Texas 2025 - 89th Regular

Texas House Bill HB104 Compare Versions

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1	1		By: Bonnen H.B. No. 104
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4	6		A BILL TO BE ENTITLED
5	7		AN ACT
6	8		relating to the creation of the Texas future fund, the Texas future
7	9		fund investment review board, and permissible investments by the
8	10		economic stabilization fund.
9	11		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	12		SECTION 1. Chapter 403 Government Code, is amended by
11	13		adding Subchapter U to read as follows:
12	14		SUBCHAPTER U. TEXAS FUTURE FUND
13	15		Sec. 403.701. DEFINITIONS. In this subchapter:
14	16		(1) "Fund" means the Texas future fund.
15	17		(2) "Board" means the Texas future fund investment
16	18		review board.
17	19		(3) "Trust company" means the Texas treasury
18	20		safekeeping trust company.
19	21		Sec. 403.702. ESTABLISHMENT; PURPOSE. (a) The Texas
20	22		future fund is established to strengthen the state's proven
21	23		leadership in supporting the advancement of innovative
22	24		technologies.
23	25		(b) The purpose of the fund is to develop and diversify the
24	26		economy of Texas by making investments in frontier technology
25	27		infrastructure, industry sectors critical to national defense, and
26	28		other innovative technologies as recommended by the board.
27	29		Sec. 403.703. TEXAS FUTURE FUND. (a) The Texas future fund
28	30		is a separately managed account within the Texas economic
29	31		stabilization fund to be administered by the comptroller.
30	32		(b) Under guidance of the board, the trust company, or the
31	33		trust company's designated investment manager, shall make
32	34		investments with money from the fund as authorized by this
33	35		subchapter. The trust company or its investment manager may,
34	36		pursuant to the board policy adopted under Sec. 403.708, invest
35	37		proceeds, interest earned, or other earnings received from the sale
36	38		of stock or other investments in the fund. The trust company shall
37	39		provide separate accounting and reporting for the investments in
38	40		the fund and shall credit to the fund all payments, distributions,
39	41		interest, and other earnings on the investments in the fund.
40	42		(c) In managing these investments, the trust company may,
41	43		under guidance of the board, acquire, exchange, sell, supervise,
42	44		manage, or retain any kind of investment that a prudent investor,
43	45		exercising reasonable care, skill, and caution, would acquire or
44	46		retain in light of the purposes, terms, distribution requirements,
45	47		and other circumstances then prevailing for the fund, taking into
46	48		consideration the investment of all the assets of the fund rather
47	49		than a single investment.
48	50		(d) Amounts invested pursuant to this subchapter are not
49	51		included in the balance of the economic stabilization fund for
50	52		purposes of Section 404.0241(b).
51	53		(e) The reasonable expenses of administering and managing
52	54		the fund and its assets shall be paid from the fund.
53	55		Sec. 403.704. THIRD-PARTY CONTRACTS; AUDITS. (a) The
54	56		trust company may enter into contracts with one or more qualified
55	57		third-parties for the administration, management, and custody of
56	58		the assets of the fund and any other responsibilities authorized
57	59		under this subchapter. An entity that is contracted to administer,
58	60		manage, or custody assets of the fund shall be required
59	61		contractually to act in a fiduciary capacity with respect to the
60	62		assets of the fund.
61	63		(b) The trust company may contract with a certified public
62	64		accountant to perform an independent audit of the fund.
63	65		(c) The trust company may contract with a licensed attorney
64	66		to review contracts and other legal documents.
65	67		Sec. 403.705. FUTURE FUND INVESTMENT REVIEW BOARD
66	68		COMPOSITION. (a) the Texas future fund investment review board is
67	69		the governing body of the fund. The board is composed of the
68	70		following nine members:
69	71		(1) two members appointed by the governor;
70	72		(2) two members appointed by the lieutenant governor;
71	73		(3) two members appointed by the speaker of the house
72	74		of representatives; and
73	75		(4) three members appointed by the comptroller of
74	76		public accounts, one of which shall be designated the chair of the
75	77		board.
76	78		(b) In making appointments to the board:
77	79		(1) the governor, lieutenant governor, speaker of the
78	80		house of representatives, and comptroller must each appoint one
79	81		member with experience in either private equity, venture capital,
80	82		or similar fields.
81	83		(2) the governor, lieutenant governor, speaker of the
82	84		house of representatives, and comptroller must each appoint one
83	85		member with experience in either frontier technology
84	86		infrastructure, industry sectors critical to national defense, or
85	87		other innovative technologies; and
86	88		(3) the comptroller must appoint one member with
87	89		experience managing, directing, overseeing, or investing public
88	90		funds or public pension assets.
89	91		(c) A person may not be a member of the board if the person
90	92		or the person's spouse:
91	93		(1) is employed by, or participates in, the management
92	94		of a business entity or other organization receiving an investment
93	95		from the fund; or
94	96		(2) owns or controls, directly or indirectly, an
95	97		interest in a business entity, or other organization receiving an
96	98		investment from the fund.
97	99		Sec. 403.706. BOARD MEMBER TERMS; VACANCY. (a) board
98	100		members appointed by the governor, lieutenant governor, speaker of
99	101		the house, and comptroller serve at the pleasure of the appointing
100	102		office for staggered six-year terms, with the terms of three
101	103		members expiring on January 31 of each odd-numbered year.
102	104		(b) Not later than the 30th day after the date a board
103	105		member's term expires, the appropriate appointing authority shall
104	106		appoint a replacement.
105	107		(c) If a vacancy occurs on the board, the appropriate
106	108		appointing authority shall appoint a successor, in the same manner
107	109		as the original appointment, to serve for the remainder of the
108	110		unexpired term. The appropriate appointing authority shall appoint
109	111		the successor not later than the 30th day after the date the vacancy
110	112		occurs.
111	113		Sec. 403.707. CONFLICTS OF INTEREST. (a) Subject to the
112	114		approval of the comptroller, the board shall adopt a code of ethics,
113	115		including conflict-of-interest standards, based on standards of
114	116		professional conduct and ethics common in the financial industry
115	117		for conduct governing members of the board and the investment
116	118		decision-making process. Each member of the board shall affirm in
117	119		writing the member's compliance with the code of ethics and the
118	120		corresponding conflict-of-interest standards.
119	121		(b) The conflict-of-interest standards shall, at a minimum,
120	122		define conflicts of interest and address appropriate standards for
121	123		recusal, required disclosure of conflicts, waivers of conflicts,
122	124		and actions required to address undisclosed conflicts.
123	125		Sec. 403.708. BOARD POWERS AND DUTIES. (a) The board shall
124	126		oversee the investment of the fund, including providing guidance on
125	127		the investment philosophy that should be pursued in managing the
126	128		assets of the fund.
127	129		(b) The board shall develop and require adherence to
128	130		procedures for operational and investment due diligence on
129	131		opportunities that meet the requirements of this subchapter. The
130	132		procedures shall be based upon financial industry best practices.
131	133		(c) The board shall develop and maintain a list of target
132	134		industries and opportunities that represent sectors critical to
133	135		national defense, frontier technologies with the greatest
134	136		potential to drive innovation, and the diversification of the
135	137		economy of Texas.
136	138		(d) The board shall establish an investment policy for the
137	139		fund. Subject to the approval of the comptroller, the investment
138	140		policy must, at a minimum, include the following requirements,
139	141		limitations, and preferences:
140	142		(1) limit Texas future fund investment to no more than
141	143		twenty percent of the estimated total value of any single project
142	144		calculated at the time of investment;
143	145		(2) limit Texas future fund participation to no more
144	146		than thirty percent of the total value of any single company
145	147		calculated at the time of the investment;
146	148		(3) prioritization of investments in companies with a
147	149		physical presence in Texas;
148	150		(4) prioritization of investments in companies
149	151		expanding employment opportunities in Texas;
150	152		(5) a prohibition on the use of race, color,
151	153		ethnicity, sex, gender identity, or sexual orientation in
152	154		investment decisions; and
153	155		(6) compliance with investment restrictions contained
154	156		in Chapters 2270, 2271, 2273, 2274, 2275, and 2276 of the Texas
155	157		Government Code.
156	158		(e) The board shall biennially set priorities for the fund's
157	159		investment program and consider the priorities in making investment
158	160		decisions under this subchapter.
159	161		(f) The board may conduct a closed meeting in accordance
160	162		with Subchapter E, Chapter 551, Texas Government Code, to discuss
161	163		issues related to managing, acquiring, or selling securities.
162	164		(g) The board shall meet at least two times per year to
163	165		review the fund's investments.
164	166		(h) The comptroller shall provide administrative support
165	167		and resources to the board as necessary for the board to perform its
166	168		duties under this subchapter.
167	169		(j) Not later than December 31 of each even numbered year,
168	170		the board shall submit a report to the legislature with the
169	171		following information:
170	172		(1) a summary of the investments made as of the most
171	173		recent fiscal-year end, including the name of the companies, the
172	174		amount of the investments, and brief description of the companies
173	175		activities; and
174	176		(2) a summary of the estimated impact the investments
175	177		have had on the Texas economy.
176	178		Sec. 403.709. PUBLIC INFORMATION. (a) The following
177	179		information is public information and may be disclosed under
178	180		Chapter 552, Government Code:
179	181		(1) the name, address, and a summary description of an
180	182		entity that has received an investment from the fund;
181	183		(2) the date on which the fund made an investment in
182	184		the company and the date of any follow-on investments if
183	185		applicable;
184	186		(3) the dollar amount of capital committed or invested
185	187		in a company or project;
186	188		(4) the dollar amount of capital returned by the
187	189		company in connection with an investment from the fund;
188	190		(5) the internal rate of return or another investment
189	191		performance metric used in connection with each investment the fund
190	192		has made and the date on which the return or other investment
191	193		performance metric was calculated;
192	194		(6) the names of the principals responsible for
193	195		managing any company in which the fund is or has invested;
194	196		(7) each recusal filed by a member of the board in
195	197		connection with a deliberation or decision of the board relating to
196	198		an investment;
197	199		(8) the minutes and audio or video recordings of each
198	200		open portion of a meeting of the board at which an item described by
199	201		this subsection was discussed;
200	202		(9) the state's percentage ownership interest in a
201	203		company that received an investment from the fund;
202	204		(10) any annual ethics disclosure report submitted to
203	205		the board or the trust company from a company that has received an
204	206		investment from the fund; and
205	207		(11) any other relevant information concerning a fund
206	208		investment with the consent of the receiving company.
207	209		(b) All information received by the board, the comptroller,
208	210		the trust company, or a contractor of the comptroller or the trust
209	211		company from or about a company that has received an investment
210	212		from the fund or a company that was considered for an investment
211	213		from the fund that is not listed in subsection (a) is confidential
212	214		and excepted from the requirements of chapter 552.
213	215		Sec. 403.710. BOARD MEMBER TRAINING. (a) Before a member
214	216		of the board may assume the member's duties, the member must
215	217		complete a training course provided by the comptroller.
216	218		(b) A training program established under this section shall
217	219		provide information to the member regarding:
218	220		(1) the role and functions of the board; and
219	221		(2) the requirements of:
220	222		(A) Chapter 551, Texas Government Code; and
221	223		(B) Chapter 552, Texas Government Code.
222	224		Sec. 403.711. COMPENSATION AND EXPENSES OF APPOINTED BOARD
223	225		MEMBERS. Appointed members of the board shall serve without pay but
224	226		shall be reimbursed for their actual expenses incurred in
225	227		attending meetings of the board or in performing other work of the
226	228		board when that work is approved by the chair of the board.
227	229		Sec. 403.712. INVESTMENT PROCEDURE. (a) Subject to the
228	230		comptroller's approval, the board shall develop procedures for
229	231		making investments under this subchapter.
230	232		(b) For each investment being considered, the trust company
231	233		or the trust company's designated investment manager shall:
232	234		(i) present its due diligence findings to the board;
233	235		(ii) provide a written investment memorandum,
234	236		summarizing the investment opportunity, along with an assessment
235	237		of the expected investment risk and rate of return, and estimated
236	238		impact on the state's economy; and
237	239		(iii) provide a summary of how each opportunity being
238	240		recommended meets the overall objectives of the board's investment
239	241		policy and related investment requirements;
240	242		SECTION 2. Section 404.0241, Government Code, is amended by
241	243		adding a new subsection (b-6) to read as follows:
242	244		(b-6) Notwithstanding any other law, the comptroller shall
243	245		designate $5 billion of the economic stabilization fund to comprise
244	246		a separately managed account within the economic stabilization fund
245	247		called the "Texas Future Fund", to be administered by the
246	248		comptroller and managed in accordance with Chapter 403, Subchapter
247	249		U.
248	250		SECTION 3. This Act takes effect immediately if it receives
249	251		a vote of two-thirds of all the members elected to each house, as
250	252		provided by Section 39, Article III, Texas Constitution. If this
251	253		Act does not receive the vote necessary for immediate effect, this
252	254		Act takes effect September 1, 2025.