Relating to the creation of the Texas future fund and the Texas future fund investment review board and to the permissible uses of money in the Texas future fund.

89(R) HB 104 - Senate Committee Report version - Bill Text

By: Bonnen (Senate Sponsor - Schwertner)

H.B. No. 104

(In the Senate - Received from the House May 6, 2025;

May 6, 2025, read first time and referred to Committee on Finance;

May 25, 2025, reported adversely, with favorable Committee

Substitute by the following vote: Yeas 12, Nays 3; May 25, 2025,

sent to printer.)
Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR H.B. No. 104

By: Schwertner

A BILL TO BE ENTITLED

AN ACT

relating to the creation of the Texas future fund and the Texas

future fund investment review board and to the permissible uses of

money in the Texas future fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle F, Title 4, Government Code, is amended

by adding Chapter 483 to read as follows:

CHAPTER 483. TEXAS FUTURE FUND

SUBCHAPTER A. GENERAL PROVISIONS

Sec.

483.0001.

PURPOSES. The purposes of this chapter are

to:

(1)

strengthen this state's proven leadership in

supporting the advancement of innovative technologies; and

(2)

develop and diversify this state's economy by

authorizing investments in frontier technology infrastructure,

industry sectors critical to national defense, and other innovative

technologies.

Sec. 483.0002. DEFINITIONS. In this chapter:

(1)

"Board" means the Texas future fund investment

review board.

(2) "Fund" means the Texas future fund.

(3)

"Trust company" means the Texas treasury

safekeeping trust company.

Sec.

483.0003.

PUBLIC INFORMATION. (a) The following is

public information and may be disclosed under Chapter 552:

(1)

the name, the address, and a summary description

of an entity that has received an investment of money from the fund;

(2)

the date on which the fund made an investment in an

entity and, if applicable, the date of any additional investments

in the entity;

(3)

the dollar amount of capital committed or invested

in an entity or project;

(4)

the dollar amount of capital returned by an entity

in connection with an investment from the fund;

(5)

the internal rate of return or another investment

performance metric used in connection with each investment of money

from the fund and the date on which the rate of return or other

investment performance metric was calculated;

(6)

the names of the principals responsible for

managing any entity in which money from the fund is or has been

invested;

(7)

each recusal filed by a member of the board in

connection with a deliberation or decision of the board relating to

an investment of money from the fund;

(8)

the minutes and audio or video recordings of each

open portion of a board meeting at which an item described by

another provision of this subsection was discussed;

(9)

the state's percentage ownership interest in an

entity that received an investment of money from the fund;

(10)

any annual ethics disclosure report submitted to

the board or the trust company from an entity that has received an

investment of money from the fund; and

(11)

any other relevant information concerning an

investment of money from the fund with the consent of the receiving

entity.

(b)

All information received by the board, the comptroller,

the trust company, or a contractor of the comptroller or the trust

company from or about an entity that has received an investment of

money from the fund or an entity that was considered for an

investment of money from the fund that is not listed in Subsection

(a) is confidential and excepted from disclosure under Chapter 552.

SUBCHAPTER B. CREATION AND OPERATION OF TEXAS FUTURE FUND

Sec.

483.0051.

CREATION OF FUND. The Texas future fund is

created as a separately managed account in the economic

stabilization fund. The comptroller shall administer the fund.

Sec.

483.0052.

INVESTMENT OF MONEY IN FUND; ACCOUNTING.

(a) The trust company, or the trust company's designated

investment manager, in consultation with the board, shall invest

money in the fund in the manner authorized by this chapter.

(b)

The trust company or its investment manager, as provided

by the investment policy adopted by the board under Section

483.0109, may invest the proceeds and other earnings received from

the sale of stock or other investments made using money in the fund

and any interest earned on amounts in the fund.

(c) The trust company shall:

(1)

credit to the fund all payments, distributions,

interest, and other earnings attributable to the investment of

money in the fund; and

(2)

provide separate accounting for, and reporting on,

the investments made using money in the fund.

Sec.

483.0053.

INVESTMENT STANDARD. In managing the

investments made using money in the fund, the trust company, in the

manner authorized by the board, may acquire, exchange, sell,

supervise, manage, or retain any kind of investment that a prudent

investor, exercising reasonable care, skill, and caution, would

acquire or retain in light of the purposes, terms, distribution

requirements, and other circumstances then prevailing for the fund,

taking into consideration the investment of all the assets of the

fund rather than a single investment.

Sec.

483.0054.

PAYMENT OF FUND EXPENSES. The reasonable

expenses of administering and managing the fund and its assets

shall be paid from the fund.

Sec.

483.0055.

EXCLUSION OF INVESTED AMOUNTS FROM

CALCULATION OF CERTAIN OTHER FUND BALANCES. The amount of money

invested under this chapter is not included in the balance of the

economic stabilization fund for purposes of Section 404.0241(b).

Sec.

483.0056.

THIRD-PARTY CONTRACTS. (a) The trust

company may enter into a contract with one or more qualified third

parties for the administration, management, and custody of the

assets of the fund and any other responsibilities authorized under

this chapter. A contract described by this subsection must require

the third party to act in a fiduciary capacity with respect to the

assets of the fund.

(b)

The trust company shall contract with a certified public

accountant to perform an annual independent audit of the fund and to

evaluate and report on compliance with Section 483.0105.

(c)

The trust company may contract with a licensed attorney

to review contracts and other legal documents.

SUBCHAPTER C. TEXAS FUTURE FUND INVESTMENT REVIEW BOARD

Sec.

483.0101.

CREATION OF BOARD; COMPTROLLER SUPPORT. (a)

The Texas future fund investment review board is established to

serve as the governing body of the fund.

(b)

The comptroller shall provide administrative support

and resources to the board as necessary for the board to perform its

duties under this chapter.

Sec.

483.0102.

BOARD COMPOSITION. (a) The board is

composed of the following nine members:

(1) three members appointed by the comptroller;

(2) two members appointed by the governor;

(3)

two members appointed by the lieutenant governor;

and

(4)

two members appointed by the governor from a list

of candidates for appointment provided by the speaker of the house

of representatives.

(b) In making appointments to the board:

(1)

under Subsections (a)(1)-(3), the comptroller,

governor, and lieutenant governor must each appoint:

(A)

one member with experience in private equity,

venture capital, or a similar field; and

(B)

one member with experience in frontier

technology infrastructure, an industry sector that is critical to

national defense, or another innovative technology;

(2)

under Subsection (a)(4), the governor must

appoint:

(A)

one candidate for appointment with

experience in private equity, venture capital, or a similar field;

and

(B)

one candidate for appointment with

experience in frontier technology infrastructure, an industry

sector that is critical to national defense, or another innovative

technology; and

(3)

the comptroller must appoint at least one member

with experience managing, directing, overseeing, or investing

public funds or public pension assets.

(c)

The governor may reject one or more of the candidates on

a list submitted by the speaker of the house of representatives

under Subsection (a)(4) and request a list of additional candidates

for appointment.

(d)

The comptroller shall designate one member appointed

under Subsection (a)(1) as the presiding officer of the board.

Sec.

483.0103.

BOARD MEMBER TERMS; VACANCY. (a) Board

members serve staggered six-year terms, with the terms of three

members expiring on January 31 of each odd-numbered year.

(b)

Not later than the 30th day after the date a board

member's term expires, the appropriate appointing authority shall

appoint a replacement as provided by Section 483.0102.

(c)

A vacancy on the board shall be filled in the same manner

and is subject to the same qualifications as the original

appointment. A board member appointed to fill a vacancy on the

board shall serve the remainder of the unexpired term.

Sec.

483.0104.

ELIGIBILITY FOR APPOINTMENT TO BOARD. A

person is not eligible for appointment to the board if the person or

the person's spouse:

(1)

is employed by, or participates in, the management

of a business entity or other organization receiving an investment

from the fund; or

(2)

owns or controls, directly or indirectly, an

interest in a business entity or other organization receiving an

investment from the fund.

Sec.

483.0105.

CONFLICTS OF INTEREST. (a) Subject to the

comptroller's approval, the board shall adopt a code of ethics,

including conflict of interest standards, based on standards of

professional conduct and ethics common in the financial industry

for conduct governing members of the board and the investment

decision-making process. Each member of the board shall affirm in

writing the member's compliance with the code of ethics and the

corresponding conflict of interest standards.

(b)

The conflict of interest standards, at a minimum, must

define conflicts of interest and address appropriate standards for

recusal, required disclosure of conflicts, waivers of conflicts,

and actions required to address undisclosed conflicts.

Sec.

483.0106.

BOARD MEMBER TRAINING. (a) Before a member

of the board may assume the member's duties, the member must

complete a training course provided by the comptroller.

(b)

A training course required under this section must

provide information to the board member regarding:

(1) the role and functions of the board; and

(2) the requirements of Chapters 551 and 552.

Sec.

483.0107.

COMPENSATION AND EXPENSES OF BOARD MEMBERS.

Members of the board shall serve without compensation but shall be

reimbursed for their actual expenses incurred in attending meetings

of the board or in performing other work of the board when that work

is approved by the presiding officer of the board.

Sec.

483.0108.

BOARD MEETINGS. (a) The board shall meet at

least twice each year to review the fund's investments.

(b)

The board may conduct a closed meeting in accordance

with Subchapter E, Chapter 551, to discuss issues related to

managing, acquiring, or selling securities.

Sec.

483.0109.

GENERAL POWERS AND DUTIES OF BOARD. (a) The

board shall:

(1)

oversee the investment of the assets of the fund;

and

(2)

provide guidance on the investment strategy to be

used to manage the assets of the fund.

(b)

The board shall develop and require adherence to

procedures for operational and investment due diligence on

investment opportunities that meet the requirements of this

chapter. The procedures must be based upon financial industry best

practices.

(c)

The board shall develop and maintain a list of target

industries and investment opportunities that represent sectors

critical to national defense, frontier technologies with the

greatest potential to drive innovation, and the diversification of

this state's economy.

(d)

The board shall establish an investment policy for the

fund. Subject to the comptroller's approval, the investment

policy, at a minimum, must:

(1)

limit fund investment to no more than 20 percent of

the estimated total value of any single project calculated at the

time of investment;

(2)

limit fund participation to no more than 30

percent of the total value of any single entity calculated at the

time of the investment;

(3)

prioritize investments in entities with a physical

presence in this state;

(4)

prioritize investments in entities expanding

employment opportunities in this state;

(5)

prohibit the use of race, color, ethnicity, sex,

gender identity, or sexual orientation in investment decisions; and

(6)

require compliance with the investment

restrictions contained in Chapters 2270, 2271, 2273, 2274, 2275,

and 2276.

(e)

The board shall establish priorities for the fund's

investment program biennially. The board shall consider those

priorities when making investment decisions under this chapter.

Sec.

483.0110.

INVESTMENT PROCEDURES. (a) Subject to the

comptroller's approval, the board shall develop procedures for

making investments under this chapter.

(b)

For each investment being considered, the trust company

or the trust company's designated investment manager shall:

(1) present its due diligence findings to the board;

(2)

provide a written investment memorandum

summarizing the investment opportunity, along with an assessment

of the expected investment risk and rate of return and estimated

effect on this state's economy; and

(3)

provide a summary of how each investment

opportunity being recommended meets the overall objectives of the

board's investment policy and related investment requirements.

Sec.

483.0111.

BOARD REPORT. Not later than December 31 of

each even-numbered year, the board shall submit a report to the

legislature with the following information:

(1)

a summary of the investments made using money in

the fund during the preceding state fiscal year, including, for

each investment, the name of the entity receiving the investment,

the amount of the investment, and a brief description of the

activities of the entity receiving the investment; and

(2)

a summary of the estimated effect of the

investments made using money in the fund on this state's economy.

SECTION 2. Section 404.0241, Government Code, is amended by

adding Subsection (b-6) to read as follows:

(b-6)

Notwithstanding any other law, the comptroller shall

designate $500 million of the economic stabilization fund balance

as the initial balance of a separately managed account in the

economic stabilization fund. The account shall be known as the

Texas future fund, administered by the comptroller, and managed in

accordance with Chapter 483.

SECTION 3. As soon as practicable after the effective date

of this Act but not later than October 1, 2025, the comptroller of

public accounts, governor, and lieutenant governor shall appoint

the initial members of the Texas future fund investment review

board as required by Section 483.0102, Government Code, as added by

this Act. The initial members appointed to the board, other than

the member designated as the presiding officer of the board, shall

draw lots to determine which three members serve a term that expires

January 31, 2027, which three members serve a term that expires

January 31, 2029, and which two members serve a term that expires

January 31, 2031. The member designated as the presiding officer of

the board serves a term that expires January 31, 2031.

SECTION 4. 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, 2025.

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