86R11080 MEW-D
By: Middleton H.B. No. 3125
A BILL TO BE ENTITLED
AN ACT
relating to the investment authority of an independent school
district.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2256.0204, Government Code, is amended
by amending Subsections (c), (d), (e), and (g) and adding
Subsection (c-1) to read as follows:
(c) In addition to authorized investments permitted by this
subchapter, an independent school district subject to this section
may purchase, sell, and invest its funds and funds under its control
in:
(1) corporate bonds that, at the time of purchase, are
rated by a nationally recognized investment rating firm "AA-" or
the equivalent and have a stated final maturity that is not later
than the third anniversary of the date the corporate bonds were
purchased; and
(2) any other kind of investment that a prudent
investor, exercising reasonable care, skill, and caution, would
acquire or retain in light of the purposes, terms, distribution
requirements, and other circumstances of the district's funds or
funds under its control then prevailing, taking into consideration
the investment of all of the district's funds and funds under its
control rather than a single investment.
(c-1) To the extent the investment standard of care provided
by Subsection (c)(2) conflicts with the standard of care provided
by Section 2256.006, the standard of care provided by Subsection
(c)(2) applies with regard to investments authorized by that
subdivision.
(d) An independent school district subject to this section
is not authorized by this section to:
(1) invest in the aggregate more than 15 percent of its
monthly average fund balance, excluding bond proceeds, reserves,
and other funds held for the payment of debt service, in corporate
bonds or other kinds of investments authorized by Subsection
(c)(2); or
(2) invest more than 25 percent of the funds invested
in corporate bonds in any one domestic business entity, including
subsidiaries and affiliates of the entity.
(e) An independent school district subject to this section
may purchase, sell, and invest its funds and funds under its control
in corporate bonds or other kinds of investments authorized by
Subsection (c)(2) if the governing body of the district:
(1) amends its investment policy to authorize
corporate bonds or other kinds of investments authorized by
Subsection (c)(2) as an eligible investment;
(2) adopts procedures to provide for:
(A) monitoring rating changes in corporate bonds
acquired with public funds; and
(B) liquidating the investment in corporate
bonds or other kinds of investments authorized by Subsection
(c)(2); and
(3) identifies the funds eligible to be invested in
corporate bonds or other kinds of investments authorized by
Subsection (c)(2).
(g) Corporate bonds or other kinds of investments
authorized by Subsection (c)(2) are not an eligible investment for
a public funds investment pool.
SECTION 2. 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, 2019.