HBA-MPM C.S.S.B. 1545 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 1545 By: Duncan Pensions & Investments 5/18/2001 Committee Report (Substituted) 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. C.S.S.B. 1545 amends the Education Code relating to the investment of the assets of funds of certain institutions of higher education. 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 C.S.S.B. 1545 amends the Education Code to define "prudent investor standard" rather than "prudent person standard" as the standard of care described in the Texas Constitution 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. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 1545 differs from the original bill by redefining "prudent investor standard" rather than "prudent person standard." The substitute removes provisions in the original that amended the Property Code to repeal a 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.