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.