85R5318 LED-D     By: Huffman S.B. No. 509       A BILL TO BE ENTITLED   AN ACT   relating to the evaluation of investment practices and performance   of certain public retirement systems.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 802.002(a), Government Code, is amended   to read as follows:          (a)  Except as provided by Subsection (b), the Employees   Retirement System of Texas, the Teacher Retirement System of Texas,   the Texas County and District Retirement System, the Texas   Municipal Retirement System, and the Judicial Retirement System of   Texas Plan Two are exempt from Sections 802.101(a), 802.101(b),   802.101(d), 802.102, 802.103(a), 802.103(b), 802.109, 802.2015,   802.2016, 802.202, 802.203, 802.204, 802.205, 802.206, and   802.207. The Judicial Retirement System of Texas Plan One is exempt   from all of Subchapters B and C except Sections 802.104 and 802.105.   The optional retirement program governed by Chapter 830 is exempt   from all of Subchapters B and C except Section 802.106.          SECTION 2.  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)  A public retirement system shall select an   independent firm with substantial experience in evaluating   institutional investment practices and performance to evaluate the   retirement system's investment practices and performance.  Each   evaluation must include:                (1)  a detailed summary of the retirement system's   investment asset allocations;                (2)  any investment policy or strategic investment plan   adopted by the retirement system in order to evaluate the   retirement system's portfolio risk, cash flow, and liquidity;                (3)  the names of investment managers appointed by the   retirement system's governing body; and                (4)  a description of the retirement system's asset   retention process.          (b)  The governing body of a public retirement system shall   determine specific areas to be evaluated under Subsection (a), but   the first evaluation must be a comprehensive analysis of the   retirement system's investment program.          (c)  A public retirement system shall conduct the evaluation   required by Subsection (a):                (1)  biennially, 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 five 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 less than $100 million.          (d)  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).          (e)  A public retirement system shall pay the costs of each   evaluation of the system under this section.          (f)  Not later than the 45th day after the first day of a   public retirement system's fiscal year, the governing body of the   system shall submit to the board an annual investment performance   report.  The report must include:                (1)  a listing of all 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                (2)  a copy of the retirement system's most recent   evaluation under Subsection (a).          (g)  Not later than February 1 of each year, the board shall   submit a comprehensive 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 the information received under this section   by the board during the preceding calendar year.          SECTION 3.  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 December 1, 2018.          SECTION 4.  This Act takes effect September 1, 2017.