Office of House Bill AnalysisS.B. 512
By: Duncan
Public Education


Under current law, the State Board of Education (SBOE) is responsible for
the investments of the Permanent School Fund (PSF).  The members of SBOE
are not required to possess any investment expertise, which makes it more
difficult to manage the fund with prudence and to avoid conflicts of
interest. A committee of persons with expertise in institutional fund
investments would be better qualified to manage the investments of the PSF.
Senate Bill 512 establishes a permanent school fund investment advisory
committee to advise SBOE regarding the management of the PSF. 


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. 


Senate Bill 512 amends the Education Code to establish a five-member
permanent school fund investment advisory committee (committee) to advise
the State Board of Education (SBOE) regarding the management and investment
of the permanent school fund (PSF).  The bill provides that the committee
is composed of two members appointed by the governor who are not subject to
senate confirmation, and one member each appointed by the lieutenant
governor, the speaker of the house of representatives, and the SBOE.  The
bill requires the initial appointments to be made not later than November
1, 2001, and provides that a person appointed to the committee must have
appropriate expertise in investing institutional funds.  The bill sets
forth provisions related to the administration and operation of the

S.B. 512 applies provisions regarding conflicts of interest, the PSF ethics
policy, and the reporting of expenditures to the members of the committee.
The bill prohibits a person who serves as a money manager, advisor,
consultant, or broker regarding the PSF from knowingly employing or
compensating a lobbyist to communicate directly with a member of the
legislature, SBOE, or the committee.  The bill provides that a violation of
this provision is a Class B misdemeanor and requires SBOE to terminate the
contract of a person who commits such an offense.   

The bill provides that SBOE must meet and act as a body corporate when
considering and making investment decisions relating to the PSF.  The bill
prohibits SBOE from creating a committee or subcommittee to consider or
make such investment decisions.  


September 1, 2001.