By: Capriglione H.B. No. 4209
A BILL TO BE ENTITLED
AN ACT
relating to the investment of public funds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (a) of Section 2256.010, Government
Code, is amended by deleting "and" at the end of clause (5),
changing the period at the end of clause (6) to "; and", and adding a
new clause (7), to read as follows:
"(7) interest-bearing banking deposits that are
guaranteed or insured by the Federal Deposit Insurance Corporation
or its successor or the National Credit Union Share Insurance Fund
or its successor."
SECTION 2. Section 2256.010, Government Code, is amended by
adding a new subsection (c), to read as follows:
"(c) In addition to the authority to invest funds in
certificates of deposit under Subsections (a) and (b), an
investment in certificates of deposit made in accordance with
Section 2256.020(2) is an authorized investment under this
section."
SECTION 3. Subsection (a), Clause (4), Section 2256.014,
Government Code, is amended to read as follows:
(3) complies with Rule 2a-7, promulgated by the United
States Securities and Exchange Commission has a dollar weighted
average stated maturity of 90 days or fewer; and
(4) includes in its investment objectives the
maintenance of stable net asset value of $1 for each shares
determined in accordance with Rule 2a-7, promulgated by the United
States Securities and Exchange Commission.
SECTION 4. Subsection (c), Clause (2), Section 2256.015,
Government Code, is amended to read as follows:
"(2) the entity must receive bids from at least two
[three]separate providers with no material financial interest in
the bonds from which proceeds were received;".
SECTION 5. Section 2256.011, Government Code, is amended by
adding a new subsection (e), to read as follows:
"(e) The repurchase agreement may provide that the
investing entity may agree to waive sovereign immunity from suit or
liability for the purpose of adjudicating a claim to enforce the
repurchase agreement or for damages for breach of the repurchase
agreement."
SECTION 6. Section 2256.015, Government Code, is amended by
adding a new subsection (d), to read as follows:
"(d) The guaranteed investment contract may provide that
the investing entity may agree to waive sovereign immunity from
suit or liability for the purpose of adjudicating a claim to enforce
the guaranteed investment contract or for damages for breach of the
guaranteed investment contract."
SECTION 7. Subsection (b), Section 2256.016, Government
Code, is amended to renumber current subsections (6) through (12)
as subsections (7) through (13), and to add a new clause (6), to
read as follows:
"(6) its policy as to holding deposits in cash;"
SECTION 8. Subsections(f)and (h), Section 2256.016,
Government Code, are amended to read as follows:
"(f) To be eligible to receive funds from and invest funds
on behalf of an entity under this chapter, a public funds investment
pool created to function as a money market mutual fund must mark its
portfolio to market daily, and, to the extent reasonably possible,
stabilize at a $1 net asset value. If the ratio of the market value
of the portfolio divided by the book value of the portfolio is less
than 0.995 or greater than 1.005, the governing body of the public
funds investment pool shall take such action as it may determine is
necessary to eliminate or reduce to the extent reasonably
practicable any dilution or unfair results to existing
participants, including the sale of portfolio holdings [shall be
sold as necessary] to attempt to maintain the ratio between 0.995
and 1.005."
"(h) To maintain eligibility to receive funds from and
invest funds on behalf of an entity under this chapter, an
investment pool must be continuously rated no lower than the
highest liquidity rating given to United States Treasury
obligations [AAA or AAA m or at an equivalent rating] by at least
one nationally recognized rating service."
SECTION 9. Section 2256.019, Government Code, is amended to
read as follows:
"A public funds investment pool must be continuously rated no
lower than the highest liquidity rating given to United States
Treasury obligations [AAA or AAA m or at an equivalent rating] by at
least one nationally recognized rating service."
SECTION 10. Chapter 2256, Government Code, is amended by
adding a new section 2256.02015, to read as follows:
"Sec. 2256.02015. Authorized Investments: Eligible
Entities.
(a) An eligible entity may enter into hedging contracts, and
related security and insurance agreements, to protect against
economic loss related to price fluctuations of commodities used in
the general operations of the eligible entity or used in connection
with the acquisition or construction of capital projects by the
eligible entity. A hedging transaction must comply with the
regulations of the Commodity Futures Trading Commission and the
Securities and Exchange Commission. If there is a conflict between
the municipal charter of the eligible entity and this chapter, this
chapter prevails.
(b) A payment by an eligible entity under a hedging contract
may be considered: (i) an operation and maintenance expense of the
eligible entity; (ii) an acquisition expense of the eligible
entity; or (iii) a construction expense of the eligible entity. The
eligible entity may credit any amount it receives under the
contract or agreement against expenses associated with commodity
purchases.
(c) The governing body of the eligible entity may set policy
regarding hedging transactions.
(d) As used in this section:
(1) "Eligible entity" means those state agencies and
political subdivisions described in Section 1371.001(4),
Government Code; and
(2) "Hedging" means entering into an offsetting
position in a related security or using a financial agreement as a
protection against loss due to price fluctuation."
SECTION 11. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2015.