~%~1.~ 9~~~ '~ Item No. 7.° Informational presPntat:_ion by Ron Srhult,z, (Invest.ment. Conr~ul.t;ant for Texas A:.:,or_:iation of Counties;) nn the' overall. operation and financial condition of Tex Pool anti the Countries rove:~trnents . Mi:'. SC.Ylultz Went. UVer' lnterF.'St rate>, inflation, ~>rC)dL1Ct1VE' limit.;, anti discussed Tex Pool, He answered questions the Court. had e'en Tex Pooa.. The Court would like for BarY~ara to work with Ron Schultz to be able to invest our money better. i ~~~~~~~ ~~o~~~ ~ ~~~ ~~ ~ ~~~~ i ~~~~~ TEXPOOL V. 90% OF 75% OF 90 DAY UST-BILL 8.25% 7.75% 7.25% 6.75% 6.25% 5.75° 5.25°i 4.75° 4.25° 3.75°. 3.25' 2.75' 2.25' 1.75 IVG MO RATE DAY UST-BILL ~ DAY UST-BILL 111193 '.5C t.01 6.5 6.C 5.! 5. 4. 95 30YA-BINJD Q a w H u d w z W H 0 0 0 0 0 0 0 0 ~ M N r r r r N Q W PUBLIC FUNDS INVESTMENT (Government Code 10) Chapter 2256. Public Funds Investment Public Funds Investment Act (short title) previously known as S42ct-2 Subchapter A. Authorized Investments for Governmental Entities Amendment by Acts 1993, 73rd Leg., ch. 181, § 1 V.T.C.A. Government Code, ~ 311.031(c) provides, in part, that. the repeal of a statute by a code does not affect urz cnn.erzcbrzent of the •stattcte by the same legislature which enacted the code and that the amendment is preserved and given effect as port. of the code provision. Section 1 of Acts 1993, 73rd Leg., ch. 181, eff Aug. 3U, 1993, adds ~ S(c•) to Vernon'. Ann.Civ.St. art.. 842ct-2 [now this sr.tbchcrpterJ without reference to the repeal of said article by Acts 1993, 73rd Leg., ch. 268, ~ 46(1). The added ¢ S(c) reads: "The cottnty tax assessor-collector nasty use electronic naear7s tv tr•unsfer or• invest. ad vctlorena taxes collected on behalf•of the corurry, crs we ll as prrrsucrnt to a contract with other taxing untts. " Amendment by Actti 1993, 73rd Leg., di. 858, § 1 V.T.C.A. Government Code, ~ 311.031(c) provides, in part, that the repeal of a stcrtttte by a code does not affect an amendment of tlae ,rtattcte by the same legislature which enacted the code and that the amendnaerzt. is preserved and given ~ffec•t as port of the code provision. Sectio-i 1 ofActs 1993, 73rd Leg., ch. 858, eff. June 18 , 1993, adds ~ 2 (e) to Verrzon's Ann.Civ.St. art. 842a-2 [norv this sttbchupter] without reference to the repeal of said article by Acts 1993, 73rd Leg., ch. 268, ~ 46(1). The added ~ 2 (e) reads: "In addition to investments urtthorized by other lctw, the state, Cl Clepal•tr71e1'ZL, COrnrlZt.SSlon, board, off ce, or any other entity of•state ~~~overnm.ent or are entity listed in Sctbsec•tiora (a) of this section pray invest ZZT b017C11' issr.ted, ussr.uned, or grtctranteed by the Stctte of Lsrctel. " Amendment by Acts 1993, 73rd Leg., ch. 946, § 1 V.T.C.A. Governrrtent Code, SS 311.U31(c) provides, in part, that. the repeal of a statttte by a cvde does not affect urz ana.endrrrent of the stcrtrtte by the same legislutaere which enacted the code and that. the am.erubnent. is preserved crud given effect us part of the code provision. Section 1 ofActs 1993, 73rd Le~~~., ch. 946, eff: Aug. 30, 1993, cunends section 2 of Verrzvn's Ann.Civ.St. art.. 842a-2 [now this sr.tbchapterJ without reference to the repeal cif said article by Acts 1993, 73rd Leg., ch. 268, ~ 46(1). As so amended, •sec•tior2 2 reads: "(a) An irtcorl)orated city or town, a counh~, ct public school. di•rtric•t, a district. or authority created under Article III, Section. 52(b)(1) Ol' (2), or Article XVt, Section 59, of the Texas Cvnstitettion, cui instttt.tttorl Of htgller ecktcation cr•c deftrted by Section 61.003 of the Education Code, a hospital district, afresh water ,supply distr•ic•t, or cozy nor~profrt corporation or public •fr.tnds irtvestnxera.t. pool created under Chapter 791, Goverrarner7t Cade, acting' on behalf of any of 11-~ those entities nzay, in accordance with. this Ac•t, purchase, sell, cnzd invest. its faends cnzrl fonds under its control in the following: "(1) obligations of the United States or• its agencies and instrturzentulities; "(2) direct obligutiorzs of th.e Stcrte of Texas or its agencies; "(3) other obligations, the principal of and interest. on which are t.enconditionally guaranteed or insured by, or backed by the fr.tll faith and credit of, the State of Texas or the United States or its agencies and instratrnentalities; "(4) obligutiorzs of states, agerzc•ies, counties, cities, and other politic•ul subdivisions of mzy state having been rated crs to investment. quality by u nationally recognized investment rating firm. and having received u rctting of net less thurz A or its equivalent; "(5) certific•utes of deposit issated by state arzd national bunks domiciled in this state that are: "(A) guaranteed or irz.rured by the Federal Deposit Insttranc•e Corporutiorz, or its satccessvr; or "(B) sect.tred by obligations that are described by Setbdivisivrz.s (1)-(4) of this subsection, which. are intended to in.cltrde all direct federal agency or• instr•umentaliryissaed nwrtgage backed sect.erities that hcr.ve ct rncu-ket value of not less thmz the principal. amot.erzt of the certificates or in crrzy other nzanrzc> stag therc~of,• and "(9) ftrll~~ colluter•ulized repu.r•chase u~~~re~errrents having a define termination date, .SeClrl'eCl by Obh~~'LrtlOn.S described by Subdivisivrz (1) of this st.r.bsection, pledged to the political entity and deposited with. u. third part~~ selected and approved by the political entity, 11-4 and placed throregh cl primary ~~=overnnlent. securities dealer, us defined by the Federal Reserve, or a bank domiciled in this state. "(b) In LIdC11t1o11 t0 the Ir1VL'Stl11L'11t.S described by St.rbsectu)n (Cl) Of IhIS SeCtlOn, an institution of higher education us defined by Sec•tio-161.003 of the Education Code may, in accordance with this Act, purchase, sell, and invest its fi.rndr and fiuuls iulder its control in the following: "(I) cosh management and frxed income ftrruls sponsored by organizations exempt from federal income tcixativn Under Section SUI (fl, Internal Revenue Code of 1986 (26 U.S.C. Section 501(f)), and its sr.lbsegtcent uniencbnentr; "(2) negotiable certifrcates of deposit issued by u bank that. has u certificate of deposit ruling of ut least 1 or the ecprivulerlt. by a nationally recognized credit rating agency or that is associated with cr holding company having u c•nnlnlercial paper rating of at leustA-1, P-1, or the equivalent by a nationally recognized credit. toting agency; and "(3) corporate bonds, debentir.res, or similar debt. obligations rated by cl nationally recogrllzed urvestmerlt r'C1t111~~~•f1r711. in one of the nvo highest long-term rating categories, withoict regard to grcrdcetivn,c within those cute~r,~ories. "(c) In this section: "(I) `Bond proceeds' inc•lirde.s belt rs not limited to proceeds fr•onl the sale of bonds and reserves crud fields mcrintcr.ined fvr debt service purposes. "(2) `Prime domestic• ban.ker•s' ucc•eptarlces' nlecrns u bunkers' ucceptcrnc•e with u stated nlaticrity of 270 days or less fr•on1. the dote of•its issLUmce that. will be, in accordance with its terms, ligLCiduted in fi.ell at nlatieri>)l, that. is eligible for c•ollaterul for borrowing from a Federal Reserve Bank, curd that. is accepted by a bunk organized and existing iulder the laws of the United States or any state, the short-term obligations of which (or qf•a bank holding company of which. the bunk is the lcu•gest sLr.bsidiury) are rated at least A-1, P-1, or the egLCivulent. by ut least. one rurtion.cdly recognized credit. rating agency. "(3) `Repurchase ugreenlent' nlearls a sinudtuneoics agreement to brry, hokl for u specified tune, arul then sell buck ut a firtur•e dote, obli~~~utivr7s described by Subsection (u)(1) of this section, the principal and irl.terest of which are gr.ulrunteed by the Untied States or any of its agencies, ill market. valise of not less than the principal cunount. of the funds disbursed. The term. includes direct. secvu•i>)1 repirr•chcrse agreements and reverse secir.rity repurchase agreements. "(4) `Public fiends irlvestnlerlt pool' nlecrns an entity created to invest. public funds jointly on behalf of the entitr'es that purticipcrte in the pool and whose irzvestm.erlt. objectives in order of priority are: first, safety of princ•ipul; second, liquidity; and third, income. "(d) In addition to the investments described by Subsection. (cr.), of this section, an entity listed in that subsection may, in accordance with this Ac•t, prerchuse, sell, and invest its funds and firnds colder its control in a no-load nlorley nutrket. nurtirul fund that is regl.r.luted by the federal Seclr.rities a-ul E.xchcul~~~e Commission. with. a dollar-x~ei~s,~hted cevercrge stetted maturity of 90 clays or less cold whose invea'tment objectives include seeking to nlcri-ltuin a stable net asset. value of $1 per shcn•e. Nn entity li.,•tc'd in Subsection (u) of this section is uiethorized by this Act to invest in the u~~~~~~re~~~atc more than <40 pc scent of its monthly crveru~~~e fiend balance, excllcdin~S~ bond proceeds, in motley nlcn•kc't nlrrtucrl•fu-uls described in this subsection or to invest its funds or firnds Inkier its control, excluding bond proceeds, in any one money market 11-5 mittttal ftelul in an umvtu~t that exceeds 1 U percent of the total assets of the money n~tarket m.utttul fund. "(e) An entity listed in Subsection (u) of this section n7rry invest its fieluls and fitncls gender its control in an eligible public ft.mds investment pool if the governing body of the entity by resolution authorizes investment in the purticttlar pool. A public fttncLs investment pool may invest the funds it receives from entities li.stecl in Subsection (u) of this section in any investment described by that subsection. A public funds investment pool shall establish an advisory board composed of pctrticipunts in the pool and other persons why are qualified to advise the pool. "(f) To become eligible to receive funds from. trod invest funds on behalf of an entity listed in Subsection (a) of this section, a pteblic fitncls investment pool )Host furnish to the chief financial officer or other authorized repre.rentutive of the entity an offering circular or other similar disclosure instrument that colztuins, at a n7.ininuun, the following information: "(1) the types of ilivest7mentr in which money i.s allowed to be inve.stecl; "(2) the maximum average dollar-weighted mcrttcriry allowed, based on the stated maturity date, of the pool; "(3) the nutxin7atln stated muttr.rtty date any uwestment. security within the portfolio may have; "(4) the objectives of the pool; "(S) the size of the pool; "(6) the names of the members cif the advisory board of the pool and the dotes their terms expire; "(7) the catstodian bank that will scrfekeep the pool's assets; "(8) whether the ilztent. of the pool is to nul.intuin a lief u.s.set vahce of one dollar and the risk of market pric•e.fhtcnlation; "(9) whether the only source of puym.ent. is the assets of the pool at. market value or whether there is u seco-~drtry source of puyrment, such a.r insurance or guarantees, and a description of th.e secondary source of payment; "(10) the Hume and address of the independent. atr.ditor of the pool; "(I1) the regtr.irements to be satisfied for an entity to deposit funds in and withdraw funds from the pool artd ar~y deadlines or other operatinl,= policies required for the entity to invest fitncls in and withdraw fitruls from the pool; and "(12) the perfornacmce history of the pool, inchtdir7g yield, overage dollar-weighted maturities, a11C1 eXpC'17Se TatlOS. "(g) To nruintuir~ eligtb7hty t0 1'C:CL'lVe fr!l7C1Y fl'U11Z alld tnve.l't funds on behalf of an entity listed irz Subsection (cr) of this sectivrt, a public fitncls investment pool nrctst furnish to the chief financial v~cer or other atr.thorized representative of the entity: "(I) invesUn.ent. trun.S(lCt1Un CU77flI'n7C111o11.S; and "(2) ct -r7.vlzthly report that contains, crt a minimum, the fnllowirig tnfvrnrutron: 11-~ "(A) the types and percentage breakdown of secrcrities in which the pool is invested; "(B) the current average dollar-weighted maturity, based on the stated maturity date, of the pool.; "(C) the cacrrent. percentage of the pool's portfolio in investments that have stated matacrities of greater than one year; "(D) the carrying value versais tlae naurket value of the pvol's portfvlio, ccsing amortized cost vala~ution; "(E) the size of the pool; "(F) the ncranber of participuaats in the pool; "(G) the cac.stoclian bcraak that is .cufekeeping the cr.s.sets of the pool; "(H) a listin~~~ of daily transaction activity of the entity purticiputiaag in the pool; "(I) the yield and expense ratio of the pool; "(J) the portfolio managers of the pool; oral "(K) uary changes yr uddendct to the offering circaelccr." § 2256.001. Short Title This subchapter may be cited as the Public Funds Investment Act Added by Acts 1993, 73rd Leg., ch. 2C,8, § 1, eft. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Actti 1987, 70th Lea., ch. 889. Vernon's Ann. Civ. St. art. 842a-2, ~ 1. § 2256.(H)2. Definitions In this subchapter: (1) "Institution of higher education" has the meaning assigned by Section b1.003, Education Code. (2) "School district" means a public school district. Added by Actti 1993, 73rd Leg., ch. 268, § 1, eft. Sept. 1, 1993. Prior Laws: Act. 1987, 70th Lea., ch. 889. Acts 1989, 71st Lea., ch. 39, § 1. Acts 1989, 71st Lea., ch. 628, § 1. Historical and Statutory Notes Acts 1989, 71st Leg., ch. 693, § 4. Acts 1989, 71st Leg., Ch. 750, § 1. Vernon's Ann. Civ. St. art. 842a-2, § 2(a). § 2256.0(13 Authority to Invest Funds Each governing body of the following entities may purchase, sell, and invest its funds and funds under its control in investments authorized under this subchapter in compliance with investment policies approved by the governing body and according to the standard of care prescribed by Section 225C.OU5: 11-7 (1) a municipality; (2} a county; (3) a school district; (4) a district or authority created under: (A) Article III, Section 52(b)(1) or (2), of the Texas Constitution; or (B) Article XVI, Section 59, of the Texas Constitution; (5) an institution of higher education; (6) a hospital district (7) a nonprofit corporation acting on helialf of an entity listed in Subdivisions (1) through (6); or (8) a public funds investment pool created under Chapter 791 acting on behalf of a combination of entities listed in Subdivisions (1) through (h). Added by Acts 1993, 73rd Leg., ch. 268, § 1, eft. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1987, 70th Leg., ch. 889 Acts 1989, 71st Leg., ch. 693, § 4. Acts 1989, 71st Leg., ch. 39, § 1. Acts 1989, 71st Leg., ch. 750, § 1. Acts 1989, 71st Leg., ch. 628, §§ 1, 2. Vemon's Ann. Civ. St. art. 842a-2, §§ 2(a), 5(a) § 2256.004 Investment Policies (a) The investment policies must: (1) be written; (2) primarily emphasize safety of principal and liquidity; and (3) address investment diversification, yield, and maturity and the quality and capability of investment management. (b) The investment policies may provide that bids for certificates of deposit be solicited: (1) orally; (2} in writing; (3} electronically; or (4) in any combination of those methods. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Prior Laws: ACLS 1987, 70th Leg., ch. 889. § 2256.005. Standard of Care Historical and Statutory Notes Acts 1989, 71st Leg., ch. 628, § 2. Vernon's Ann.Civ.St. art. 842a-2, § 5. Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Prior Laws: AC[s 1987, 70th Leg., ch. 889 Vemoii s Ann.Civ.St. art 842a-2, § 4. Historical and Statutory Notes 11-8 § 2256.006. Authorized Investments: Obligations of, or Guaranteed by, Governmental Entities The following are authorized investments under this subchapter: (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of this state or its agencies; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal of and interest of which are unconditionally guaranteed or insured by this state or the United States or its instrumentalities; and (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent. Added by Acts 1993, 73rd Led., clt. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1993, 73rd Leg., ch. 820, § 2, eff. Sept. 1, 1993. Historical and Statutory Notes Section 3(c) of the 1993 vnendatory act provides: p