Texas 2009 - 81st Regular

Texas House Bill HB3607 Compare Versions

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1	1	81R15700 MTB-F
2	2	By: Truitt H.B. No. 3607
3	3	Substitute the following for H.B. No. 3607:
4	4	By: Truitt C.S.H.B. No. 3607
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to authorized investments for governmental entities.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 2256.005(b), Government Code, is amended
12	12	to read as follows:
13	13	(b) The investment policies must:
14	14	(1) be written;
15	15	(2) primarily emphasize safety of principal and
16	16	liquidity;
17	17	(3) address investment diversification, yield, and
18	18	maturity and the quality and capability of investment management;
19	19	and
20	20	(4) include:
21	21	(A) a list of the types of authorized investments
22	22	in which the investing entity's funds may be invested;
23	23	(B) the maximum allowable stated maturity of any
24	24	individual investment owned by the entity;
25	25	(C) for pooled fund groups, the maximum
26	26	dollar-weighted average maturity allowed based on the stated
27	27	maturity date for the portfolio;
28	28	(D) methods to monitor the market price of
29	29	investments acquired with public funds; [and]
30	30	(E) a requirement for settlement of all
31	31	transactions, except investment pool funds and mutual funds, on a
32	32	delivery versus payment basis; and
33	33	(F) procedures to monitor rating changes in
34	34	investments acquired with public funds and the liquidation of such
35	35	investments consistent with the provisions of Section 2256.021.
36	36	SECTION 2. Section 2256.007(d), Government Code, is amended
37	37	to read as follows:
38	38	(d) An investment officer shall attend a training session
39	39	not less than once each state fiscal biennium [in a two-year period]
40	40	and may receive training from any independent source approved by
41	41	the governing body of the state agency. The investment officer
42	42	shall prepare a report on this subchapter and deliver the report to
43	43	the governing body of the state agency not later than the 180th day
44	44	after the last day of each regular session of the legislature.
45	45	SECTION 3. Sections 2256.008(a) and (b), Government Code,
46	46	are amended to read as follows:
47	47	(a) Except as provided by Subsections (b) and (e), the
48	48	treasurer, the chief financial officer if the treasurer is not the
49	49	chief financial officer, and the investment officer of a local
50	50	government shall:
51	51	(1) attend at least one training session from an
52	52	independent source approved by the governing body of the local
53	53	government or a designated investment committee advising the
54	54	investment officer as provided for in the investment policy of the
55	55	local government and containing at least 10 hours of instruction
56	56	relating to the treasurer's or officer's responsibilities under
57	57	this subchapter within 12 months after taking office or assuming
58	58	duties; and
59	59	(2) except as provided by Subsections (b) and (e),
60	60	attend an investment training session not less than once each state
61	61	fiscal biennium [in a two-year period] and receive not less than 10
62	62	hours of instruction relating to investment responsibilities under
63	63	this subchapter from an independent source approved by the
64	64	governing body of the local government or a designated investment
65	65	committee advising the investment officer as provided for in the
66	66	investment policy of the local government.
67	67	(b) An investing entity created under authority of Section
68	68	52(b), Article III, or Section 59, Article XVI, Texas Constitution,
69	69	that has contracted with an investment management firm under
70	70	Section 2256.003(b) and has fewer than five full-time employees or
71	71	an investing entity that has contracted with another investing
72	72	entity to invest the entity's funds may satisfy the training
73	73	requirement provided by Subsection (a)(2) by having an officer of
74	74	the governing body attend four hours of appropriate instruction
75	75	each state fiscal biennium [in a two-year period]. The treasurer or
76	76	chief financial officer of an investing entity created under
77	77	authority of Section 52(b), Article III, or Section 59, Article
78	78	XVI, Texas Constitution, and that has fewer than five full-time
79	79	employees is not required to attend training required by this
80	80	section unless the person is also the investment officer of the
81	81	entity.
82	82	SECTION 4. Section 2256.009(a), Government Code, is amended
83	83	to read as follows:
84	84	(a) Except as provided by Subsection (b), the following are
85	85	authorized investments under this subchapter:
86	86	(1) obligations, including letters of credit, of the
87	87	United States or its agencies and instrumentalities;
88	88	(2) direct obligations of this state or its agencies
89	89	and instrumentalities;
90	90	(3) collateralized mortgage obligations directly
91	91	issued by a federal agency or instrumentality of the United States,
92	92	the underlying security for which is guaranteed by an agency or
93	93	instrumentality of the United States;
94	94	(4) other obligations, the principal and interest of
95	95	which are unconditionally guaranteed or insured by, or backed by
96	96	the full faith and credit of, this state or the United States or
97	97	their respective agencies and instrumentalities, including
98	98	obligations that are fully guaranteed or insured by the Federal
99	99	Deposit Insurance Corporation or by the explicit full faith and
100	100	credit of the United States;
101	101	(5) obligations of states, agencies, counties,
102	102	cities, and other political subdivisions of any state rated as to
103	103	investment quality by a nationally recognized investment rating
104	104	firm not less than A or its equivalent; and
105	105	(6) bonds issued, assumed, or guaranteed by the State
106	106	of Israel.
107	107	SECTION 5. Section 2256.010, Government Code, is amended by
108	108	adding Subsection (c) to read as follows:
109	109	(c) In addition to the authority to invest funds in
110	110	certificates of deposit under Subsections (a) and (b), an
111	111	investment in certificates of deposit is an authorized investment
112	112	under this subchapter if made in accordance with the following
113	113	conditions:
114	114	(1) the funds are invested by an investing entity
115	115	through a broker that is selected from a list adopted by the
116	116	investing entity as required by Section 2256.025;
117	117	(2) the broker selected by the investing entity under
118	118	Subdivision (1) arranges for the deposit of the funds in
119	119	certificates of deposit in one or more federally insured depository
120	120	institutions, wherever located, for the account of the investing
121	121	entity; and
122	122	(3) the full amount of the principal and accrued
123	123	interest of each of the certificates of deposit is insured by the
124	124	United States or an instrumentality of the United States.
125	125	SECTION 6. Section 2256.016, Government Code, is amended by
126	126	amending Subsections (a), (c), and (f) and adding Subsections (i),
127	127	(j), and (k) to read as follows:
128	128	(a) An entity may invest its funds and funds under its
129	129	control through an eligible investment pool if the governing body
130	130	of the entity by rule, order, ordinance, or resolution, as
131	131	appropriate, authorizes investment in the particular pool. An
132	132	investment pool shall invest the funds it receives from entities in
133	133	authorized investments permitted by this subchapter. An investment
134	134	pool may invest its funds in money market mutual funds to the extent
135	135	permitted by and consistent with this subchapter and the investment
136	136	policies and objectives adopted by the investment pool.
137	137	(c) To maintain eligibility to receive funds from and invest
138	138	funds on behalf of an entity under this chapter, an investment pool
139	139	must furnish to the investment officer or other authorized
140	140	representative of the entity:
141	141	(1) investment transaction confirmations; and
142	142	(2) a monthly report that contains, at a minimum, the
143	143	following information:
144	144	(A) the types and percentage breakdown of
145	145	securities in which the pool is invested;
146	146	(B) the current average dollar-weighted
147	147	maturity, based on the stated maturity date, of the pool;
148	148	(C) the current percentage of the pool's
149	149	portfolio in investments that have stated maturities of more than
150	150	one year;
151	151	(D) the book value versus the market value of the
152	152	pool's portfolio, using amortized cost valuation;
153	153	(E) the size of the pool;
154	154	(F) the number of participants in the pool;
155	155	(G) the custodian bank that is safekeeping the
156	156	assets of the pool;
157	157	(H) a listing of daily transaction activity of
158	158	the entity participating in the pool;
159	159	(I) the yield and expense ratio of the pool,
160	160	including a statement regarding how yield is calculated;
161	161	(J) the portfolio managers of the pool; and
162	162	(K) any changes or addenda to the offering
163	163	circular.
164	164	(f) To be eligible to receive funds from and invest funds on
165	165	behalf of an entity under this chapter, a public funds investment
166	166	pool created to function as a money market mutual fund must mark its
167	167	portfolio to market daily, and, to the extent reasonably possible,
168	168	stabilize at a $1 net asset value. If the ratio of the market value
169	169	of the portfolio divided by the book value of the portfolio is less
170	170	than 0.995 or greater than 1.005, portfolio holdings shall be sold
171	171	as necessary to maintain the ratio between 0.995 and 1.005. In
172	172	addition to the requirements of its investment policy and any other
173	173	forms of reporting, a public funds investment pool created to
174	174	function as a money market mutual fund shall report yield to its
175	175	investors in accordance with 17 C.F.R. Section 230.482(e),
176	176	promulgated by the federal Securities and Exchange Commission.
177	177	(i) If the investment pool operates an Internet website, the
178	178	information in a disclosure instrument or report described in
179	179	Subsections (b), (c)(2), and (f) must be posted on the website.
180	180	(j) To maintain eligibility to receive funds from and invest
181	181	funds on behalf of an entity under this chapter, an investment pool
182	182	must make available to the entity an annual audited financial
183	183	statement of the investment pool in which the entity has funds
184	184	invested.
185	185	(k) If an investment pool offers fee breakpoints based on
186	186	fund balances invested, the investment pool in advertising
187	187	investment rates must include either all levels of return based on
188	188	the breakpoints provided or state the lowest possible level of
189	189	return based on the smallest level of funds invested.
190	190	SECTION 7. Section 2256.019, Government Code, is amended to
191	191	read as follows:
192	192	Sec. 2256.019. RATING OF CERTAIN INVESTMENT POOLS. A
193	193	public funds investment pool must be continuously rated no lower
194	194	than AAA or AAA-m or at an equivalent rating by at least one
195	195	nationally recognized rating service [or no lower than investment
196	196	grade by at least one nationally recognized rating service with a
197	197	weighted average maturity no greater than 90 days].
198	198	SECTION 8. Subchapter A, Chapter 2256, Government Code, is
199	199	amended by adding Section 2256.0202 to read as follows:
200	200	Sec. 2256.0202. AUTHORIZED INVESTMENTS; FUNDS FROM
201	201	MANAGEMENT AND DEVELOPMENT OF MINERAL RIGHTS. (a) In addition to
202	202	other investments authorized by this subchapter, a local government
203	203	may invest funds received by the local government from leases and
204	204	contracts executed for the management and development of lands that
205	205	are owned by the local government and leased for oil, gas, and other
206	206	mineral development in any investment authorized under powers
207	207	granted under Subtitle B, Title 9, Property Code (Texas Trust
208	208	Code).
209	209	(b) Funds invested by a local government in accordance with
210	210	Subsection (a) shall be segregated and accounted for separately
211	211	from other funds of the local government.
212	212	SECTION 9. Section 2256.023(b), Government Code, is amended
213	213	to read as follows:
214	214	(b) The report must:
215	215	(1) describe in detail the investment position of the
216	216	entity on the date of the report;
217	217	(2) be prepared jointly by all investment officers of
218	218	the entity;
219	219	(3) be signed by each investment officer of the
220	220	entity;
221	221	(4) contain a summary statement[, prepared in
222	222	compliance with generally accepted accounting principles,] of each
223	223	pooled fund group that states the:
224	224	(A) beginning market value for the reporting
225	225	period;
226	226	(B) [additions and changes to the market value
227	227	during the period;
228	228	[(C)] ending market value for the period; and
229	229	(C) [(D)] fully accrued interest for the
230	230	reporting period;
231	231	(5) state the book value and market value of each
232	232	separately invested asset at the [beginning and] end of the
233	233	reporting period by the type of asset and fund type invested;
234	234	(6) state the maturity date of each separately
235	235	invested asset that has a maturity date;
236	236	(7) state the account or fund or pooled group fund in
237	237	the state agency or local government for which each individual
238	238	investment was acquired; and
239	239	(8) state the compliance of the investment portfolio
240	240	of the state agency or local government as it relates to:
241	241	(A) the investment strategy expressed in the
242	242	agency's or local government's investment policy; and
243	243	(B) relevant provisions of this chapter.
244	244	SECTION 10. This Act takes effect immediately if it
245	245	receives a vote of two-thirds of all the members elected to each
246	246	house, as provided by Section 39, Article III, Texas Constitution.
247	247	If this Act does not receive the vote necessary for immediate
248	248	effect, this Act takes effect September 1, 2009.