85R5318 LED-D
By: Huffman S.B. No. 509
A BILL TO BE ENTITLED
AN ACT
relating to the evaluation of investment practices and performance
of certain public retirement systems.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 802.002(a), Government Code, is amended
to read as follows:
(a) Except as provided by Subsection (b), the Employees
Retirement System of Texas, the Teacher Retirement System of Texas,
the Texas County and District Retirement System, the Texas
Municipal Retirement System, and the Judicial Retirement System of
Texas Plan Two are exempt from Sections 802.101(a), 802.101(b),
802.101(d), 802.102, 802.103(a), 802.103(b), 802.109, 802.2015,
802.2016, 802.202, 802.203, 802.204, 802.205, 802.206, and
802.207. The Judicial Retirement System of Texas Plan One is exempt
from all of Subchapters B and C except Sections 802.104 and 802.105.
The optional retirement program governed by Chapter 830 is exempt
from all of Subchapters B and C except Section 802.106.
SECTION 2. Subchapter B, Chapter 802, Government Code, is
amended by adding Section 802.109 to read as follows:
Sec. 802.109. INVESTMENT PRACTICES AND PERFORMANCE
REPORTS. (a) A public retirement system shall select an
independent firm with substantial experience in evaluating
institutional investment practices and performance to evaluate the
retirement system's investment practices and performance. Each
evaluation must include:
(1) a detailed summary of the retirement system's
investment asset allocations;
(2) any investment policy or strategic investment plan
adopted by the retirement system in order to evaluate the
retirement system's portfolio risk, cash flow, and liquidity;
(3) the names of investment managers appointed by the
retirement system's governing body; and
(4) a description of the retirement system's asset
retention process.
(b) The governing body of a public retirement system shall
determine specific areas to be evaluated under Subsection (a), but
the first evaluation must be a comprehensive analysis of the
retirement system's investment program.
(c) A public retirement system shall conduct the evaluation
required by Subsection (a):
(1) biennially, if the retirement system has total
assets the book value of which, as of the last day of the last fiscal
year considered in an evaluation under this section, was at least
$100 million; or
(2) once every five years, if the retirement system
has total assets the book value of which, as of the last day of the
last fiscal year considered in an evaluation under this section,
was less than $100 million.
(d) A report of an evaluation under this section must be
filed with the governing body of the public retirement system not
later than December 1 of each year in which the system is evaluated
under Subsection (c).
(e) A public retirement system shall pay the costs of each
evaluation of the system under this section.
(f) Not later than the 45th day after the first day of a
public retirement system's fiscal year, the governing body of the
system shall submit to the board an annual investment performance
report. The report must include:
(1) a listing of all commissions and fees paid by the
retirement system during the system's previous fiscal year for the
sale, purchase, or management of system assets; and
(2) a copy of the retirement system's most recent
evaluation under Subsection (a).
(g) Not later than February 1 of each year, the board shall
submit a comprehensive investment performance report to the
governor, the lieutenant governor, the speaker of the house of
representatives, and the legislative committees having principal
jurisdiction over legislation governing public retirement systems.
The report must compile the information received under this section
by the board during the preceding calendar year.
SECTION 3. Notwithstanding Section 802.109(c), Government
Code, as added by this Act, a report of the first evaluation of a
public retirement system, as required by Section 802.109,
Government Code, as added by this Act, must be filed with the
governing body of the system not later than December 1, 2018.
SECTION 4. This Act takes effect September 1, 2017.