Texas 2025 - 89th Regular

Texas House Bill HB5270 Compare Versions

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1	1		By: Curry H.B. No. 5270
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4	6		A BILL TO BE ENTITLED
5	7		AN ACT
6	8		relating to authorized investments by governmental entities.
7	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	10		SECTION 1. Section 2256.002, Government Code, is amended by
9	11		adding Subdivision (9-a) to read as follows:
10	12		(9-a) "Qualified manager" means:
11	13		(A) an investment management firm registered:
12	14		(i) under the Investment Advisers Act of
13	15		1940 (15 U.S.C. Section 80b-1 et seq.); or
14	16		(ii) with the State Securities Board;
15	17		(B) a bank, as defined by Section 3, Federal
16	18		Deposit Insurance Act (12 U.S.C. Section 1813); or
17	19		(C) a bank holding company, as defined by Section
18	20		2(a), Bank Holding Company Act of 1956 (12 U.S.C. Section 1841(a)).
19	21		SECTION 2. Section 2256.003(b), Government Code, is amended
20	22		to read as follows:
21	23		(b) In the exercise of its powers under Subsection (a), the
22	24		governing body of an investing entity may contract with a qualified
23	25		manager [an investment management firm registered under the
24	26		Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or
25	27		with the State Securities Board] to provide for the investment and
26	28		management of its public funds or other funds under its control. A
27	29		contract made under authority of this subsection may not be for a
28	30		term longer than two years. A renewal or extension of the contract
29	31		must be made by the governing body of the investing entity by order,
30	32		ordinance, or resolution.
31	33		SECTION 3. Section 2256.016, Government Code, is amended to
32	34		read as follows:
33	35		Sec. 2256.016. AUTHORIZED INVESTMENTS: INVESTMENT POOLS.
34	36		(a) An entity may invest its funds and funds under its control
35	37		through an eligible investment pool if the governing body of the
36	38		entity by rule, order, ordinance, or resolution, as appropriate,
37	39		authorizes investment in the particular pool. An investment pool
38	40		shall invest the funds it receives from entities in authorized
39	41		investments permitted by this subchapter. An investment pool may
40	42		invest its funds in money market mutual funds to the extent
41	43		permitted by and consistent with this subchapter and the investment
42	44		policies and objectives adopted by the investment pool.
43	45		(b) To be eligible to receive funds from and invest funds on
44	46		behalf of an entity under this chapter, an investment pool must
45	47		furnish to the investment officer or other authorized
46	48		representative of the entity an offering circular or other similar
47	49		disclosure instrument that contains, at a minimum, the following
48	50		information:
49	51		(1) the types of investments in which money is allowed
50	52		to be invested;
51	53		(2) the maximum average dollar-weighted maturity
52	54		allowed, based on the stated maturity date, of the pool;
53	55		(3) the maximum stated maturity date any investment
54	56		security within the portfolio has;
55	57		(4) the objectives of the pool;
56	58		(5) the size of the pool;
57	59		(6) the names of the members of the advisory board of
58	60		the pool and the dates their terms expire;
59	61		(7) the custodian bank that will safekeep the pool's
60	62		assets;
61	63		(8) whether the intent of the pool is to maintain a net
62	64		asset value of one dollar and the risk of market price fluctuation;
63	65		(9) whether the only source of payment is the assets of
64	66		the pool at market value or whether there is a secondary source of
65	67		payment, such as insurance or guarantees, and a description of the
66	68		secondary source of payment;
67	69		(10) the name and address of the independent auditor
68	70		of the pool;
69	71		(11) the requirements to be satisfied for an entity to
70	72		deposit funds in and withdraw funds from the pool and any deadlines
71	73		or other operating policies required for the entity to invest funds
72	74		in and withdraw funds from the pool;
73	75		(12) the performance history of the pool, including
74	76		yield, average dollar-weighted maturities, and expense ratios;
75	77		[and]
76	78		(13) the pool's policy regarding holding deposits in
77	79		cash; and
78	80		(14) written confirmation in readily visible font and
79	81		positioning on the disclosure that there is no sponsorship
80	82		agreement or royalty paid to any association or organization from
81	83		funds or interest income of the pool.
82	84		(c) To maintain eligibility to receive funds from and invest
83	85		funds on behalf of an entity under this chapter, an investment pool
84	86		must furnish to the investment officer or other authorized
85	87		representative of the entity:
86	88		(1) investment transaction confirmations; and
87	89		(2) a monthly report that contains, at a minimum, the
88	90		following information:
89	91		(A) the types and percentage breakdown of
90	92		securities in which the pool is invested;
91	93		(B) the current average dollar-weighted
92	94		maturity, based on the stated maturity date, of the pool;
93	95		(C) the current percentage of the pool's
94	96		portfolio in investments that have stated maturities of more than
95	97		one year;
96	98		(D) the book value versus the market value of the
97	99		pool's portfolio, using amortized cost valuation;
98	100		(E) the size of the pool;
99	101		(F) the number of participants in the pool;
100	102		(G) the custodian bank that is safekeeping the
101	103		assets of the pool;
102	104		(H) a listing of daily transaction activity of
103	105		the entity participating in the pool;
104	106		(I) the yield and expense ratio of the pool,
105	107		including a statement regarding how yield is calculated;
106	108		(J) the portfolio managers of the pool; [and]
107	109		(K) any changes or addenda to the offering
108	110		circular; and
109	111		(L) written confirmation in readily visible font
110	112		and positioning on the disclosure that there is no sponsorship
111	113		agreement or royalty paid to any association or organization from
112	114		funds or interest income of the pool.
113	115		(d) An entity by contract may delegate to an investment pool
114	116		the authority to hold legal title as custodian of investments
115	117		purchased with its local funds.
116	118		(e) In this section, for purposes of an investment pool for
117	119		which a $1.00 net asset value is maintained, "yield" shall be
118	120		calculated in accordance with regulations governing the
119	121		registration of open-end management investment companies under the
120	122		Investment Company Act of 1940, as promulgated from time to time by
121	123		the federal Securities and Exchange Commission.
122	124		(f) To be eligible to receive funds from and invest funds on
123	125		behalf of an entity under this chapter:
124	126		(1) a public funds investment pool that uses amortized
125	127		cost or fair value accounting must mark its portfolio to market
126	128		daily; [and]
127	129		(2) if the investment pool uses amortized cost:
128	130		(A) the investment pool must, to the extent
129	131		reasonably possible, stabilize at a $1.00 net asset value, when
130	132		rounded and expressed to two decimal places;
131	133		(B) the governing body of the investment pool
132	134		must, if the ratio of the market value of the portfolio divided by
133	135		the book value of the portfolio is less than 0.995 or greater than
134	136		1.005, take action as the body determines necessary to eliminate or
135	137		reduce to the extent reasonably practicable any dilution or unfair
136	138		result to existing participants, including a sale of portfolio
137	139		holdings to attempt to maintain the ratio between 0.995 and 1.005;
138	140		and
139	141		(C) the investment pool must, in addition to the
140	142		requirements of its investment policy and any other forms of
141	143		reporting, report yield to its investors in accordance with
142	144		regulations of the federal Securities and Exchange Commission
143	145		applicable to reporting by money market funds; and
144	146		(3) an investment pool must invest at least 35 percent
145	147		of the pool’s funds with an authorized investment described by
146	148		Sections 2256.009(a)(7) or (8) or 2256.010 in a bank located in this
147	149		state.
148	150		(g) To be eligible to receive funds from and invest funds on
149	151		behalf of an entity under this chapter, a public funds investment
150	152		pool must have an advisory board composed:
151	153		(1) equally of participants in the pool and other
152	154		persons who do not have a business relationship with the pool and
153	155		are qualified to advise the pool, for a public funds investment pool
154	156		created under Chapter 791 and managed by a state agency; or
155	157		(2) of participants in the pool and other persons who
156	158		do not have a business relationship with the pool and are qualified
157	159		to advise the pool, for other investment pools.
158	160		(h) To maintain eligibility to receive funds from and invest
159	161		funds on behalf of an entity under this chapter, an investment pool
160	162		must be continuously rated no lower than AAA or AAA-m or at an
161	163		equivalent rating by at least one nationally recognized rating
162	164		service.
163	165		(i) If the investment pool operates an Internet website, the
164	166		information in a disclosure instrument or report described in
165	167		Subsections (b), (c)(2), and (f) must be posted on the website.
166	168		(j) To maintain eligibility to receive funds from and invest
167	169		funds on behalf of an entity under this chapter, an investment pool
168	170		must make available to the entity an annual audited financial
169	171		statement of the investment pool in which the entity has funds
170	172		invested.
171	173		(k) If an investment pool offers fee breakpoints based on
172	174		fund balances invested, the investment pool in advertising
173	175		investment rates must include either all levels of return based on
174	176		the breakpoints provided or state the lowest possible level of
175	177		return based on the smallest level of funds invested.
176	178		(l) The annual audit under Section 2256.016(j) shall be
177	179		posted on the publicly accessible internet website of the
178	180		investment pool and on the comptroller’s internet website.
179	181		(m) To be eligible to receive funds from and invest funds on
180	182		behalf of an entity under this chapter, a public funds investment
181	183		pool is prohibited from:
182	184		(1) entering into a royalty or sponsorship agreement
183	185		with an association or organization; and
184	186		(2) paying a royalty or sponsorship from funds or
185	187		interest income available to the pool.
186	188		SECTION 4. This Act takes effect September 1, 2026.