Bill Text: TX SB1246 | 2023-2024 | 88th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to authorized investments of public money by certain governmental entities and the confidentiality of certain information related to those investments.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [SB1246 Detail]
Download: Texas-2023-SB1246-Introduced.html
Bill Title: Relating to authorized investments of public money by certain governmental entities and the confidentiality of certain information related to those investments.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [SB1246 Detail]
Download: Texas-2023-SB1246-Introduced.html
88R7616 JCG/KBB-F | ||
By: Huffman | S.B. No. 1246 |
|
||
|
||
relating to the investment authority of certain state agencies and | ||
the confidentiality of certain information related to those | ||
investments. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 404.024, Government Code, is amended by | ||
amending Subsections (b) and (c) and adding Subsections (c-1) and | ||
(c-2) to read as follows: | ||
(b) Subject to Chapter 2270, state funds not deposited in | ||
state depositories shall be invested by the comptroller in: | ||
(1) direct security repurchase agreements; | ||
(2) reverse security repurchase agreements; | ||
(3) direct obligations of or obligations the principal | ||
and interest of which are guaranteed by the United States; | ||
(4) direct obligations of or obligations guaranteed by | ||
agencies or instrumentalities of the United States government; | ||
(5) bankers' acceptances that: | ||
(A) are eligible for purchase by the Federal | ||
Reserve System; | ||
(B) do not exceed 270 days to maturity; and | ||
(C) are issued by a bank whose other comparable | ||
short-term obligations are rated in the highest short-term rating | ||
category, within which there may be subcategories or gradations | ||
indicating relative standing, including such subcategories or | ||
gradations as "rating category" or "rated," by a nationally | ||
recognized statistical rating organization, as defined by 15 U.S.C. | ||
Section 78c; | ||
(6) commercial paper that: | ||
(A) does not exceed 365 [ |
||
and | ||
(B) except as provided by Subsection (i), is | ||
issued by an entity whose other comparable short-term obligations | ||
are rated in the highest short-term rating category by a nationally | ||
recognized statistical rating organization; | ||
(7) contracts written by the treasury in which the | ||
treasury grants the purchaser the right to purchase securities in | ||
the treasury's marketable securities portfolio at a specified price | ||
over a specified period and for which the treasury is paid a fee and | ||
specifically prohibits naked-option or uncovered option trading; | ||
(8) direct obligations of or obligations guaranteed by | ||
the Inter-American Development Bank, the International Bank for | ||
Reconstruction and Development (the World Bank), the African | ||
Development Bank, the Asian Development Bank, and the International | ||
Finance Corporation that have received the highest long-term rating | ||
categories for debt obligations by a nationally recognized | ||
statistical rating organization; | ||
(9) bonds issued, assumed, or guaranteed by the State | ||
of Israel; | ||
(10) obligations of a state or an agency, county, | ||
city, or other political subdivision of a state; | ||
(11) mutual funds secured by obligations that are | ||
described by Subdivisions (1) through (6) or by obligations | ||
consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated | ||
by the Securities and Exchange Commission, including pooled funds: | ||
(A) established by the Texas Treasury | ||
Safekeeping Trust Company; | ||
(B) operated like a mutual fund; and | ||
(C) with portfolios consisting only of | ||
dollar-denominated securities; | ||
(12) foreign currency for the sole purpose of | ||
facilitating investment by state agencies that have the authority | ||
to invest in foreign securities; | ||
(13) asset-backed securities, as defined by the | ||
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section | ||
270.2a-7), that are rated at least A or its equivalent by a | ||
nationally recognized statistical rating organization and that | ||
have a weighted-average maturity of five years or less; and | ||
(14) corporate debt obligations that are rated at | ||
least A or its equivalent by a nationally recognized statistical | ||
rating organization and mature in five years or less from the date | ||
on which the obligations were "acquired," as defined by the | ||
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section | ||
270.2a-7). | ||
(c) Investments in direct security repurchase agreements | ||
and reverse security repurchase agreements may be: | ||
(1) placed through [ |
||
doing business in this state or with primary dealers as approved by | ||
the Federal Reserve System; or | ||
(2) made directly with a state agency with the | ||
authority to invest in repurchase agreements. | ||
(c-1) For purposes of Subsection (c), "state agency" means: | ||
(1) an office, department, commission, board, or | ||
agency that is part of any branch of state government; | ||
(2) an institution of higher education as defined by | ||
Section 61.003, Education Code; or | ||
(3) a nonprofit corporation acting on behalf of an | ||
entity described by Subdivision (1) or (2). | ||
(c-2) Notwithstanding any other law, the term of any reverse | ||
security repurchase agreement made by the comptroller may not | ||
exceed 90 days after the date the reverse security repurchase | ||
agreement is delivered. Money received by the comptroller under | ||
the terms of a reverse security repurchase agreement may be used to | ||
acquire additional authorized investments, but the term of the | ||
authorized investments acquired must mature not later than the | ||
expiration date stated in the reverse security repurchase | ||
agreement. | ||
SECTION 2. Section 825.103(d), Government Code, is amended | ||
to read as follows: | ||
(d) Notwithstanding any other law, the retirement system | ||
has exclusive authority over the purchase of goods and services | ||
using money other than money appropriated from the general revenue | ||
fund, including specifically money from trusts under the | ||
administration of the retirement system, and Subtitles [ |
||
and F, Title 10, do [ |
||
respect to that money. The retirement system shall acquire goods or | ||
services by procurement methods approved by the board of trustees | ||
or the board's designee. For purposes of this subsection, goods and | ||
services include all professional and consulting services and | ||
utilities as well as supplies, materials, equipment, skilled or | ||
unskilled labor, and insurance. The comptroller shall procure | ||
goods or services for the retirement system at the request of the | ||
retirement system, and the retirement system may use the services | ||
of the comptroller in procuring goods or services. | ||
SECTION 3. Section 825.301(a), Government Code, is amended | ||
to read as follows: | ||
(a) The board of trustees shall invest and reinvest assets | ||
of the retirement system without distinction as to their source in | ||
accordance with Section 67, Article XVI, Texas Constitution. For | ||
purposes of the investment authority of the board of trustees under | ||
Section 67, Article XVI, Texas Constitution, "securities" includes | ||
any investment instrument within the meaning of the term as defined | ||
by Section 4001.068, 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. | ||
Section 78c(a)(10), any derivative instrument, and any other | ||
instrument commonly used by institutional investors to manage | ||
institutional investment portfolios. An interest in a limited | ||
partnership or investment contract is considered a security without | ||
regard to the number of investors or the control, access to | ||
information, or rights granted to or retained by the retirement | ||
system. Any instrument or contract intended to manage transaction | ||
or currency exchange risk in purchasing, selling, or holding | ||
securities is considered to be a security. Subject to Section | ||
825.3013, an interest in a title-holding entity is considered a | ||
security. Investment decisions are subject to the standard provided | ||
in the Texas Trust Code by Section 117.004(b), Property Code. | ||
SECTION 4. Section 825.3012(b), Government Code, is amended | ||
to read as follows: | ||
(b) Notwithstanding any provision of Section 825.301, the | ||
board of trustees shall determine the maximum percentage [ |
||
the retirement system that may be invested in hedge funds. | ||
SECTION 5. Subchapter D, Chapter 825, Government Code, is | ||
amended by adding Sections 825.3013 and 825.3014 to read as | ||
follows: | ||
Sec. 825.3013. TITLE-HOLDING ENTITIES; INVESTMENTS IN REAL | ||
PROPERTY. (a) The retirement system may form a title-holding | ||
entity for the purpose of investing the retirement system's assets | ||
in real property. The title-holding entity must be: | ||
(1) wholly owned and controlled by the system; and | ||
(2) exempt from taxation under Section 501(a), | ||
Internal Revenue Code of 1986, as an organization described by | ||
Section 501(c) of that code. | ||
(b) Subject to Subsection (a)(2), a title-holding entity | ||
formed under this section may hold title to real property jointly | ||
with another person. | ||
(c) The board of trustees shall adopt policies for the | ||
governance, management, and reporting for a title-holding entity | ||
formed under this section. | ||
(d) The following persons may not be employed by, receive | ||
compensation from, be a party to a contract with or a direct or | ||
indirect financial beneficiary of a contract with, or hold a direct | ||
or indirect interest in a title-holding entity formed by the | ||
retirement system under this section: | ||
(1) a trustee or employee of the system; or | ||
(2) a relative of a trustee or employee of the system | ||
within the second degree of consanguinity or affinity, as | ||
determined under Chapter 573. | ||
(e) Chapter 551 and Subtitles D and F, Title 10, do not apply | ||
to a title-holding entity formed under this section. | ||
Sec. 825.3014. CONFIDENTIALITY OF RECORDS RELATED TO | ||
TITLE-HOLDING ENTITIES. (a) Notwithstanding any other law other | ||
than this section, all information that relates to a title-holding | ||
entity formed under Section 825.3013 is confidential and excepted | ||
from disclosure under Section 552.021, including information | ||
relating to: | ||
(1) a pre-due diligence or post-due diligence review, | ||
audit, or investigation; | ||
(2) the formation of a title-holding entity under | ||
Section 825.3013; or | ||
(3) a potential purchase of real property by a | ||
title-holding entity, regardless of whether the purchase is | ||
completed. | ||
(b) The following information as it relates to a | ||
title-holding entity formed under Section 825.3013 is public | ||
information under Chapter 552: | ||
(1) the title-holding entity's certificate of | ||
formation or comparable instrument issued by a foreign | ||
jurisdiction; | ||
(2) the date or dates on which the title-holding | ||
entity purchased or sold an interest in real property; | ||
(3) information relating to the title-holding entity's | ||
qualification for the federal income tax exemption required under | ||
Section 825.3013(a)(2); | ||
(4) the name and location, including the physical | ||
address, city, state, and country, of any real property in which the | ||
title-holding entity has an interest; | ||
(5) as shown in the meeting minutes of the board of | ||
trustees, each recusal by a member of the board in connection with a | ||
deliberation or action relating to the title-holding entity, any | ||
real property in which the entity has an ownership interest, or a | ||
lease or contract with the title-holding entity; | ||
(6) the name of each employer or business entity owned | ||
wholly or partly by the relative of a member of the board of | ||
trustees or a retirement system employee, within the second degree | ||
of consanguinity or affinity under Chapter 573, that is a | ||
prospective party to a transaction or contract with the | ||
title-holding entity, including a contract that is: | ||
(A) a real property purchase and sale agreement; | ||
(B) for goods or services; or | ||
(C) a lease agreement, including a ground lease | ||
agreement; | ||
(7) the name of the business entity or employer | ||
described by Subdivision (6) as stated in the business entity's or | ||
employer's certificate of formation or comparable instrument; | ||
(8) copies of income tax returns filed by the | ||
title-holding entity, except information in the returns relating to | ||
indebtedness, tax basis, and gains or losses realized on the sale or | ||
other disposition of real property by the title-holding entity; | ||
(9) if the system or a state agency is a tenant of real | ||
property owned by the title-holding entity: | ||
(A) the name of that tenant; | ||
(B) the name and address of the property; and | ||
(C) the financial returns to the system from | ||
investing in the property; and | ||
(10) if applicable, the name of any joint owner of real | ||
property a title-holding entity has an ownership interest in and | ||
the percentage of the property owned by a joint owner. | ||
(c) Except as provided by this subsection, this section | ||
applies to information regardless of whether the title-holding | ||
entity disposes of the entity's interest in real property or an | ||
asset if the information is inextricably intertwined with another | ||
interest in real property or other assets owned by the | ||
title-holding entity. The final sale documentation of the disposed | ||
real property or other asset is public information under Chapter | ||
552. | ||
(d) This section does not prohibit the retirement system or | ||
any person from asserting that any information described by this | ||
section is confidential or exempt from disclosure under Section | ||
552.021 or other law. Notwithstanding any other law, if the | ||
retirement system discloses information described by Subsection | ||
(a) to a person, the disclosure does not: | ||
(1) waive or affect the confidentiality of information | ||
relating to any other title-holding entity; or | ||
(2) waive the retirement system's right to assert | ||
exceptions to disclosure of the information in the future. | ||
SECTION 6. Section 2270.0004, Government Code, is amended | ||
to read as follows: | ||
Sec. 2270.0004. INAPPLICABILITY OF CERTAIN REQUIREMENTS | ||
INCONSISTENT WITH OTHER LAW OR FIDUCIARY RESPONSIBILITIES AND | ||
RELATED DUTIES. An investing entity described by Section | ||
2270.0001(7)(B) or (C) is not subject to a requirement of this | ||
chapter: | ||
(1) if applicable, to the extent prescribed by Section | ||
825.103(d); or | ||
(2) if the entity determines that the requirement | ||
would be inconsistent with the entity's fiduciary responsibility | ||
with respect to the investment of entity assets or other duties | ||
imposed by law relating to the investment of entity assets, | ||
including the duty of care established under Section 67, Article | ||
XVI, Texas Constitution. | ||
SECTION 7. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2023. |