changes in fees imposed on regulated entities, broken down by industry [industries];

(4) a report on:

(A) changes in the regulatory jurisdiction of the agency, including the number of chartered financial institutions, license holders, and registrants subject to the agency's jurisdiction and any changes in those figures; and

(B) any enforcement activities by the agency; and

(5) a description [list] of all new rules adopted or repealed.

(c) In addition to the reporting requirements of Subsection (b), not later than November 1 of each year, each financial regulatory agency shall submit to the governor, the committee of each house of the legislature that has jurisdiction over appropriations, and the Legislative Budget Board a report that contains:

(1) the salary for all financial regulatory agency personnel and the total amount of per diem expenses and travel expenses paid for all agency employees;

(2) the total amount of per diem expenses and travel expenses paid for each member of the agency's policy-making body [, provided that only one report must be submitted regarding the Finance Commission of Texas];

(2-a) trend performance data relating to Subdivisions (1) and (2) for the preceding five fiscal years;

(3) the agency's operating plan for a period of two fiscal years [and annual budget]; [and]

(4) the agency's operating budget that includes:

(A) revenues from all sources; and

(B) an accounting of all expenditures, including a breakdown of expenditures by program and administrative expenses, showing:

(i) projected budget data for a period of two fiscal years; and

(ii) trend budget performance data for the preceding five fiscal years; and

(5) trend performance data for the preceding five fiscal years regarding:

(A) the number of full-time equivalent positions at the agency;

(B) the number of complaints received from the public and the number of complaints initiated by agency staff;

(C) the number of complaints dismissed and the number of complaints resolved by enforcement action;

(D) the number of enforcement actions, by sanction type;

(E) the number of enforcement cases closed through voluntary compliance;

(F) the amount of each administrative penalty assessed, broken down by sanction type;

(G) the amount of each administrative penalty collected, broken down by sanction type;

(H) the total amount of administrative penalties assessed and the rate of collection of assessed administrative penalties;

(I) the number of enforcement cases that allege a threat to public health, safety, or welfare or a violation of professional standards of care and the disposition of those cases;

(J) the average time to resolve a complaint;

(K) the number of entities regulated by the agency;

(L) the number of license holders or regulated persons, broken down by type of license and license status, including inactive status or retired status;

(M) the fee charged to issue and renew each type of license, certificate, permit, or other similar authorization issued by the agency;

(N) any assessments paid to the agency by the holder of a license, certificate, permit, or other similar authorization issued by the agency;

(O) the average time to issue a license, certificate, permit, or other similar authorization issued by the agency;

(P) litigation costs, broken down by administrative hearings, judicial proceedings, and outside counsel costs;

(Q) reserve fund balances; and

(R) the key performance measures approved by the governing board of the agency during the fiscal year for which the report is due [a detailed report of all revenue received and all expenses incurred by the financial regulatory agency in the previous 12 months].

SECTION 3. Section 16.005, Finance Code, as amended by this Act, applies only to a report originally due on or after the effective date of this Act. A report originally due before the effective date of this Act is governed by the law in effect on the date the report was originally due, and the former law is continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2025.