85R12263 JSA-D
By: Alvarado H.J.R. No. 110
A JOINT RESOLUTION
proposing a constitutional amendment to establish permanent funds
for the support of state institutions and agencies of higher
education that do not participate in funding from the permanent
university fund.
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Article VII, Texas Constitution, is amended by
adding Sections 21 and 22 to read as follows:
Sec. 21. (a) The permanent university fund II is
established as a trust fund outside the state treasury to provide
for the maintenance and support of the University of Houston System
and the Texas Tech University System and the institutions of higher
education within those systems.
(b) The permanent university fund II is managed by the
boards of regents of the University of Houston System and the Texas
Tech University System acting jointly. The boards of regents by
agreement may designate a public or private entity to manage the
fund, including a nonprofit corporation created by the boards to
manage the fund on their behalf. If the boards of regents have not
designated an entity to manage the fund, the comptroller of public
accounts shall manage the fund at the direction of the boards of
regents.
(c) The permanent university fund II consists of:
(1) money transferred to the fund from the permanent
university fund under Subsection (d) of this section;
(2) any other money or asset transferred or deposited
to the credit of the fund by the legislature or under this
constitution; and
(3) any increase in the value of or income from the
assets of the fund.
(d) At the end of each state fiscal biennium beginning with
the biennium ending August 31, 2019, the comptroller shall
determine the total value of the permanent university fund as of
that date plus the total amount of distributions made from the fund
in that biennium. If the total amount determined by the comptroller
for a state fiscal biennium exceeds the total value of the permanent
university fund as of August 31, 2017, plus the total amount of
distributions made from the permanent university fund in the state
fiscal biennium ending August 31, 2017, the comptroller shall
promptly transfer from the permanent university fund to the
permanent university fund II an amount equal to 99 percent of the
excess amount.
(e) Unless otherwise provided by this section, the
provisions of this constitution governing the investment of the
permanent university fund apply to the investment of the permanent
university fund II.
(f) The available university fund II consists of the
distributions made to it from the total return on all investment
assets of the permanent university fund II. The amount of any
distributions to the available university fund II shall be
determined jointly by the boards of regents of the University of
Houston System and the Texas Tech University System in a manner
intended to provide the available university fund II with a stable
and predictable stream of annual distributions and to maintain over
time the purchasing power of permanent university fund II
investments and annual distributions to the available university
fund II, taking into account any transfers from the permanent
university fund II to the permanent university fund III required by
Section 22 of this article. The amount distributed to the available
university fund II in a state fiscal year must be not less than the
amount needed to pay the principal and interest due and owing in
that fiscal year on bonds and notes issued under this section. If
the purchasing power of permanent university fund II investments
for any rolling 10-year period is not preserved, the boards of
regents may not increase annual distributions to the available
university fund II until the purchasing power of the permanent
university fund II investments is restored, except as necessary to
pay the principal and interest due and owing on bonds and notes
issued under this section. An annual distribution made to the
available university fund II during any state fiscal year may not
exceed an amount equal to seven percent of the average net fair
market value of permanent university fund II investment assets as
determined by the boards of regents, except as necessary to pay any
principal and interest due and owing on bonds and notes issued under
this section. The expenses of managing permanent university fund
II land and investments shall be paid by the permanent university
fund II.
(g) The boards of regents of the University of Houston
System and the Texas Tech University System may not make any
distributions to the available university fund II until a state
fiscal biennium that begins after the first state fiscal biennium
in which the total value of the permanent university fund II, as
determined by the comptroller, equals or exceeds the total value of
the permanent university fund as of August 31, 2017, plus the total
amount of distributions made from the permanent university fund in
the state fiscal biennium ending August 31, 2017. As soon as
practicable after the comptroller makes that determination, the
comptroller shall make an equitable distribution of the land in the
permanent university fund between the permanent university fund and
the permanent university fund II so that the value of the land and
related mineral interests in each fund are substantially equal, and
shall transfer funds from the permanent university fund II to the
permanent university fund equal to the value of the land and related
mineral interests transferred to the permanent university fund II
under this subsection.
(h) The Board of Regents of the University of Houston System
may issue bonds and notes not to exceed a total amount of 15 percent
of the cost value of the investments and other assets of the
permanent university fund II (exclusive of real estate) at the time
of the issuance of the bonds and notes, and may pledge all or any
part of its interest in the available university fund II to secure
the payment of the principal and interest of those bonds and notes,
for the purpose of acquiring land either with or without permanent
improvements, constructing and equipping buildings or other
permanent improvements, major repair and rehabilitation of
buildings and other permanent improvements, acquiring capital
equipment and library books and library materials, and refunding
bonds or notes issued under this section or other law for the
University of Houston System administration and any component
institution of higher education of the system.
(i) The Board of Regents of the Texas Tech University System
may issue bonds and notes not to exceed a total amount of 15 percent
of the cost value of the investments and other assets of the
permanent university fund II (exclusive of real estate) at the time
of the issuance of the bonds and notes, and may pledge all or any
part of its interest in the available university fund II to secure
the payment of the principal and interest of those bonds and notes,
for the purpose of acquiring land either with or without permanent
improvements, constructing and equipping buildings or other
permanent improvements, major repair and rehabilitation of
buildings and other permanent improvements, acquiring capital
equipment and library books and library materials, and refunding
bonds or notes issued under this section or other law for the Texas
Tech University System administration and any component
institution of higher education of the system.
(j) An institution of higher education that receives
funding under Section 17 of this article in a state fiscal year may
not participate in the funding provided by this section in that
year.
(k) The proceeds of the bonds or notes issued under this
section may not be used for the purpose of constructing, equipping,
repairing, or rehabilitating buildings or other permanent
improvements that are to be used for student housing,
intercollegiate athletics, or auxiliary enterprises.
(l) The bonds and notes issued under this section shall be
payable solely out of the available university fund II, mature
serially or otherwise in not more than 30 years from their
respective dates, and, except for refunding bonds, be sold only
through competitive bidding. All of these bonds and notes are
subject to approval by the attorney general and when so approved are
incontestable. The permanent university fund II may be invested in
these bonds and notes.
(m) To assure efficient use of construction funds and the
orderly development of physical plants to accommodate the state's
real need, the legislature may provide for the approval or
disapproval of all new construction projects at the institutions
entitled to participate in the funding provided by this section
except the University of Houston and Texas Tech University.
(n) The state systems and institutions of higher education
that receive funds under this section in a state fiscal year may not
receive any funds from the general revenue of the state in that
fiscal year for acquiring land with or without permanent
improvements, for constructing or equipping buildings or other
permanent improvements, or for major repair and rehabilitation of
buildings or other permanent improvements except that:
(1) in the case of fire or natural disaster the
legislature may appropriate from the general revenue an amount
sufficient to replace the uninsured loss of any building or other
permanent improvement; and
(2) the legislature, by two-thirds vote of each house,
may, in cases of demonstrated need, which need must be clearly
expressed in the body of the act, appropriate general revenue funds
for acquiring land with or without permanent improvements, for
constructing or equipping buildings or other permanent
improvements, or for major repair and rehabilitation of buildings
or other permanent improvements.
(o) This section is self-enacting and the comptroller shall
do all things necessary to effectuate this section. This section
does not impair any obligation created by the issuance of bonds or
notes in accordance with prior law, and all outstanding bonds and
notes shall be paid in full, both principal and interest, in
accordance with their terms, and nothing in this section shall
affect the pledges made in connection with such bonds or notes
previously issued. If the provisions of this section conflict with
any other provision of this constitution, then the provisions of
this section shall prevail, notwithstanding any such conflicting
provisions.
Sec. 22. (a) The comptroller of public accounts shall
establish the permanent university fund III as a trust fund outside
the state treasury. The legislature shall use the fund to provide a
permanent source of funding for the maintenance and support of
state institutions of higher education that do not benefit from the
funding provided by the permanent university fund or the permanent
university fund II.
(b) Subject to Subsection (c), beginning with the next state
fiscal biennium after the comptroller determines that, as of the
end of a state fiscal biennium, the total value of the permanent
university fund II equals or exceeds the total value of the
permanent university fund as of August 31, 2017, plus the total
amount of distributions made from the permanent university fund in
the state fiscal biennium ending August 31, 2017:
(1) the transfers from the permanent university fund
to the permanent university fund II under Section 21(d) of this
article shall cease, and the amount, if any, that would otherwise be
transferred from the permanent university fund in each subsequent
state fiscal biennium under Section 21(d) shall be transferred to
the permanent university fund III; and
(2) an amount equal to 99 percent of the amount by
which the total value of the permanent university fund II at the end
of a subsequent state fiscal biennium plus the total amount of
distributions made from the permanent university fund II in that
biennium exceeds the total value of the permanent university fund
as of August 31, 2017, plus the total amount of distributions made
from the permanent university fund in the state fiscal biennium
ending August 31, 2017, if any, shall be transferred from the
permanent university fund II to the permanent university fund III.
(c) If at the end of a state fiscal biennium the total value
of the permanent university fund III plus the amount of all
distributions made from the fund in that biennium is equal to or
exceeds the total value of the permanent university fund as of
August 31, 2017, plus the total amount of distributions made from
the permanent university fund in the state fiscal biennium ending
August 31, 2017, then in each subsequent state fiscal biennium the
transfers from the permanent university fund and the permanent
university fund II under Subsection (a) of this section shall
cease.
SECTION 2. Section 18(e), Article VII, Texas Constitution,
is amended to read as follows:
(e) The available university fund consists of the
distributions made to it from the total return on all investment
assets of the permanent university fund, including the net income
attributable to the surface of permanent university fund land. The
amount of any distributions to the available university fund shall
be determined by the board of regents of The University of Texas
System in a manner intended to provide the available university
fund with a stable and predictable stream of annual distributions
and to maintain over time the purchasing power of permanent
university fund investments and annual distributions to the
available university fund, taking into account any transfers from
the permanent university fund to the permanent university fund II
or permanent university fund III required by Section 21 or 22 of
this article. The amount distributed to the available university
fund in a fiscal year must be not less than the amount needed to pay
the principal and interest due and owing in that fiscal year on
bonds and notes issued under this section. If the purchasing power
of permanent university fund investments for any rolling 10-year
period is not preserved, the board may not increase annual
distributions to the available university fund until the purchasing
power of the permanent university fund investments is restored,
except as necessary to pay the principal and interest due and owing
on bonds and notes issued under this section. An annual
distribution made by the board to the available university fund
during any fiscal year may not exceed an amount equal to seven
percent of the average net fair market value of permanent
university fund investment assets as determined by the board,
except as necessary to pay any principal and interest due and owing
on bonds issued under this section. The expenses of managing
permanent university fund land and investments shall be paid by the
permanent university fund.
SECTION 3. This proposed constitutional amendment shall be
submitted to the voters at an election to be held November 7, 2017.
The ballot shall be printed to permit voting for or against the
proposition: "The constitutional amendment to establish permanent
funds for the support of state institutions and agencies of higher
education that do not participate in funding from the permanent
university fund."