Texas 2019 - 86th Regular

Texas Senate Bill SB322 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 322
	1	+	86R31933 LED-D
	2	+	By: Huffman, et al. S.B. No. 322
	3	+	(Murphy)
	4	+	Substitute the following for S.B. No. 322: No.
2	5
3	6
	7	+	A BILL TO BE ENTITLED
4	8		AN ACT
5	9		relating to the evaluation and reporting of investment practices
6	10		and performance of certain public retirement systems.
7	11		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	12		SECTION 1. Section 801.209(a), Government Code, is amended
9	13		to read as follows:
10	14		(a) For each public retirement system, the board shall post
11	15		on the board's Internet website, or on a publicly available website
12	16		that is linked to the board's website, the most recent data from
13	17		reports received under Sections 802.101, 802.103, 802.104,
14	18		802.105, 802.108, 802.109, 802.2015, and 802.2016.
15	19		SECTION 2. Section 802.103, Government Code, is amended by
16	20		amending Subsection (a) and adding Subsection (e) to read as
17	21		follows:
18	22		(a) The [Except as provided by Subsection (c), the]
19	23		governing body of a public retirement system shall publish an
20	24		annual financial report showing the financial condition of the
21	25		system as of the last day of the fiscal year covered in the report.
22	26		The report must include:
23	27		(1) the financial statements and schedules examined in
24	28		the most recent audit performed as required by Section 802.102;
25	29		(2) [and must include] a statement of opinion by the
26	30		certified public accountant as to whether or not the financial
27	31		statements and schedules are presented fairly and in accordance
28	32		with generally accepted accounting principles;
29	33		(3) a listing, by asset class, of all direct and
30	34		indirect commissions and fees paid by the retirement system during
31	35		the system's previous fiscal year for the sale, purchase, or
32	36		management of system assets; and
33	37		(4) the names of investment managers engaged by the
34	38		retirement system.
35	39		(e) The board may adopt rules necessary to implement this
36	40		section.
37	41		SECTION 3. Subchapter B, Chapter 802, Government Code, is
38	42		amended by adding Section 802.109 to read as follows:
39	43		Sec. 802.109. INVESTMENT PRACTICES AND PERFORMANCE
40	44		REPORTS. (a) Except as provided by Subsection (e) and subject to
41	45		Subsections (c) and (k), a public retirement system shall select an
42	46		independent firm with substantial experience in evaluating
43	47		institutional investment practices and performance to evaluate the
44	48		appropriateness, adequacy, and effectiveness of the retirement
45	49		system's investment practices and performance and to make
46	50		recommendations for improving the retirement system's investment
47	51		policies, procedures, and practices. Each evaluation must include:
48	52		(1) an analysis of any investment policy or strategic
49	53		investment plan adopted by the retirement system and the retirement
50	54		system's compliance with that policy or plan;
51	55		(2) a detailed review of the retirement system's
52	56		investment asset allocation, including:
53	57		(A) the process for determining target
54	58		allocations;
55	59		(B) the expected risk and expected rate of
56	60		return, categorized by asset class;
57	61		(C) the appropriateness of selection and
58	62		valuation methodologies of alternative and illiquid assets; and
59	63		(D) future cash flow and liquidity needs;
60	64		(3) a review of the appropriateness of investment fees
61	65		and commissions paid by the retirement system;
62	66		(4) a review of the retirement system's governance
63	67		processes related to investment activities, including investment
64	68		decision-making processes, delegation of investment authority, and
65	69		board investment expertise and education; and
66	70		(5) a review of the retirement system's investment
67	71		manager selection and monitoring process.
68	72		(b) The governing body of a public retirement system may
69	73		determine additional specific areas to be evaluated under
70	74		Subsection (a) and may select particular asset classes on which to
71	75		focus, but the first evaluation must be a comprehensive analysis of
72	76		the retirement system's investment program that covers all asset
73	77		classes.
74	78		(c) In selecting an independent firm to conduct the
75	79		evaluation described by Subsection (a), a public retirement system:
76	80		(1) subject to Subdivision (2), may select a firm
77	81		regardless of whether the firm has an existing relationship with
78	82		the retirement system; and
79	83		(2) may not select a firm that directly or indirectly
80	84		manages investments of the retirement system.
81	85		(d) A public retirement system shall conduct the evaluation
82	86		described by Subsection (a):
83	87		(1) once every three years, if the retirement system
84	88		has total assets the book value of which, as of the last day of the
85	89		last fiscal year considered in an evaluation under this section,
86	90		was at least $100 million; or
87	91		(2) once every six years, if the retirement system has
88	92		total assets the book value of which, as of the last day of the last
89	93		fiscal year considered in an evaluation under this section, was at
90	94		least $30 million and less than $100 million.
91	95		(e) A public retirement system is not required to conduct
92	96		the evaluation described by Subsection (a) if the retirement system
93	97		has total assets the book value of which, as of the last day of the
94	98		preceding fiscal year, was less than $30 million.
95	99		(f) A report of an evaluation under this section must be
96	100		filed with the governing body of the public retirement system not
97	101		later than May 1 of each year following the year in which the system
98	102		is evaluated under Subsection (d).
99	103		(g) Not later than the 31st day after the date the governing
100	104		body of a public retirement system receives a report of an
101	105		evaluation under this section, the governing body shall submit the
102	106		report to the board.
103	107		(h) A public retirement system shall pay the costs of each
104	108		evaluation of the system under this section.
105	109		(i) The board shall submit an investment performance report
106	110		to the governor, the lieutenant governor, the speaker of the house
107	111		of representatives, and the legislative committees having
108	112		principal jurisdiction over legislation governing public
109	113		retirement systems in the biennial report required by Section
110	114		801.203. The report must compile and summarize the information
111	115		received under this section by the board during the preceding two
112	116		fiscal years.
113	117		(j) A report of an evaluation by the Teacher Retirement
114	118		System of Texas and an investment report that includes the Teacher
115	119		Retirement System of Texas under this section satisfies the
116	120		requirements of Section 825.512.
117	121		(k) The following reports may be used by the applicable
118	122		public retirement systems to satisfy the requirement for a report
119	123		of an evaluation under this section:
120	124		(1) an investment report under Section 10A, Article
121	125		6243g-4, Revised Statutes;
122	126		(2) an investment report under Section 2D, Chapter 88
123	127		(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
124	128		(Article 6243h, Vernon's Texas Civil Statutes); and
125	129		(3) a report on a review conducted on the retirement
126	130		system's investments under Section 2B, Article 6243e.2(1), Revised
127	131		Statutes.
128	132		(l) The board may adopt rules necessary to implement this
129	133		section.
130	134		SECTION 4. Notwithstanding Section 802.109(d), Government
131	135		Code, as added by this Act, a report of the first evaluation of a
132	136		public retirement system, as required by Section 802.109,
133	137		Government Code, as added by this Act, must be filed with the
134	138		governing body of the system not later than May 1, 2020.
135	139		SECTION 5. The State Pension Review Board is required to
136	140		implement a provision of this Act only if the legislature
137	141		appropriates money specifically for that purpose. If the
138	142		legislature does not appropriate money specifically for that
139	143		purpose, the State Pension Review Board may, but is not required to,
140	144		implement a provision of this Act using other appropriations
141	145		available for that purpose.
142	146		SECTION 6. This Act takes effect immediately if it receives
143	147		a vote of two-thirds of all the members elected to each house, as
144	148		provided by Section 39, Article III, Texas Constitution. If this
145	149		Act does not receive the vote necessary for immediate effect, this
146	150		Act takes effect September 1, 2019.
147		-	______________________________ ______________________________
148		-	President of the Senate Speaker of the House
149		-	I hereby certify that S.B. No. 322 passed the Senate on
150		-	April 17, 2019, by the following vote: Yeas 31, Nays 0; and that
151		-	the Senate concurred in House amendment on May 24, 2019, by the
152		-	following vote: Yeas 31, Nays 0.
153		-	______________________________
154		-	Secretary of the Senate
155		-	I hereby certify that S.B. No. 322 passed the House, with
156		-	amendment, on May 22, 2019, by the following vote: Yeas 144,
157		-	Nays 0, two present not voting.
158		-	______________________________
159		-	Chief Clerk of the House
160		-	Approved:
161		-	______________________________
162		-	Date
163		-	______________________________
164		-	Governor