By: Bonnen H.B. No. 104       A BILL TO BE ENTITLED   AN ACT   relating to the creation of the Texas future fund, the Texas future   fund investment review board, and permissible investments by the   economic stabilization fund.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 403 Government Code, is amended by   adding Subchapter U to read as follows:          SUBCHAPTER U.  TEXAS FUTURE FUND          Sec. 403.701.  DEFINITIONS. In this subchapter:                (1)  "Fund" means the Texas future fund.                (2)  "Board" means the Texas future fund investment   review board.                (3)  "Trust company" means the Texas treasury   safekeeping trust company.          Sec. 403.702.  ESTABLISHMENT; PURPOSE.  (a)  The Texas   future fund is established to strengthen the state's proven   leadership in supporting the advancement of innovative   technologies.          (b)  The purpose of the fund is to develop and diversify the   economy of Texas by making investments in frontier technology   infrastructure, industry sectors critical to national defense, and   other innovative technologies as recommended by the board.          Sec. 403.703.  TEXAS FUTURE FUND. (a)  The Texas future fund   is a separately managed account within the Texas economic   stabilization fund to be administered by the comptroller.          (b)  Under guidance of the board, the trust company, or the   trust company's designated investment manager, shall make   investments with money from the fund as authorized by this   subchapter.  The trust company or its investment manager may,   pursuant to the board policy adopted under Sec. 403.708, invest   proceeds, interest earned, or other earnings received from the sale   of stock or other investments in the fund.  The trust company shall   provide separate accounting and reporting for the investments in   the fund and shall credit to the fund all payments, distributions,   interest, and other earnings on the investments in the fund.          (c)  In managing these investments, the trust company may,   under guidance of the board, 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.          (d)  Amounts invested pursuant to this subchapter are not   included in the balance of the economic stabilization fund for   purposes of Section 404.0241(b).          (e)  The reasonable expenses of administering and managing   the fund and its assets shall be paid from the fund.          Sec. 403.704.  THIRD-PARTY CONTRACTS; AUDITS.  (a)  The   trust company may enter into contracts 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 subchapter.  An entity that is contracted to administer,   manage, or custody assets of the fund shall be required   contractually to act in a fiduciary capacity with respect to the   assets of the fund.          (b)  The trust company may contract with a certified public   accountant to perform an independent audit of the fund.          (c)  The trust company may contract with a licensed attorney   to review contracts and other legal documents.          Sec. 403.705.  FUTURE FUND INVESTMENT REVIEW BOARD   COMPOSITION. (a)  the Texas future fund investment review board is   the governing body of the fund.  The board is composed of the   following nine members:                (1)  two members appointed by the governor;                (2)  two members appointed by the lieutenant governor;                (3)  two members appointed by the speaker of the house   of representatives; and                (4)  three members appointed by the comptroller of   public accounts, one of which shall be designated the chair of the   board.          (b)  In making appointments to the board:                (1)  the governor, lieutenant governor, speaker of the   house of representatives, and comptroller must each appoint one   member with experience in either private equity, venture capital,   or similar fields.                (2)  the governor, lieutenant governor, speaker of the   house of representatives, and comptroller must each appoint one   member with experience in either frontier technology   infrastructure, industry sectors critical to national defense, or   other innovative technologies; and                (3)  the comptroller must appoint one member with   experience managing, directing, overseeing, or investing public   funds or public pension assets.          (c)  A person may not be a member of 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. 403.706.  BOARD MEMBER TERMS; VACANCY.  (a)  board   members appointed by the governor, lieutenant governor, speaker of   the house, and comptroller serve at the pleasure of the appointing   office for 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.          (c)  If a vacancy occurs on the board, the appropriate   appointing authority shall appoint a successor, in the same manner   as the original appointment, to serve for the remainder of the   unexpired term.  The appropriate appointing authority shall appoint   the successor not later than the 30th day after the date the vacancy   occurs.          Sec. 403.707.  CONFLICTS OF INTEREST.  (a)  Subject to the   approval of the comptroller, 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 shall, at a minimum,   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. 403.708.  BOARD POWERS AND DUTIES.  (a)  The board shall   oversee the investment of the fund, including providing guidance on   the investment philosophy that should be pursued in managing the   assets of the fund.          (b)  The board shall develop and require adherence to   procedures for operational and investment due diligence on   opportunities that meet the requirements of this subchapter.  The   procedures shall be based upon financial industry best practices.          (c)  The board shall develop and maintain a list of target   industries and opportunities that represent sectors critical to   national defense, frontier technologies with the greatest   potential to drive innovation, and the diversification of the   economy of Texas.          (d)  The board shall establish an investment policy for the   fund.  Subject to the approval of the comptroller, the investment   policy must, at a minimum, include the following requirements,   limitations, and preferences:                (1)  limit Texas future fund investment to no more than   twenty percent of the estimated total value of any single project   calculated at the time of investment;                (2)  limit Texas future fund participation to no more   than thirty percent of the total value of any single company   calculated at the time of the investment;                (3)  prioritization of investments in companies with a   physical presence in Texas;                (4)  prioritization of investments in companies   expanding employment opportunities in Texas;                (5)  a prohibition on the use of race, color,   ethnicity, sex, gender identity, or sexual orientation in   investment decisions; and                (6)  compliance with investment restrictions contained   in Chapters 2270, 2271, 2273, 2274, 2275, and 2276 of the Texas   Government Code.          (e)  The board shall biennially set priorities for the fund's   investment program and consider the priorities in making investment   decisions under this subchapter.          (f)  The board may conduct a closed meeting in accordance   with Subchapter E, Chapter 551, Texas Government Code, to discuss   issues related to managing, acquiring, or selling securities.          (g)  The board shall meet at least two times per year to   review the fund's investments.          (h)  The comptroller shall provide administrative support   and resources to the board as necessary for the board to perform its   duties under this subchapter.          (j)  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 as of the most   recent fiscal-year end, including the name of the companies, the   amount of the investments, and brief description of the companies   activities; and                (2)  a summary of the estimated impact the investments   have had on the Texas economy.          Sec. 403.709.  PUBLIC INFORMATION.  (a)  The following   information is public information and may be disclosed under   Chapter 552, Government Code:                (1)  the name, address, and a summary description of an   entity that has received an investment from the fund;                (2)  the date on which the fund made an investment in   the company and the date of any follow-on investments if   applicable;                (3)  the dollar amount of capital committed or invested   in a company or project;                (4)  the dollar amount of capital returned by the   company 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 the fund   has made and the date on which the return or other investment   performance metric was calculated;                (6)  the names of the principals responsible for   managing any company in which the fund is or has 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;                (8)  the minutes and audio or video recordings of each   open portion of a meeting of the board at which an item described by   this subsection was discussed;                (9)  the state's percentage ownership interest in a   company that received an investment from the fund;                (10)  any annual ethics disclosure report submitted to   the board or the trust company from a company that has received an   investment from the fund; and                (11)  any other relevant information concerning a fund   investment with the consent of the receiving company.          (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 a company that has received an investment   from the fund or a company that was considered for an investment   from the fund that is not listed in subsection (a) is confidential   and excepted from the requirements of chapter 552.          Sec. 403.710.  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 program established under this section shall   provide information to the member regarding:                (1)  the role and functions of the board; and                (2)  the requirements of:                      (A)  Chapter 551, Texas Government Code; and                      (B)  Chapter 552, Texas Government Code.          Sec. 403.711.  COMPENSATION AND EXPENSES OF APPOINTED BOARD   MEMBERS. Appointed members of the board shall serve without pay 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 chair of the board.          Sec. 403.712.  INVESTMENT PROCEDURE.  (a)  Subject to the   comptroller's approval, the board shall develop procedures for   making investments under this subchapter.          (b)  For each investment being considered, the trust company   or the trust company's designated investment manager shall:                (i)  present its due diligence findings to the board;                (ii)  provide a written investment memorandum,   summarizing the investment opportunity, along with an assessment   of the expected investment risk and rate of return, and estimated   impact on the state's economy; and                (iii)  provide a summary of how each opportunity being   recommended meets the overall objectives of the board's investment   policy and related investment requirements;            SECTION 2.  Section 404.0241, Government Code, is amended by   adding a new subsection (b-6) to read as follows:          (b-6)  Notwithstanding any other law, the comptroller shall   designate $5 billion of the economic stabilization fund to comprise   a separately managed account within the economic stabilization fund   called the "Texas Future Fund", to be administered by the   comptroller and managed in accordance with Chapter 403, Subchapter   U.          SECTION 3.  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.