HBA-MPM S.B. 1545 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1545
By: Duncan
Pensions & Investments
5/18/2001
Engrossed



BACKGROUND AND PURPOSE 

In 1999, the 76th Legislature passed a constitutional amendment that was
subsequently approved by the voters providing that the available university
fund consists of distributions from the total return on all investments of
the permanent university fund.  Current state law prohibits public
institutions of higher education from appropriating for expenditure the net
unrealized appreciation of the assets of the endowment fund.  Senate Bill
1545 amends the Education and Property codes to conform with the provisions
of the constitutional amendment relating to the composition of the
available university fund.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

Senate Bill 1545 amends the Education Code to redefine "prudent person
standard" as a standard of care described in the Texas Constitution and
means that standard of judgment and care that prudent investors, exercising
reasonable care, skill, and caution, would acquire or retain in light of
the purposes, terms, distribution requirements, and other circumstances of
the endowment fund then prevailing, taking into consideration the
investment of all the assets of the fund rather than a single investment.
The bill amends the Property Code to repeal the provision prohibiting the
governing board of an institution of higher education from appropriating
for expenditure the net unrealized appreciation of the assets of an
endowment fund. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.