Texas Senate Bill SB404

Texas 2025 - 89th Regular

• Filed: 11/21/24

Caption

Relating to the investment of public funds by a local government in investment pools.

Impact

The bill mandates that local governments divest from any restricted investment pools within specific timelines upon discovering such investments. At least 50% of the funds must be removed within 180 days, and 100% must be divested within 360 days. This requirement will compel local governments to assess their investment strategies critically and ensure compliance with state law to avoid potential financial discrepancies. It may also promote a standardized approach in managing public funds across different local jurisdictions.

Summary

SB404 proposes amendments to the Government Code regarding the investment of public funds by local governments in investment pools. The bill specifically allows local governments to invest only in pools managed by the Texas comptroller or the Texas Treasury Safekeeping Trust Company. This legislative move aims to streamline investment practices for local entities by designating certain pools as acceptable for fund management, which could enhance the security and accountability of local investment practices.

Contention

Some points of contention around SB404 may arise from the strict schedules for divestment and the definitions of restricted investment pools. Critics might argue that the rapid divestment requirements could lead to financial losses if not managed judiciously. Additionally, the need for local governments to produce reports justifying any delays in compliance could impose additional administrative burdens. Proponents of the bill believe that these provisions will enhance accountability and protect public funds, while opponents may view them as potential overreach into local financial practices.

Texas Constitutional Statutes Affected

Government Code

• Chapter 2256. Public Funds Investment
  • Section: 016
  • Section: New Section