LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION April 6, 2023 TO: Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3495 by Bonnen (Relating to the investment authority of certain state agencies and the confidentiality of certain information related to those investments.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3495, As Introduced : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2024$02025$02026$02027$02028$0All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain fromTRS Trust Account Fund960 Probable Revenue Gain fromTexas Treasury Safekeeping Trust Company Accounts2024$7,500,000$1,500,0002025$7,500,000$1,500,0002026$7,500,000$1,500,0002027$7,500,000$1,500,0002028$7,500,000$1,500,000 Fiscal AnalysisThe bill would amend Government Code to allow the Comptroller of Public Accounts (CPA) to invest in direct security repurchase agreements and reverse security repurchase agreements directly with a state agency that has the authority to invest in repurchase agreements. The bill would give the Teacher Retirement System (TRS) Board of Trustees the authority to determine the maximum percentage of the value of the total investment portfolio that may be invested in hedge funds. The bill would also give the TRS Board the authority to create a title-holding entity for the purpose of investing the retirement system's assets in real property.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
April 6, 2023
TO: Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3495 by Bonnen (Relating to the investment authority of certain state agencies and the confidentiality of certain information related to those investments.), As Introduced
TO: Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB3495 by Bonnen (Relating to the investment authority of certain state agencies and the confidentiality of certain information related to those investments.), As Introduced
Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services
Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB3495 by Bonnen (Relating to the investment authority of certain state agencies and the confidentiality of certain information related to those investments.), As Introduced
HB3495 by Bonnen (Relating to the investment authority of certain state agencies and the confidentiality of certain information related to those investments.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3495, As Introduced : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3495, As Introduced : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
2024 $0
2025 $0
2026 $0
2027 $0
2028 $0
All Funds, Five-Year Impact:
2024 $7,500,000 $1,500,000
2025 $7,500,000 $1,500,000
2026 $7,500,000 $1,500,000
2027 $7,500,000 $1,500,000
2028 $7,500,000 $1,500,000
Fiscal Analysis
The bill would amend Government Code to allow the Comptroller of Public Accounts (CPA) to invest in direct security repurchase agreements and reverse security repurchase agreements directly with a state agency that has the authority to invest in repurchase agreements. The bill would give the Teacher Retirement System (TRS) Board of Trustees the authority to determine the maximum percentage of the value of the total investment portfolio that may be invested in hedge funds. The bill would also give the TRS Board the authority to create a title-holding entity for the purpose of investing the retirement system's assets in real property.
Methodology
According to the analysis of TRS and the CPA, the ability to enter into repurchase agreements directly with other state investing entities would result in an estimated savings of $3.0 million per year, which is assumed to be split evenly between the Texas Treasury Safekeeping Trust Company and the TRS Pension Trust Fund. TRS states that the ability to invest directly in real estate, without the requirement to engage with a third party in the form of a limited partnership would result in an estimated savings to the Pension Trust Fund of $6.0 million per year. Based on the analysis of the Employees Retirement System (ERS), TRS, the CPA, and the Permanent School Fund Corporation (PSFC) duties and responsibilities associated with implementing the provisions of the bill could be accomplished by utilizing existing resources.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 323 Teacher Retirement System, 327 Employees Retirement System, 706 Texas Permanent School Fund Corporation
304 Comptroller of Public Accounts, 323 Teacher Retirement System, 327 Employees Retirement System, 706 Texas Permanent School Fund Corporation
LBB Staff: b > td > JMc, MOc, KK, ASA, MMo
JMc, MOc, KK, ASA, MMo