HBA-MSH, JEK C.S.H.J.R. 74 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.J.R. 74 By: Keel Public Education 4/23/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, the investment and management of the permanent school fund (fund) is a responsibility of the State Board of Education. The members of the board of education are not required to possess any investment expertise, which makes it more difficult to manage the fund with prudence and avoid conflicts of interest regarding advice from investment consultants. As proposed, C.S.H.J.R. 74 requires the submission to the voters of a constitutional amendment providing for the transfer of authority to invest and manage the fund from the State Board of Education to the Permanent School Fund Investment Board, and modifying the standards used to determine appropriate investment and management decisions. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this resolution does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.J.R. 74 amends the Texas Constitution to require the Permanent School Fund Investment Board (board) to invest and manage the assets of the permanent school fund (fund). The resolution sets forth permanent provisions for the appointment of nine board members who serve staggered terms of six years as well as provisions relating to the initial appointments to the board. The resolution provides that a person must have appropriate expertise in investing institutional funds to be eligible for appointment to the board. The resolution authorizes the board to manage investments with the reasonable care, skill, and caution of prudent investors. FOR ELECTION This proposed constitutional amendment shall be submitted to the voters at an election to be held November 6, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.J.R. 74 differs from the original resolution by providing that members of the Permanent School Fund Investment Board (board) serve staggered terms of six years, with the term of one member appointed by each appointing authority expiring February 1 of each odd-numbered year. The substitute specifies that the board must be appointed in the manner provided by law, which may provide that provisions regarding the filling of vacancies in state or district offices do not apply. The substitute sets forth provisions for the initial appointments of board members.