Bill Text: TX SB322 | 2019-2020 | 86th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the evaluation and reporting of investment practices and performance of certain public retirement systems.
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2019-06-10 - Effective immediately [SB322 Detail]
Download: Texas-2019-SB322-Introduced.html
Bill Title: Relating to the evaluation and reporting of investment practices and performance of certain public retirement systems.
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2019-06-10 - Effective immediately [SB322 Detail]
Download: Texas-2019-SB322-Introduced.html
86R2464 LED-D | ||
By: Huffman | S.B. No. 322 |
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relating to the evaluation and reporting of investment practices | ||
and performance of certain public retirement systems. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 801.209(a), Government Code, is amended | ||
to read as follows: | ||
(a) For each public retirement system, the board shall post | ||
on the board's Internet website, or on a publicly available website | ||
that is linked to the board's website, the most recent data from | ||
reports received under Sections 802.101, 802.103, 802.104, | ||
802.105, 802.108, 802.109, 802.2015, and 802.2016. | ||
SECTION 2. Section 802.103(a), Government Code, is amended | ||
to read as follows: | ||
(a) The [ |
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governing body of a public retirement system shall publish an | ||
annual financial report showing the financial condition of the | ||
system as of the last day of the fiscal year covered in the report. | ||
The report must include: | ||
(1) the financial statements and schedules examined in | ||
the most recent audit performed as required by Section 802.102; | ||
(2) [ |
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certified public accountant as to whether or not the financial | ||
statements and schedules are presented fairly and in accordance | ||
with generally accepted accounting principles; | ||
(3) a listing, by asset class, of all direct and | ||
indirect commissions and fees paid by the retirement system during | ||
the system's previous fiscal year for the sale, purchase, or | ||
management of system assets; and | ||
(4) the names of investment managers engaged by the | ||
retirement system. | ||
SECTION 3. Subchapter B, Chapter 802, Government Code, is | ||
amended by adding Section 802.109 to read as follows: | ||
Sec. 802.109. INVESTMENT PRACTICES AND PERFORMANCE | ||
REPORTS. (a) Except as provided by Subsection (d), a public | ||
retirement system shall select an independent firm with substantial | ||
experience in evaluating institutional investment practices and | ||
performance to evaluate the appropriateness, adequacy, and | ||
effectiveness of the retirement system's investment practices and | ||
performance and to make recommendations for improving the | ||
retirement system's investment policies, procedures, and | ||
practices. Each evaluation must include: | ||
(1) an analysis of any investment policy or strategic | ||
investment plan adopted by the retirement system and the retirement | ||
system's compliance with that policy or plan; | ||
(2) a detailed review of the retirement system's | ||
investment asset allocation, including: | ||
(A) the process for determining target | ||
allocations; | ||
(B) the expected risk and assumed rate of return, | ||
categorized by asset class; | ||
(C) the appropriateness of selection and | ||
valuation methodologies of alternative and illiquid assets; and | ||
(D) future cash flow and liquidity needs; | ||
(3) a review of the appropriateness of investment fees | ||
and commissions paid by the retirement system; | ||
(4) a review of the retirement system's governance | ||
processes related to investment activities, including investment | ||
decision-making processes, delegation of investment authority, and | ||
board investment expertise and education; and | ||
(5) a review of the retirement system's investment | ||
manager selection and monitoring process. | ||
(b) The governing body of a public retirement system may | ||
determine additional specific areas to be evaluated under | ||
Subsection (a) and may select particular asset classes on which to | ||
focus, but the first evaluation must be a comprehensive analysis of | ||
the retirement system's investment program that covers all asset | ||
classes. | ||
(c) A public retirement system shall conduct the evaluation | ||
described by Subsection (a): | ||
(1) once every three years, if the retirement system | ||
has total assets the book value of which, as of the last day of the | ||
last fiscal year considered in an evaluation under this section, | ||
was at least $100 million; or | ||
(2) once every six years, if the retirement system has | ||
total assets the book value of which, as of the last day of the last | ||
fiscal year considered in an evaluation under this section, was at | ||
least $30 million and less than $100 million. | ||
(d) A public retirement system is not required to conduct | ||
the evaluation described by Subsection (a) if the retirement system | ||
has total assets the book value of which, as of the last day of the | ||
preceding fiscal year, was less than $30 million. | ||
(e) A report of an evaluation under this section must be | ||
filed with the governing body of the public retirement system not | ||
later than December 1 of each year in which the system is evaluated | ||
under Subsection (c). | ||
(f) Not later than the 31st day after the date the governing | ||
body of a public retirement system receives a report of an | ||
evaluation under this section, the governing body shall submit the | ||
report to the board. | ||
(g) A public retirement system shall pay the costs of each | ||
evaluation of the system under this section. | ||
(h) Not later than February 1 of each year, the board shall | ||
submit an investment performance report to the governor, the | ||
lieutenant governor, the speaker of the house of representatives, | ||
and the legislative committees having principal jurisdiction over | ||
legislation governing public retirement systems. The report must | ||
compile and summarize the information received under this section | ||
by the board during the preceding calendar year. | ||
(i) A report of an evaluation by the Teacher Retirement | ||
System of Texas and an investment report that includes the Teacher | ||
Retirement System of Texas under this section satisfies the | ||
requirements of Section 825.512. | ||
SECTION 4. Notwithstanding Section 802.109(c), Government | ||
Code, as added by this Act, a report of the first evaluation of a | ||
public retirement system, as required by Section 802.109, | ||
Government Code, as added by this Act, must be filed with the | ||
governing body of the system not later than January 1, 2020. | ||
SECTION 5. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2019. |