Texas 2019 - 86th Regular

Texas House Bill HB2706 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 2706
	1	+	By: Capriglione, Lambert H.B. No. 2706
	2	+	(Senate Sponsor - Nelson)
	3	+	(In the Senate - Received from the House April 26, 2019;
	4	+	April 29, 2019, read first time and referred to Committee on State
	5	+	Affairs; May 15, 2019, reported adversely, with favorable
	6	+	Committee Substitute by the following vote: Yeas 9, Nays 0;
	7	+	May 15, 2019, sent to printer.)
	8	+	Click here to see the committee vote
	9	+	COMMITTEE SUBSTITUTE FOR H.B. No. 2706 By: Zaffirini
2	10
3	11
	12	+	A BILL TO BE ENTITLED
4	13		AN ACT
5	14		relating to authorized investments for governmental entities and a
6	15		study of the investment and management of funds by public schools.
7	16		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	17		SECTION 1. Sections 2256.011(a) and (b), Government Code,
9	18		are amended to read as follows:
10	19		(a) A fully collateralized repurchase agreement is an
11	20		authorized investment under this subchapter if the repurchase
12	21		agreement:
13	22		(1) has a defined termination date;
14	23		(2) is secured by a combination of cash and
15	24		obligations described by Section 2256.009(a)(1) or 2256.013 or, if
16	25		applicable, Section 2256.0204; [and]
17	26		(3) requires the securities being purchased by the
18	27		entity or cash held by the entity to be pledged to the entity, held
19	28		in the entity's name, and deposited at the time the investment is
20	29		made with the entity or with a third party selected and approved by
21	30		the entity; and
22	31		(4) is placed through a primary government securities
23	32		dealer, as defined by the Federal Reserve, or a financial
24	33		institution doing business in this state.
25	34		(b) In this section, "repurchase agreement" means a
26	35		simultaneous agreement to buy, hold for a specified time, and sell
27	36		back at a future date obligations described by Section
28	37		2256.009(a)(1) or 2256.013 or, if applicable, Section 2256.0204, at
29	38		a market value at the time the funds are disbursed of not less than
30	39		the principal amount of the funds disbursed. The term includes a
31	40		direct security repurchase agreement and a reverse security
32	41		repurchase agreement.
33	42		SECTION 2. Section 2256.013, Government Code, is amended to
34	43		read as follows:
35	44		Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER.
36	45		Commercial paper is an authorized investment under this subchapter
37	46		if the commercial paper:
38	47		(1) has a stated maturity of 365 [270] days or fewer
39	48		from the date of its issuance; and
40	49		(2) is rated not less than A-1 or P-1 or an equivalent
41	50		rating by at least:
42	51		(A) two nationally recognized credit rating
43	52		agencies; or
44	53		(B) one nationally recognized credit rating
45	54		agency and is fully secured by an irrevocable letter of credit
46	55		issued by a bank organized and existing under the laws of the United
47	56		States or any state.
48	57		SECTION 3. Sections 2256.016(e) and (f), Government Code,
49	58		are amended to read as follows:
50	59		(e) In this section, for purposes of an investment pool for
51	60		which a $1.00 net asset value is maintained, "yield" shall be
52	61		calculated in accordance with regulations governing the
53	62		registration of open-end management investment companies under the
54	63		Investment Company Act of 1940, as promulgated from time to time by
55	64		the federal Securities and Exchange Commission.
56	65		(f) To be eligible to receive funds from and invest funds on
57	66		behalf of an entity under this chapter:
58	67		(1) [,] a public funds investment pool that uses
59	68		amortized cost or fair value accounting must mark its portfolio to
60	69		market daily; [,] and
61	70		(2) if the investment pool uses amortized cost:
62	71		(A) the investment pool must, to the extent
63	72		reasonably possible, stabilize at a $1.00 net asset value, when
64	73		rounded and expressed to two decimal places;
65	74		(B) the governing body of the investment pool
66	75		must, if [. If] the ratio of the market value of the portfolio
67	76		divided by the book value of the portfolio is less than 0.995 or
68	77		greater than 1.005, [the governing body of the public funds
69	78		investment pool shall] take action as the body determines necessary
70	79		to eliminate or reduce to the extent reasonably practicable any
71	80		dilution or unfair result to existing participants, including a
72	81		sale of portfolio holdings to attempt to maintain the ratio between
73	82		0.995 and 1.005; and
74	83		(C) the investment pool must, in [. In] addition
75	84		to the requirements of its investment policy and any other forms of
76	85		reporting, [a public funds investment pool that uses amortized cost
77	86		shall] report yield to its investors in accordance with regulations
78	87		of the federal Securities and Exchange Commission applicable to
79	88		reporting by money market funds.
80	89		SECTION 4. Subchapter A, Chapter 2256, Government Code, is
81	90		amended by adding Section 2256.0208 to read as follows:
82	91		Sec. 2256.0208. LOCAL GOVERNMENT INVESTMENT OF BOND
83	92		PROCEEDS AND PLEDGED REVENUE. (a) In this section, "pledged
84	93		revenue" means money pledged to the payment of or as security for:
85	94		(1) bonds or other indebtedness issued by a local
86	95		government;
87	96		(2) obligations under a lease, installment sale, or
88	97		other agreement of a local government; or
89	98		(3) certificates of participation in a debt or
90	99		obligation described by Subdivision (1) or (2).
91	100		(b) The investment officer of a local government may invest
92	101		bond proceeds or pledged revenue only to the extent permitted by
93	102		this chapter, in accordance with:
94	103		(1) statutory provisions governing the debt issuance
95	104		or the agreement, as applicable; and
96	105		(2) the local government's investment policy regarding
97	106		the debt issuance or the agreement, as applicable.
98	107		SECTION 5. Section 2256.0204(g), Government Code, is
99	108		repealed.
100	109		SECTION 6. (a) The Texas Education Agency shall conduct a
101	110		study regarding the investment and management of funds by school
102	111		districts and open-enrollment charter schools. On request of the
103	112		agency, a district or school or the entity that invests or manages
104	113		funds for the district or school, as appropriate, shall provide the
105	114		agency information regarding:
106	115		(1) the district's or school's investments, including
107	116		asset allocations, fees, and risks; and
108	117		(2) the district's or school's cash flow, fund
109	118		balances, and other revenue sources.
110	119		(b) Not later than June 1, 2020, the Texas Education Agency
111	120		shall deliver a report to the governor, the lieutenant governor,
112	121		the speaker of the house of representatives, and each standing
113	122		committee of the legislature having primary jurisdiction over
114	123		primary and secondary education that includes:
115	124		(1) the findings of the study; and
116	125		(2) any recommendations for legislative action based
117	126		on the findings of the study.
118	127		(c) This section expires September 1, 2021.
119	128		SECTION 7. This Act takes effect September 1, 2019.
120		-	______________________________ ______________________________
121		-	President of the Senate Speaker of the House
122		-	I certify that H.B. No. 2706 was passed by the House on April
123		-	25, 2019, by the following vote: Yeas 132, Nays 4, 1 present, not
124		-	voting; and that the House concurred in Senate amendments to H.B.
125		-	No. 2706 on May 23, 2019, by the following vote: Yeas 142, Nays 2,
126		-	2 present, not voting.
127		-	______________________________
128		-	Chief Clerk of the House
129		-	I certify that H.B. No. 2706 was passed by the Senate, with
130		-	amendments, on May 21, 2019, by the following vote: Yeas 31, Nays
131		-	0.
132		-	______________________________
133		-	Secretary of the Senate
134		-	APPROVED: __________________
135		-	Date
136		-	__________________
137		-	Governor
	129	+	* * * * *