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.