Texas Senate Bill SB1216

Texas 2017 - 85th Regular

Caption

Relating to the Teacher Retirement System of Texas.

Impact

The bill impacts Texas state laws by providing the TRS board with greater latitude in managing retirement system assets while also safeguarding significant investments through the required board approval for hefty alternative investments. This dual focus on flexibility and accountability is designed to enhance the performance of these assets while ensuring oversight and adherence to fiscal responsibilities. Should the bill pass, it will result in an immediate update to the management policy of the TRS, instituting a structure that mandates board involvement in large-scale investment decisions.

Summary

SB1216 aims to amend provisions related to the Teacher Retirement System (TRS) of Texas, particularly regarding the management of retirement system assets. The bill introduces the definition of 'alternative investments' and seeks to establish clearer guidelines for the investment authority of the TRS. It allows the board of trustees to delegate investment authority to private professional investment managers and sets limits on investments in alternative assets surpassing $100 million without board approval. This centralizes decision-making authority while introducing new standards for investment management practices.

Contention

Notable points of contention surrounding SB1216 may arise from concerns about the potential risks associated with alternative investments, such as private equity and hedge funds, which can be inherently more volatile than traditional assets like stocks and bonds. Critics of the bill may argue that it could expose the pension fund to higher risks without adequate controls. However, proponents believe that a diversified investment strategy will ultimately benefit the retirement system by potentially increasing the overall returns on pension funds, thus providing better financial security for participants in the system.