CHAPTER 825. ADMINISTRATION - Texas Statutes

GOVERNMENT CODETITLE 8. PUBLIC RETIREMENT SYSTEMSSUBTITLE C. TEACHER RETIREMENT SYSTEM OF TEXASCHAPTER 825. ADMINISTRATIONSUBCHAPTER A. BOARD OF TRUSTEESSec. 825.001. COMPOSITION OF BOARD OF TRUSTEES. The board of trustees is composed of nine members.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.001 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.002. TRUSTEES APPOINTED BY GOVERNOR. (a) The governor shall appoint, with the advice and consent of the senate and as provided by this section, seven members of the board of trustees.(b) The governor shall appoint three members of the board to hold office for staggered terms, with the term of one trustee expiring on August 31 of each odd-numbered year. These members must be persons who have demonstrated financial expertise, who have worked in private business or industry, and who have broad investment experience, preferably in investment of pension funds. None of the members appointed under this subsection may be a member or annuitant of the retirement system.(c) The governor shall appoint two members of the board from a slate of three members of the retirement system who are currently employed by a public school district and who have been nominated in accordance with Subsection (f) by the members of the retirement system whose most recent credited service was performed for a public school district. The two members hold office for staggered terms.(d) The governor shall appoint one member of the board from a slate of three former members of the retirement system who have retired and are receiving benefits from the retirement system and who have been nominated in accordance with Subsections (f) and (g) by the persons who have retired and are receiving benefits from the retirement system.(e) The governor shall appoint one member from a slate of three members of the retirement system who are currently employed by an institution of higher education and who have been nominated in accordance with Subsection (f) by the members of the retirement system whose most recent credited service was performed for an institution of higher education.(f) Persons considered for nomination under Subsection (c), (d), or (e) must have been nominated by written ballot at an election conducted under rules adopted by the board of trustees.(g) To provide for the nomination of persons for appointment under Subsection (d), the board shall send to each retiree of the retirement system:(1) notice of the deadline for filing as a candidate for nomination;(2) information on procedures to follow in filing as a candidate; and(3) a written ballot.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 5101, ch. 927, Sec. 1, eff. Sept. 1, 1983. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.002 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 30, eff. Sept. 1, 1995.

Sec. 825.003. TRUSTEES APPOINTED BY GOVERNOR FROM NOMINEES OF BOARD OF EDUCATION. The governor shall appoint two members of the board of trustees, subject to confirmation by two-thirds of the senate, from lists of nominees submitted by the State Board of Education. These members must be persons who have demonstrated financial expertise, have worked in private business or industry, and have broad investment experience, preferably in investment of pension funds.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.003 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 31, eff. Sept. 1, 1995.

Sec. 825.0031. NONDISCRIMINATION IN APPOINTMENTS. Appointments to the board shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointees.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 12, eff. Sept. 1, 1993.

Sec. 825.0032. INELIGIBILITY FOR BOARD AND OF CERTAIN EMPLOYEES. (a) Except as provided by Subsection (b), 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 funds from the retirement system;(2) owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization receiving funds from the retirement system; or(3) uses or receives a substantial amount of tangible goods, services, or funds from the retirement system, other than compensation or reimbursement authorized by law for board membership, attendance, or expenses.(b) Subsection (a) does not apply to employment by, participation in the management of, or ownership or control of an interest in a business entity or other organization on behalf of the retirement system. Subsection (a)(3) does not apply to a person who is nominated for appointment under Section 825.002(c), (d), or (e).(c) A person may not be a trustee or an employee of the retirement system employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) if:(1) the person is a paid officer, employee, or consultant of a Texas trade association in the field of investment or insurance; or(2) the person's spouse is a paid officer, employee, or consultant of a Texas trade association in the field of investment or insurance.(d) Repealed by Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 27, eff. September 1, 2007.(e) In this section, a Texas trade association means a cooperative and voluntarily joined association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.(f) A person may not serve as a trustee or act as the general counsel to the board or the retirement system if the person is required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a business or an association related to the operation of the board.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 12, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 32, eff. Sept. 1, 1995.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 5, eff. September 1, 2007.Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 27, eff. September 1, 2007.

Sec. 825.004. TERMS OF OFFICE; FILLING VACANCIES. (a) Members of the board of trustees hold office for terms of six years.(b) A vacancy in the office of a trustee shall be filled for the unexpired term in the same manner that the office was previously filled.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.004 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.0041. BOARD MEMBER TRAINING. (a) A person who is appointed to and qualifies for office as a member of the board of trustees may not vote, deliberate, or be counted as a member in attendance at a meeting of the board until the person completes a training program that complies with this section.(b) A training program must provide the person with information regarding:(1) the legislation that created the retirement system and the system's programs, functions, rules, and budget;(2) the results of the most recent formal audit of the system;(3) the requirements of laws relating to open meetings, public information, administrative procedure, and conflicts of interest; and(4) any applicable ethics policies adopted by the system or the Texas Ethics Commission.(c) A person appointed to the board of trustees is entitled to reimbursement under Section 825.007 for the travel expenses incurred in attending the training program regardless of whether the attendance at the program occurs before or after the person qualifies for office.

Added by Acts 1995, 74th Leg., ch. 555, Sec. 33, eff. Sept. 1, 1995.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 6, eff. September 1, 2007.

Sec. 825.005. OATH OF OFFICE. Before taking office as a trustee, a person shall take the constitutional oath prescribed for officers of the state.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.005 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.006. SUNSET PROVISION. The board of trustees of the Teacher Retirement System of Texas is subject to review under Chapter 325 (Texas Sunset Act), but is not abolished under that chapter. The board shall be reviewed during the period in which state agencies abolished in 2019, and every 12th year after that year, are reviewed.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1985, 69th Leg., ch. 479, Sec. 219, eff. Sept. 1, 1985; Acts 1985, 69th Leg., ch. 729, Sec. 27, eff. Sept. 1, 1985. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.006 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 580, Sec. 3, eff. Sept. 1, 1989; Acts 1989, 71st Leg., ch. 889, Sec. 4, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., 1st C.S., ch. 17, Sec. 1.26, eff. Nov. 12, 1991; Acts 1993, 73rd Leg., ch. 812, Sec. 13, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 555, Sec. 34, eff. Sept. 1, 1995.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 7, eff. September 1, 2007.

Sec. 825.007. COMPENSATION; EXPENSES. Trustees serve without compensation but are entitled to reimbursement from the expense account of the retirement system for all necessary expenses that they incur in the performance of official board duties.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.007 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.008. VOTING. Each trustee is entitled to one vote.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.008 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.009. LEAVE FOR MEMBER TRUSTEES. (a) A trustee appointed from a slate of members nominated by members of the retirement system under Section 825.002 is entitled to leave with pay from the trustee's public school employer to attend to the official business of the retirement system.(b) The retirement system may enter into an agreement with the public school employer to adequately compensate the employer for the loss of services of the trustee.

Added by Acts 1991, 72nd Leg., 1st C.S., ch. 13, Sec. 14, eff. Nov. 12, 1991.

Sec. 825.010. GROUNDS FOR REMOVAL OF TRUSTEE. (a) It is a ground for removal from the board that a trustee:(1) does not have at the time of taking office the qualifications required for the trustee's position;(2) does not maintain during service on the board the qualifications required for the trustee's position;(3) violates a prohibition established by Section 825.002(b) or 825.0032;(4) cannot because of illness or disability discharge the trustee's duties for a substantial part of the term for which the trustee is appointed; or(5) is absent from more than half of the regularly scheduled board meetings that the person is eligible to attend during a calendar year without an excuse approved by a majority vote of the board.(b) The validity of an action of the board is not affected by the fact that it is taken when a ground for removal of a trustee exists.(c) If the executive director has knowledge that a potential ground for removal exists, the executive director shall notify the presiding officer of the board of the ground. The presiding officer shall then notify the appropriate appointing officer and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding officer, the executive director shall notify the next highest officer of the board, who shall notify the appropriate appointing officer and the attorney general that a potential ground for removal exists.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 14, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 35, eff. Sept. 1, 1995.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 9, eff. September 1, 2007.

SUBCHAPTER B. POWERS AND DUTIES OF BOARD OF TRUSTEESSec. 825.101. GENERAL ADMINISTRATION. The board of trustees is responsible for the general administration and operation of the retirement system. Notwithstanding any other law, the board of trustees has exclusive control over all assets held in trust by the retirement system and all operations funded by trust assets and shall administer the retirement system for the sole and exclusive benefit of the members and participants.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.101 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 20, eff. September 1, 2005.

Sec. 825.102. RULEMAKING. Subject to the limitations of this subtitle, the board of trustees may adopt rules for:(1) eligibility for membership;(2) the administration of the funds of the retirement system; and(3) the transaction of business of the board.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.102 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.1025. NEGOTIATED RULEMAKING; ALTERNATIVE DISPUTE RESOLUTION. (a) The board of trustees shall develop and implement a policy to encourage the use of:(1) negotiated rulemaking procedures under Chapter 2008 for the adoption of the retirement system's rules; and(2) appropriate alternative dispute resolution procedures under Chapter 2009 to assist in the resolution of internal and external disputes under the retirement system's jurisdiction.(b) Subject to Subsection (d), the retirement system's procedures relating to alternative dispute resolution must conform, to the extent possible, to any model guidelines issued by the State Office of Administrative Hearings for the use of alternative dispute resolution by state agencies.(c) The board of trustees shall designate a trained person to:(1) coordinate the implementation of the policy adopted under Subsection (a);(2) serve as a resource for any training needed to implement the procedures for negotiated rulemaking or alternative dispute resolution; and(3) collect data concerning the effectiveness of those procedures, as implemented by the retirement system.(d) The board of trustees shall ensure that the implementation of this section and the negotiated rulemaking procedures and alternative dispute resolution procedures adopted under this section are consistent with the fiduciary responsibility imposed on the board by law.

Added by Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 10, eff. September 1, 2007.

Sec. 825.103. ADMINISTERING SYSTEM ASSETS. (a) The board of trustees is the trustee of all assets of the retirement system.(b) The board may invest and reinvest the retirement system's assets as authorized by Article XVI, Section 67, of the Texas Constitution.(c) Except as provided herein, Chapter 412, Labor Code, does not apply to the retirement system. The board of trustees may acquire services described by that chapter in any manner or amount the board considers reasonable. The State Office of Risk Management shall provide services for the retirement system as requested by the retirement system, and the retirement system may use the services of the State Office of Risk Management to obtain insurance and perform risk management and workers' compensation claim services. In accordance with terms mutually agreed upon by both parties, the retirement system shall be subject to the relevant requirements of Chapter 412, Labor Code, only for the specific programs or services the board elects to obtain from or through the State Office of Risk Management. The State Office of Risk Management shall pay to the retirement system any amounts collected on behalf of the system through subrogation of claims, regardless of the budget biennium in which the office receives the amounts. The State Office of Risk Management shall pay these amounts directly to the retirement system instead of to the general revenue fund.(d) Notwithstanding any other law, the retirement system has exclusive authority over the purchase of goods and services using money other than money appropriated from the general revenue fund, including specifically money from trusts under the administration of the retirement system, and Subtitle D, Title 10, does not apply to the retirement system with respect to that money. The retirement system shall acquire goods or services by procurement methods approved by the board of trustees or the board's designee. For purposes of this subsection, goods and services include all professional and consulting services and utilities as well as supplies, materials, equipment, skilled or unskilled labor, and insurance. The comptroller shall procure goods or services for the retirement system at the request of the retirement system, and the retirement system may use the services of the comptroller in procuring goods or services.(e) Chapters 2054 and 2055 do not apply to the retirement system. The board of trustees shall control all aspects of information technology and associated resources relating to the retirement system, including computer, data management, and telecommunication operations, procurement of hardware, software, and middleware, and telecommunication equipment and systems, location, operation, and replacement of computers, computer systems, and telecommunication systems, data processing, security, disaster recovery, and storage. The Department of Information Resources shall assist the retirement system at the request of the retirement system, and the retirement system may use any service that is available through that department.(f) Subchapter C, Chapter 2260, does not apply to the retirement system. The acceptance of benefits by the retirement system under a contract does not waive immunity from suit or immunity from liability.(g) Notwithstanding any other law, Chapters 2261 and 2262 do not apply to the retirement system. The Contract Advisory Team shall assist the retirement system at the request of the retirement system. The retirement system may use the training program for contract management provided under Chapter 2262.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.103 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 21, eff. September 1, 2005.Acts 2007, 80th Leg., R.S., Ch. 937, Sec. 1.63, eff. September 1, 2007.

Sec. 825.104. DESIGNATION OF AUTHORITY TO SIGN VOUCHERS. (a) The board of trustees shall file with the comptroller of public accounts an attested copy of a board resolution that designates the persons authorized to sign vouchers for payment from accounts of the retirement system.(b) A filed copy of the resolution required by Subsection (a) evidences the comptroller's authority to issue warrants for payment from funds of the retirement system.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.104 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.105. ADOPTING RATES AND TABLES. The board of trustees shall adopt rates and mortality, service, and other tables the board considers necessary for the retirement system after considering the results of the actuary's investigation of the mortality, service, and compensation experience of the system's members and beneficiaries.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.105 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.107. RECORDS OF BOARD OF TRUSTEES. (a) The board of trustees shall keep, in convenient form, data necessary for:(1) actuarial valuation of the accounts of the retirement system; and(2) checking the system's expenses.(b) The board shall keep a record of all of its proceedings.(c) Except as otherwise provided by this title, records of the board are open to public inspection.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.107 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.108. REPORTS. (a) No later than December 15 of each year, the board of trustees shall publish a report in the Texas Register containing the following information:(1) the retirement system's fiscal transactions for the preceding fiscal year;(2) the amount of the system's accumulated cash and securities; and(3) the rate of return on the investment of the system's cash and securities during the preceding fiscal year.(b) No later than March 1 of each year, the board of trustees shall publish a report in the Texas Register containing the balance sheet of the retirement system as of August 31 of the preceding fiscal year. The report must contain an actuarial valuation of the system's assets and liabilities, including the extent to which the system's liabilities are unfunded.(c) A copy of the report required by Subsection (a) must be filed with the governor, the lieutenant governor, the speaker of the house of representatives, the State Pension Review Board, the legislative audit committee, and the state auditor no later than December 15 of each year.(d) A copy of the report required by Subsection (b) must be filed with the governor, the lieutenant governor, the speaker of the house of representatives, the State Pension Review Board, the legislative audit committee, and the state auditor no later than March 1 of each year.(e) The board shall prepare annually a complete and detailed written report accounting for all funds received and disbursed by the retirement system during the preceding fiscal year. The annual report must meet the reporting requirements applicable to financial reporting provided in the General Appropriations Act.(f) The board shall prepare biennially a complete and detailed written report describing and explaining any use of appropriated amounts, retirement system assets, or other resources for governmental relations, member counseling, or official publications. The report must be filed with the committees of the senate and the house of representatives having jurisdiction over appropriations, with the committees of the senate and the house of representatives having principal jurisdiction over legislation governing the retirement system, and with the Legislative Budget Board at the time the retirement system submits its budget request for the next state fiscal biennium.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1989, 71st Leg., ch. 929, Sec. 4, eff. Sept. 1, 1989. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.108 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 16, Sec. 11.06(d), eff. Aug. 26, 1991; Acts 1995, 74th Leg., ch. 555, Sec. 36, eff. Sept. 1, 1995.

Sec. 825.109. CORRECTION OF ERRORS. If an error in the records of the retirement system results in a person's receiving more or less money than the person is entitled to receive under this subtitle, the board of trustees shall correct the error and so far as practicable shall adjust future payments so that the actuarial equivalent of the benefit to which the person is entitled is paid.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.109 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.110. DETERMINATION OF ANNUAL COMPENSATION. The board of trustees shall adopt rules to exclude from annual compensation all or part of salary and wages in the final years of a member's employment that reasonably can be presumed to have been derived from a conversion of fringe benefits, maintenance, or other payments not includable in annual compensation to salary and wages. The board of trustees shall adopt rules that include a percentage limitation on the amount of increases in annual compensation that may be subject to credit and deposit during a member's final years of employment.

Added by Acts 1981, 67th Leg., 1st C.S., p. 205, ch. 18, Sec. 29, eff. Nov. 10, 1981. Amended by Acts 1985, 69th Leg., ch. 556, Sec. 3, eff. Aug. 26, 1985; Acts 1989, 71st Leg., ch. 835, Sec. 7, eff. Sept. 1, 1989. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.110 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 16, Sec. 11.05(g), eff. Aug. 26, 1991.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 22, eff. September 1, 2005.

Sec. 825.111. MANAGEMENT AUDIT. (a) The legislative audit committee may contract with an independent and internationally recognized accounting firm with substantial experience in auditing retirement or pension plans to conduct a managerial audit of the retirement system.(b) The state auditor shall pay the costs of each management audit under this section from money appropriated to the state auditor and approved for that purpose by the legislative audit committee. Not later than the 30th day after the date the retirement system receives a statement of audit costs paid by the state auditor under this subsection, the retirement system shall reimburse the state auditor for the costs from money in the expense account.(c) The legislative audit committee may determine the frequency of the audits authorized by this section and may determine the programs and operations to be covered by the audits. The accounting firm selected to conduct the audits shall report the results of those audits directly to the committee.(d) No later than 30 days after the legislative audit committee receives an audit report, the committee shall file a copy of the report with the retirement system, the governor, the lieutenant governor, the speaker of the house of representatives, the State Pension Review Board, the state auditor, and the secretary of state for publication in the Texas Register.

Added by Acts 1991, 72nd Leg., ch. 16, Sec. 11.06(e), eff. Aug. 26, 1991.

Sec. 825.112. INSURANCE. Notwithstanding any other law, the board of trustees may self-insure or purchase any insurance, including fiduciary and liability coverage for trust assets or for the trustees, employees, and agents of the board of trustees, in amounts the board of trustees considers reasonable and prudent.

Added by Acts 1991, 72nd Leg., 1st C.S., ch. 13, Sec. 15, eff. Nov. 12, 1991.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 23, eff. September 1, 2005.

Sec. 825.113. MISCELLANEOUS BOARD DUTIES. (a) The executive director or the executive director's designee shall provide to its trustees and employees, as often as necessary, information regarding their qualification for office or employment under this chapter and their responsibilities under applicable laws relating to standards of conduct for state officers or employees.(b) The board shall develop and implement policies that clearly separate the policy-making responsibilities of the board and the management responsibilities of the executive director and the staff of the retirement system.(c) The board shall prepare information of interest to the retirement system's members describing the functions of the system and the system's procedures by which complaints are filed with and resolved by the system. The system shall make the information available to the system's members and appropriate state agencies.(d) The board by rule shall establish methods by which members are notified of the name, mailing address, and telephone number of the retirement system for the purpose of directing complaints to the system.(e) The board shall develop and implement policies that provide the public with a reasonable opportunity to appear before the board and to speak on any issue under the jurisdiction of the board.(f) The retirement system shall comply with federal and state laws related to program and facility accessibility. The executive director shall prepare and maintain a written plan that describes how a person who does not speak English can be provided reasonable access to the board's programs. The board shall also comply with federal and state laws for program and facility accessibility.(g) The board of trustees shall implement a policy requiring the retirement system to use appropriate technological solutions to improve the retirement system's ability to perform its functions. The policy must ensure that the public is able to interact with the retirement system on the Internet.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 15, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 37, eff. Sept. 1, 1995.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1230, Sec. 11, eff. September 1, 2007.

Sec. 825.114. ADVISORY COMMITTEES. (a) The board of trustees may establish advisory committees as it considers necessary to assist it in performing its duties. Members of advisory committees established under this section serve at the pleasure of the board.(b) Notwithstanding any other law to the contrary, the board of trustees by rule shall determine the amount and manner of any compensation or expense reimbursement to be paid members of an advisory committee performing service for the retirement system for performing the work of the advisory committee. All compensation and expense reimbursements for an advisory committee established under this section are payable from the expense account or the retired school employees group insurance fund, as applicable.(c) Notwithstanding any other law to the contrary, the size and composition of advisory committees created by statute for the retirement system or required by statute to be created by the retirement system are as provided by the statute creating or providing for the creation of the particular committee.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 15, eff. Sept. 1, 1993.

Sec. 825.115. APPLICABILITY OF CERTAIN LAWS. (a) Except as provided by this section, the board of trustees is subject to the open meetings law, Chapter 551, and the administrative procedure law, Chapter 2001.(b) The board of trustees may in its sole discretion make a final decision on a contested case. Notwithstanding any other law, the board of trustees may in its sole discretion modify, refuse to accept, or delete any proposed finding of fact or conclusion of law contained in a proposal for decision submitted by an administrative law judge or other hearing examiner, or make alternative findings of fact and conclusions of law, in a proceeding considered to be a contested case under Chapter 2001. The board of trustees shall state in writing the specific reason for its determination and may adopt rules for the implementation of this subsection. The board of trustees may delegate its authority under this subsection to the executive director, and the executive director may delegate the authority to another employee of the retirement system.(c) The executive director or the executive director's designee under Subsection (b) may refer an appeal relating to the pension plan to the State Office of Administrative Hearings for a hearing or may employ, select, or contract for the services of an administrative law judge or hearing examiner not affiliated with the State Office of Administrative Hearings to conduct a hearing. This subsection prevails over any other law to the extent of any conflict.

Added by Acts 1995, 74th Leg., ch. 555, Sec. 38, eff. Sept. 1, 1995.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 24, eff. September 1, 2005.

SUBCHAPTER C. OFFICERS AND EMPLOYEES OF BOARD OF TRUSTEESSec. 825.201. PRESIDING OFFICER. The governor shall designate a member of the board as the presiding officer of the board to serve in that capacity at the pleasure of the governor.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.201 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 39, eff. Sept. 1, 1995.

Sec. 825.202. EXECUTIVE DIRECTOR. (a) The board of trustees, by a majority vote of all members, shall appoint an executive director.(b) The executive director may not be a member of the board of trustees.(c) To be eligible to serve as the executive director, a person must:(1) be a citizen of the United States; and(2) have executive ability and experience to carry out the duties of the office.(d) The executive director shall recommend to the board actuarial and other services necessary to administer the retirement system.(e) Annually, the executive director shall prepare an itemized expense budget for the following fiscal year and shall submit the budget to the board for review and adoption.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.202 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1993, 73rd Leg., ch. 812, Sec. 16, eff. Sept. 1, 1993.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1055, Sec. 1, eff. June 15, 2007.

Sec. 825.203. LEGAL REPRESENTATION. (a) The attorney general of the state is the legal adviser of the board of trustees. The attorney general shall represent the board in all litigation.(b) The board may not employ outside legal counsel to provide legal services to the retirement system except as provided by this section and Section 402.0212, regardless of the source of funds to be used to pay the outside counsel. For purposes of this section, "legal services" includes services provided by an attorney regarding ethics and fiduciary responsibilities.(c) The attorney general shall timely act on a request to approve a contract for outside legal services under Section 402.0212. If the attorney general denies the board's request for approval of a contract for outside legal services:(1) the attorney general shall provide the board with the reason for the denial; and(2) the board may select alternative outside legal counsel, subject to approval by the attorney general in accordance with this section and Section 402.0212.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.203 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.Amended by: Acts 2009, 81st Leg., R.S., Ch. 906, Sec. 1, eff. June 19, 2009.

Sec. 825.204. MEDICAL BOARD. (a) The board of trustees shall appoint a medical board composed of three physicians.(b) To be eligible to serve as a member of the medical board, a physician must be licensed to practice medicine in this state and be of good standing in the medical profession. A physician who is eligible to participate in the retirement system may not be a member of the medical board.(c) The medical board shall:(1) review all medical examinations required by this subtitle;(2) investigate essential statements and certificates made by or on behalf of a member of the retirement system in connection with an application for disability retirement; and(3) report in writing to the board of trustees its conclusions and recommendations on all matters referred to it.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.204 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.205. OTHER PHYSICIANS. The board of trustees may employ physicians in addition to the medical board to report on special cases.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.205 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.206. ACTUARY. (a) The board of trustees shall designate an actuary as its technical adviser.(b) At least once every five years the actuary, on authorization of the board of trustees, shall:(1) investigate the mortality, service, and compensation experience of the members and beneficiaries of the retirement system;(2) on the basis of the investigation made under Subdivision (1), recommend to the board of trustees tables and rates that are required; and(3) on the basis of tables and rates adopted by the board of trustees under Section 825.105, evaluate the assets and liabilities of the retirement system.(c) The board of trustees annually shall evaluate the performance of the actuary during the previous year. At least once every three years, the board shall redesignate its actuary after advertising for and reviewing proposals from providers of actuarial services.(d) Each actuarial experience study must include a review of all actuarial assumptions in light of relevant experience, important trends, and economic projections. Interrelated actuarial assumptions shall be reviewed carefully to ensure that adjustments in one assumption are reflected appropriately in related assumptions.(e) Each actuarial valuation must include a detailed analysis comparing experience factors to their actuarial assumptions. The analysis shall be developed and reported to identify significant variations in actual experience from what was assumed. A material variation should be the focus of an actuarial experience study.(f) An actuarial audit shall be performed in conjunction with an actuarial experience study or at least once every five years. The audit must include:(1) an analysis of the appropriateness of the actuarial assumptions;(2) a review of the assumptions and methodology for compliance with the funding standards;(3) verification of demographic data; and(4) confirmation of the valuation results, including a determination of actuarial accrued liability, normal cost, expected employee contributions, and the effects of any recent legislation.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.206 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1993, 73rd Leg., ch. 812, Sec. 17, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 555, Sec. 40, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1416, Sec. 22, eff. Sept. 1, 1997.

Sec. 825.207. COMPTROLLER. (a) Except as provided by Section 825.302 or 825.303 or by Subsection (e) of this section, the comptroller is the custodian of all securities and cash of the retirement system, including securities held in the name of a nominee of the retirement system.(b) The comptroller shall pay money from the accounts of the retirement system on warrants drawn by the comptroller and authorized by vouchers signed by the executive director or other persons designated by the board of trustees.(c) The comptroller annually shall furnish to the board of trustees a sworn statement of the amount of the retirement system's assets in the comptroller's custody.(d) The comptroller is not responsible, under either civil or criminal law, for any action or losses with respect to assets of the retirement system while the assets are in the custody of a commercial bank as provided by Section 825.302 or 825.303 or by Subsection (e) of this section.(e) The board of trustees may, in the exercise of its constitutional discretion to manage the assets of the retirement system, select one or more commercial banks, depository trust companies, or other entities to serve as custodian or custodians of all or part of the retirement system's assets.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 205, ch. 18, Sec. 30, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.207 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 251, Sec. 5, eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 812, Sec. 18, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 1416, Sec. 23, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 8.51, eff. Sept. 1, 1997.

Sec. 825.208. COMPENSATION OF EMPLOYEES; PAYMENT OF EXPENSES. (a) Notwithstanding any other law, the board of trustees shall approve the rate of compensation of all persons it employs and the amounts necessary for other expenses for operation of the retirement system. If expenditures are paid from money appropriated from the general revenue fund rather than from trust funds, the rates and amounts may not exceed those paid for similar services for the state.(b) The retirement system is exempt from Chapter 660 and Subchapter K, Chapter 659, to the extent the board of trustees determines an exemption is necessary for the performance of fiduciary duties.(c) The board of trustees may compensate employees of the retirement system, whether subject to or exempt from the overtime provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.), at the rate equal to the employees' regular rate of pay for work performed on a legal holiday or for other compensatory time accrued, when taking compensatory time off would be disruptive to the system's normal business functions.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.208 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.Amended by: Acts 2005, 79th Leg., Ch. 1359, Sec. 25, eff. September 1, 2005.

Sec. 825.210. INTEREST IN INVESTMENT PROFITS PROHIBITED. Except for an interest in the retirement assets as a member of the retirement system, a trustee or employee of the board of trustees may not have a direct or indirect interest in the gains from investments made with the system's assets and may not receive any compensation for service other than designated salary and authorized expenses.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.210 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989.

Sec. 825.211. CERTAIN INTERESTS IN LOANS, INVESTMENTS, OR CONTRACTS PROHIBITED. (a) Except as provided by Subsection (c), a person described by Subsection (b) may not participate in or be the beneficiary of, directly or indirectly, a loan, commitment to lend, a guarantee or endorsement to lend, or investment by the retirement system or a contract to advise the system or manage property or investments for the system.(b) The prohibition provided by Subsection (a) applies to a trustee or employee of the retirement system, a consultant or advisor to the retirement system, and a person related within the second degree by consanguinity or affinity to a trustee, employee, consultant, or advisor.(c) The prohibition provided by Subsection (a) does not apply to actions taken by a trustee or employee of the retirement system within the scope of that person's official duties for the system or actions taken by a consultant or advisor within the scope of the services for which the person is being compensated by the retirement system, if the actions do not involve a relationship required to be disclosed under Section 825.212. The prohibition provided by Subsection (a) does not apply to an indirect benefit received resulting from retirement system membership.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 20, eff. Sept. 1, 1993.

Sec. 825.212. RETIREMENT SYSTEM ETHICS POLICY. (a) In addition to any other requirements provided by law, the board of trustees shall enforce an ethics policy as provided by this section for employees of and consultants and advisors to the retirement system.(b) Each employee of the retirement system who exercises significant decisionmaking 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. A statement must be filed not later than the 30th day after the date a person is employed in a significant decisionmaking or fiduciary position and annually after employment not later than April 30. The filing deadline may be postponed by the executive director 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 retirement system shall maintain a financial disclosure statement for at least five years after the date of its filing.(c) An employee who has a business or commercial relationship that could reasonably be expected to diminish the employee's independence of judgment in the performance of the employee's responsibilities to the retirement system shall disclose that relationship in writing to a person designated by the board.(d) An employee who files a disclosure statement under Subsection (c) 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 retirement system, expressly waives this prohibition. The retirement system 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 on a vote of a majority of the members of the board at an open meeting called and held in compliance with Chapter 551. 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.(e) The board by rule shall adopt standards of conduct applicable to consultants and advisors to the retirement system who may reasonably be expected to receive more than $10,000 compensation from the system for a fiscal year or who render important investment advice to the retirement system.(f) A consultant or advisor who, directly or indirectly, has a personal or private commercial or business relationship, unrelated to the services that the consultant or advisor performs for the retirement system, with any other party to a transaction with the system that could reasonably be expected to diminish the person's independence of judgment in the performance of the person's responsibilities to the system shall disclose that relationship in writing to the executive director.(g) The board by rule shall require consultants and advisors to the retirement system and brokers to file regularly with the system a report detailing any expenditure of more than $50 made on behalf of a trustee or employee of the system.(h) The board shall prescribe forms for financial disclosure statements, disclosure statements of conflicts of interest, and waivers of the prohibition against involvement in a matter affected by a conflict of interest. The statements and waivers are open records. The board shall designate an employee to be the custodian of the statements and waivers for purposes of public disclosure.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 20, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(43), (79), eff. Sept. 1, 1995.

Sec. 825.213. EMPLOYMENT PRACTICES. (a) The executive director or the executive director's designee shall develop an intra-agency career ladder program that addresses opportunities for mobility and advancement for employees within the retirement system. The program shall require intra-agency posting of all positions concurrently with any public posting.(b) The executive director or the executive director's designee shall develop a system of annual performance evaluations that are based on documented employee performance. All merit pay for system employees must be based on the system established under this subsection.(c) The executive director or the executive director's designee shall prepare and maintain a written policy statement to assure implementation of a program of equal employment opportunity under which all personnel transactions are made without regard to race, color, disability, sex, religion, age, or national origin. The policy statement must include:(1) personnel policies, including policies relating to recruitment, evaluation, selection, appointment, training, and promotion of personnel that are in compliance with requirements of Chapter 21, Labor Code;(2) a comprehensive analysis of the retirement system's work force that meets federal and state guidelines;(3) procedures by which a determination can be made about the extent of underuse in the retirement system's work force of all persons for whom federal or state guidelines encourage a more equitable balance; and(4) reasonable methods to appropriately address those areas of underuse.(d) A policy statement prepared under Subsection (c) must cover an annual period, be updated annually and reviewed by the Commission on Human Rights for compliance with Subsection (c), and be filed with the governor's office.(e) The governor's office shall deliver a biennial report to the legislature based on the information received under Subsection (d). The report may be made separately or as a part of other biennial reports made to the legislature.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 20, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 555, Sec. 41, eff. Sept. 1, 1995.

Sec. 825.214. FINANCIAL AUDITOR. A person employed to perform a financial audit of the retirement system must be selected by and report to the board of trustees.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 20, eff. Sept. 1, 1993.

Sec. 825.215. ADVOCACY PROHIBITED. An employee of the retirement system may not advocate increased benefits or engage in activities to advocate or influence legislative action or inaction. Advocacy or activity of this nature is grounds for dismissal of an employee.

Added by Acts 1995, 74th Leg., ch. 555, Sec. 42, eff. Sept. 1, 1995.

SUBCHAPTER D. MANAGEMENT OF ASSETSSec. 825.301. INVESTMENT OF ASSETS. (a) The board of trustees shall invest and reinvest assets of the retirement system without distinction as to their source in accordance with Section 67, Article XVI, Texas Constitution. For purposes of the investment authority of the board of trustees under Section 67, Article XVI, Texas Constitution, "securities" means any investment instrument within the meaning of the term as defined by Section 4, The Securities Act (Article 581-4, Vernon's Texas Civil Statutes), 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10). An interest in a limited partnership or investment contract is considered a security without regard to the number of investors or the control, access to information, or rights granted to or retained by the retirement system. Any instrument or contract intended to manage transaction or currency exchange risk in purchasing, selling, or holding securities is considered to be a security. Investment decisions are subject to the standard provided in the Texas Trust Code by Section 117.004(b), Property Code.(a-1) This subsection expires September 1, 2012, and applies to the investment and reinvestment of assets of the retirement system only if the investment or reinvestment is made before September 1, 2012. In addition to any investment or reinvestment authorized by Subsection (a), the board of trustees may buy and sell the following, only to efficiently manage and reduce the risk of the overall investment portfolio:(1) futures contracts;(2) options;(3) options on futures contracts;(4) forward contracts;(5) swap contracts, including swap contracts with embedded options;(6) any instrument or contract intended to manage transaction or currency exchange risk in purchasing, selling, or holding investments; and(7) any other instrument commonly used by institutional investors to manage institutional investment portfolios.(a-2) The board of trustees may delegate investment authority and contract with one or more private professional investment managers for investment and management of not more than 30 percent of the total assets held in trust by the retirement system. In a contract made under this subsection, the board of trustees shall specify any applicable policies, requirements, or restrictions, including criteria for determining the quality of investments or the use of standard rating services, that the board of trustees adopts for investments of the system. The board of trustees may not contract under this subsection for investment and management services to be performed on or after September 1, 2012.(a-3) For the purpose of carrying out policy decisions made by the board of trustees, the board may delegate investment authority with respect to assets held by the retirement system to the executive director or the staff of the retirement system.(b) In addition to the board's authority under Subsection (a-2), the board of trustees may contract with private professional investment managers, advisors, and consultants to assist and advise the board and the staff of the retirement system in investing the assets of the retirement system.(b-1) By accepting a delegation of investment authority under Subsection (a-2) or an engagement to assist or advise the board or the staff of the retirement system under Subsection (b), a professional investment manager, advisor, or consultant submits to the jurisdiction of the courts of this state in all proceedings arising from or related to performance of the delegated authority or engagement. An action relating to services rendered under this section shall be brought only in a state district court sitting in Travis County, Texas. Chapter 2260 does not apply to a contract under Subsection (a-2) or (b). This subsection does not waive any immunity of the retirement system.(c) The board of trustees shall employ one or more performance measurement services to evaluate and analyze the investment results of those assets of the retirement system for which reliable and appropriate measurement methodology and procedures exist. Each service shall compare investment results with the written investment objectives developed by the board, and shall also compare the investment of the assets being evaluated and analyzed with the investment of other public funds.(d) The board of trustees may invest assets of the retirement system in obligations issued, assumed, or guaranteed by the Inter-American Development Bank, the International Bank for Reconstruction and Development (the World Bank), the African Development Bank, the Asian Development Bank, and the International Finance Corporation.(e) The board of trustees shall develop written investment objectives concerning the investment of the assets of the retirement system. The objectives may address desired rates of return, risks involved, investment time frames, and any other relevant considerations.

Added by Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 5098, ch. 925, Sec. 4, eff. Aug. 29, 1983; Acts 1983, 68th Leg., p. 5100, ch. 926, Sec. 4, eff. Aug. 29, 1983; Acts 1985, 69th Leg., ch. 542, Sec. 6, eff. Aug. 26, 1985; Acts 1987, 70th Leg., ch. 167, Sec. 5.01(a)(64), eff. Sept. 1, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.301 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 408, Sec. 3, eff. Aug. 26, 1991; Acts 1997, 75th Leg., ch. 1416, Sec. 25, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1540, Sec. 17, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 1103, Sec. 11, eff. Jan. 1, 2004.Amended by: Acts 2007, 80th Leg., R.S., Ch. 124, Sec. 1, eff. May 17, 2007.

Sec. 825.3011. CERTAIN CONSULTATIONS CONCERNING INVESTMENTS. (a) In this section, "private investment fund," "reinvestment," and "restricted securities" have the meanings assigned by Section 552.143.(b) Chapter 551 does not require the board of trustees to confer with one or more employees, consultants, or legal counsel of the retirement system or with a third party, including representatives of an issuer of restricted securities or a private investment fund, in an open meeting if the only purpose of the conference is to receive information from or question the employees, consultants, or legal counsel of the retirement system or the third party relating to:(1) an investment or a potential investment by the board of trustees in a private investment fund; or(2) the purchase, holding, or disposal of restricted securities or a private investment fund's investment in restricted securities if, under Section 552.143, the information discussed would be confidential and excepted from the requirements of Section 552.021 if the information was included in the records of a governmental body.(c) This section applies notwithstanding Section 825.115.

Added by Acts 2007, 80th Leg., R.S., Ch. 124, Sec. 2, eff. May 17, 2007.

Sec. 825.3012. INVESTMENT IN CERTAIN HEDGE FUNDS LIMITED. (a) For the purposes of this section, "hedge fund" means a private investment vehicle that:(1) is not registered as an investment company;(2) issues securities only to accredited investors or qualified purchasers under an exemption from registration; and(3) engages primarily in the strategic trading of securities and other financial instruments.(b) Notwithstanding any provision of Section 825.301, not more than five percent of the value of the total investment portfolio of the retirement system may be invested in hedge funds.(c) The percentage of the value described by Subsection (b) is determined by reference to the value of the total investment portfolio of the retirement system as of the date the retirement system executes the subscription documents for each hedge fund investment.

Added by Acts 2007, 80th Leg., R.S., Ch. 124, Sec. 3, eff. May 17, 2007.

Sec. 825.302. CUSTODY AND INVESTMENT OF ASSETS PENDING TRANSACTIONS. The retirement system may, in the exercise of its constitutional discretion to manage the assets of the retirement system, select one or more commercial banks, depository trust companies, or other entities to serve as custodian or custodians of the system's cash or securities pending completion of an investment transaction and may authorize such custodian to invest the cash so held in such short-term securities as the board of trustees determines.

Added by Acts 1981, 67th Leg., 1st C.S., p. 205, ch. 18, Sec. 31, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.3011 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 251, Sec. 6, eff. Aug. 28, 1989.

Sec. 825.3021. APPRAISAL AND SALE OF REAL PROPERTY. If the retirement system acquires, through foreclosure or conveyance of deed in lieu of foreclosure, real property assets or stock in an entity the major asset of which is real property, the retirement system shall, not later than the 90th day after the date of acquisition:(1) have the real property appraised by an appraiser who is not a trustee or employee of the retirement system and who has received MAI or SRA;(2) acquire a foreclosure endorsement to the mortgagee's title insurance policy; and(3) if the real property contains improvements, employ an individual who is not, or a property management company that is not owned by, a trustee or employee of the retirement system and who is, or that employs, a CPM, CAM, or RAM to manage the property.

Added by Acts 1993, 73rd Leg., ch. 812, Sec. 21, eff. Sept. 1, 1993.

Sec. 825.303. SECURITIES CUSTODY AND SECURITIES LENDING. (a) The retirement system may, in the exercise of its constitutional discretion to manage the assets of the retirement system, select one or more commercial banks, depository trust companies, or other entities to serve as custodian or custodians of the system's securities and to lend the securities under rules adopted by the board of trustees and as required by this section. The retirement system may select one or more commercial banks, depository trust companies, or other entities to act independently of the custodian and lend the securities under board rules and as required by this section.(b) To be eligible to lend securities under this section, a bank or brokerage firm must:(1) be experienced in the operation of a fully secured securities loan program;(2) maintain adequate capital in the prudent judgment of the retirement system to assure the safety of the securities;(3) execute an indemnification agreement satisfactory in form and content to the retirement system fully indemnifying the retirement system against loss resulting from borrower default or the failure of the bank or brokerage firm to properly execute the responsibilities of the bank or brokerage firm under the applicable securities lending agreement; (4) require any securities broker or dealer to whom it lends securities belonging to the retirement system to deliver to and maintain with the custodian collateral in the form of cash or government securities eligible for book entry in either the Federal Reserve System or the Participants Trust Company, in an amount equal to not less than 100 percent of the market value, from time to time, of the loaned securities; and(5) comply with guidelines the board of trustees may adopt concerning the investment of cash collateral, borrower limits, and other items.

Added by Acts 1981, 67th Leg., 1st C.S., p. 205, ch. 18, Sec. 31, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.3012 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 251, Sec. 7, eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 812, Sec. 22, eff. Sept. 1, 1993; Acts 1999, 76th Leg., ch. 1540, Sec. 18, 19, eff. Sept. 1, 1999.

Sec. 825.304. NOMINEE TO HOLD SECURITIES. (a) The assets of the retirement system may be held in the name of agents, nominees, depository trust companies, or other entities designated by the board of trustees.(b) The records and all relevant reports or accounts of the retirement system must show the ownership interest of the retirement system in these assets and the facts regarding the system's holdings.(c) A trustee or employee of the retirement system shall have no personal economic interest in any entity listed in Subsection (a), but shall undertake such action and duties with respect to these entities as the board of trustees determines to be in the interest of the retirement system. This subsection does not prohibit:(1) an interest in the assets as a member of the retirement system;(2) the right to receive expense reimbursements at the same rate that the board member or employee would have received as a board member or employee; and(3) such indemnification as is authorized by the board of trustees.(d) The records of an agent, nominee, or other entity that are maintained by the retirement system are subject to audit by the state auditor.

Added by Acts 1981, 67th Leg., 1st C.S., p. 205, ch. 18, Sec. 31, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.3013 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 251, Sec. 8, eff. Aug. 28, 1989.

Sec. 825.305. AVAILABLE CASH. The board of trustees may keep on deposit with the comptroller available cash not exceeding 10 percent of the total assets of the retirement system, to pay annuity and other disbursements.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.302 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 8.53, eff. Sept. 1, 1997.

Sec. 825.306. CREDITING SYS