By: Bonnen H.B. No. 104       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 $5 billion 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 two-year term,   which three members serve a four-year term, and which two members   serve a six-year term. The member designated as the presiding   officer of the board serves a six-year term.          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.