TX NATURAL RESOURCES CODE

SUBTITLE B. SURVEYS AND SURVEYORS

CHAPTER 51. LAND, TIMBER, AND SURFACE RESOURCES

SUBCHAPTER I. ACQUISITION OF PUBLIC SCHOOL LAND



§ 51.401. SPECIAL FUND ACCOUNT.
     (a) The board may designate funds received from the sale of permanent school fund land under this chapter and the proceeds of future mineral leases and royalties generated from existing and future leases of permanent school fund mineral interests received under Chapters 52 and 53 for deposit in a special fund account of the permanent school fund in the State Treasury to be used by the board as provided by this subchapter.
     (b) The special fund account must be an interest-bearing account, and the interest received on the account shall be deposited in the State Treasury to the credit of the permanent school fund.
     (c) Money received from the sale of a particular piece of land under this subchapter must be used by the board as provided by this subchapter not later than two years after the date of the sale of land from which the money is derived. Money received from the lease of minerals and royalties derived from leases and designated for use by the board as provided by this subchapter must be used by the board not later than two years after the date the money is deposited in the special fund account.
     (d) Any money remaining in the special fund account for longer than two years shall be deposited in the State Treasury to the credit of the permanent school fund.
     (e) Section 403.095, Government Code, does not apply to a fund account created under this section.

Added by Acts 1985, 69th Leg., ch. 624, § 40. Amended by Acts 1993, 73rd Leg., ch. 991, § 18, eff. Sept. 1, 1993; Acts 2001, 77th Leg., ch. 900, § 1, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 328, § 6, eff. Jan. 1, 2004; Acts 2005, 79th Leg., ch. 1098, § 7, eff. June 18, 2005.

§ 51.402. USE OF DESIGNATED FUNDS.
     (a) The board may use the money designated under Section 51.401 for any of the following purposes:
          (1) to add to a tract of public school land to form a tract of sufficient size to be manageable;
          (2) to add contiguous land to public school land;
          (3) to acquire, as public school land, interests in real property for biological, commercial, geological, cultural, or recreational purposes;
          (4) to acquire mineral and royalty interests for the use and benefit of the permanent school fund;
          (5) to protect, maintain, or enhance the value of public school land;
          (6) to acquire interests in real estate; or
          (7) to pay reasonable fees for professional services related to a permanent school fund investment.
     (b) Before using funds under Subsection (a), the board must determine, using the prudent investor standard, that the use of the funds for the intended purpose is in the best interest of the permanent school fund.
     (c) Notwithstanding Subsection (a), the market value of the investments in real estate under this section on January 1 of each even-numbered year may not exceed an amount that is equal to 15 percent of the market value of the permanent school fund on that date.

Added by Acts 1985, 69th Leg., ch. 624, § 40. Amended by Acts 2001, 77th Leg., ch. 900, § 2, 3, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 280, § 30, eff. June 18, 2003; Acts 2005, 79th Leg., ch. 1098, § 8, eff. June 18, 2005.

§ 51.4021. APPOINTMENT OF SPECIAL FUND MANAGERS.
     (a) The board may appoint investment managers to invest the money designated under Section 51.401 by contracting for professional investment management services with one or more organizations that are in the business of managing real estate investments.
     (b) To be eligible for appointment under this section, an investment manager must be:
          (1) registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.);
          (2) a bank as defined by that Act; or
          (3) an insurance company qualified to perform real estate investment services under the laws of more than one state.
     (c) In a contract under this section, the board shall specify any policies, requirements, or restrictions, including ethical standards and disclosure policies and criteria for determining the quality of investments and for the use of standard rating services, that the board adopts for real estate investments of the permanent school fund. Money designated under Section 51.401 may not be invested in a real estate investment trust, as defined by Section 200.001, Business Organizations Code.
     (d) Compensation paid to an investment manager by the board must be consistent with the compensation standards of the investment industry and compensation paid by similarly situated institutional investors.
     (e) Chapter 2263, Government Code, applies to investment managers appointed under this section. The board by rule shall adopt standards of conduct for investment managers appointed under this section as required by Section 2263.004, Government Code, and shall implement the disclosure requirements of Section 2263.005 of that code.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.

§ 51.404. TITLE SECURITY.
     (a) Real property acquired under this chapter shall be conveyed to the state by warranty deed.
     (b) The board may purchase or acquire title insurance for any real property purchased under this chapter.

Added by Acts 1985, 69th Leg., ch. 624, § 40. Amended by Acts 2003, 78th Leg., ch. 280, § 32, eff. June 18, 2003.

§ 51.405. CONTRACTS FOR PURCHASE.
     The board may enter into contracts for the purchase of property under this subchapter.

Added by Acts 1985, 69th Leg., ch. 624, § 40.

§ 51.406. DEDICATION TO PERMANENT SCHOOL FUND.
     Land acquired under this subchapter is dedicated to the permanent school fund and is subject to sale and lease in the same manner and under the same authority as any other real property dedicated to the permanent school fund.

Added by Acts 1985, 69th Leg., ch. 624, § 40.

§ 51.407. RULES.
     The board shall adopt rules for the implementation of this subchapter.

Added by Acts 1985, 69th Leg., ch. 624, § 40.

§ 51.408. ETHICS POLICY AND TRAINING.
     (a) In addition to any other requirements provided by law, the board shall adopt and enforce an ethics policy that provides standards of conduct relating to the management and investment of the funds designated under Section 51.401. The ethics policy must include provisions that address the following issues as they apply to the management and investment of the funds and to persons responsible for managing and investing the funds:
          (1) general ethical standards;
          (2) conflicts of interest;
          (3) prohibited transactions and interests;
          (4) the acceptance of gifts and entertainment;
          (5) compliance with applicable professional standards;
          (6) ethics training; and
          (7) compliance with and enforcement of the ethics policy.
     (b) The ethics policy must include provisions applicable to:
          (1) members of the board;
          (2) the commissioner;
          (3) employees of the board; and
          (4) any person who provides services to the board relating to the management or investment of the funds designated under Section 51.401.
     (c) Not later than the 45th day before the date on which the board intends to adopt a proposed ethics policy or an amendment to or revision of an adopted ethics policy, the board shall submit a copy of the proposed policy, amendment, or revision to the Texas Ethics Commission and the state auditor for review and comments. The board shall consider any comments from the commission or state auditor before adopting the proposed policy.
     (d) The provisions of the ethics policy that apply to a person who provides services to the board relating to the management or investment of the funds designated under Section 51.401 must be based on the Code of Ethics and the Standards of Professional Conduct prescribed by the Association for Investment Management and Research or other ethics standards adopted by another appropriate professionally recognized entity.
     (e) The board shall ensure that applicable provisions of the ethics policy are included in any contract under which a person provides services to the board relating to the management and investment of the funds designated under Section 51.401.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.

§ 51.409. DISCLOSURE OF CONFLICTS OF INTEREST AND FINANCES.
     (a) A member of the board, the commissioner, an employee
      of the board, or a person who provides services to the board that relate to the management or investment of the funds designated under Section 51.401 who has a business, commercial, or other relationship that could reasonably be expected to diminish the person's independence of judgment in the performance of the person's responsibilities relating to the management or investment of the funds shall disclose the relationship in writing to the board.
     (b) The board or the board's designee shall, in the ethics policy adopted under Section 51.408, define the kinds of relationships that may create a possible conflict of interest.
     (c) A person who is required to file a disclosure statement under Subsection (a) shall refrain from giving advice or making decisions about matters affected by the conflict of interest unless the board, after consultation with the general counsel of the board, expressly waives this prohibition. The board shall maintain a written record of each waiver and the reasons for it. The board may delegate the authority to waive prohibitions under this subsection to one or more designated employees of the land office on a vote of a majority of the members of the board at an open meeting called and held in compliance with Chapter 551, Government Code. The board shall have any order delegating authority to waive prohibitions under this section entered into the minutes of the meeting. The board may adopt criteria for designated employees to use to determine the kinds of relationships that do not constitute a material conflict of interest for purposes of this subsection.
     (d) Each employee of the board who exercises significant decision-making or fiduciary authority, as determined by the board, shall file financial disclosure statements with a person designated by the board. The content of a financial disclosure statement must comply substantially with the requirements of Subchapter B, Chapter 572, Government Code. A statement must be filed not later than the 30th day after the date a person is employed in a significant decision-making or fiduciary position and annually after employment not later than April 30. The filing deadline may be postponed by the board for not more than 60 days on written request or for an additional period for good cause, as determined by the chairman of the board. The board shall maintain a financial disclosure statement for at least five years after the date of its filing.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.

§ 51.410. REPORTS OF EXPENDITURES.
     A consultant, advisor, broker, or other person providing services to the board relating to the management and investment of the funds designated under Section 51.401 shall file with the board regularly, as determined by the board, a report that describes in detail any expenditure of more than $50 made by the person on behalf of:
          (1) a member of the board;
          (2) the commissioner; or
          (3) an employee of the board.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.

§ 51.411. FORMS;
     PUBLIC INFORMATION.
     (a) The board shall prescribe forms for:
          (1) statements of possible conflicts of interest and waivers of possible conflicts of interest under Section 51.409; and
          (2) reports of expenditures under Section 51.410.
     (b) A statement, waiver, or report described by Subsection (a) is public information.
     (c) The board shall designate an employee of the board to act as custodian of statements, waivers, and reports described by Subsection (a) for purposes of public disclosure.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.

§ 51.412. REPORTS TO LEGISLATURE.
     (a) Not later than September 1 of each even-numbered year, the board shall submit to the legislature a report that, specifically and in detail, assesses the direct and indirect economic impact, as anticipated by the board, of the investment of funds designated under Section 51.401 for deposit in the special fund account of the permanent school fund. The board may not disclose information under this section that is confidential under applicable state or federal law. The report must include the following information:
          (1) the total amount of money designated by Section 51.401 for deposit in the special fund account of the permanent school fund that the board intends to invest;
          (2) the rate of return the board expects to attain on the investment;
          (3) the amount of money the board expects to distribute to the permanent school fund after making the investments;
          (4) the distribution of the board's investments by county;
          (5) the effect of the board's investments on the level of employment, personal income, and capital investment in the state; and
          (6) any other information the board considers necessary to include in the report.
     (b) Not later than January 1 of each odd-numbered year, the board shall submit to the legislature a report that assesses the return and economic impact of the investments reported to the legislature before the preceding regular legislative session.

Added by Acts 2005, 79th Leg., ch. 1098, § 9, eff. June 18, 2005.