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A JOINT RESOLUTION
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proposing a constitutional amendment to establish permanent funds |
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for the support of state institutions and agencies of higher |
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education that do not participate in funding from the permanent |
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university fund. |
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BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Article VII, Texas Constitution, is amended by |
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adding Sections 21 and 22 to read as follows: |
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Sec. 21. (a) The permanent university fund II is |
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established as a trust fund outside the state treasury to provide |
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for the maintenance and support of the University of Houston System |
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and the Texas Tech University System and the institutions of higher |
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education within those systems. |
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(b) The permanent university fund II is managed by the |
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boards of regents of the University of Houston System and the Texas |
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Tech University System acting jointly. The boards of regents by |
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agreement may designate a public or private entity to manage the |
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fund, including a nonprofit corporation created by the boards to |
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manage the fund on their behalf. If the boards of regents have not |
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designated an entity to manage the fund, the comptroller of public |
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accounts shall manage the fund at the direction of the boards of |
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regents. |
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(c) The permanent university fund II consists of: |
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(1) money transferred to the fund from the permanent |
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university fund under Subsection (d) of this section; |
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(2) any other money or asset transferred or deposited |
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to the credit of the fund by the legislature or under this |
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constitution; and |
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(3) any increase in the value of or income from the |
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assets of the fund. |
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(d) At the end of each state fiscal biennium beginning with |
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the biennium ending August 31, 2019, the comptroller shall |
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determine the total value of the permanent university fund as of |
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that date plus the total amount of distributions made from the fund |
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in that biennium. If the total amount determined by the comptroller |
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for a state fiscal biennium exceeds the total value of the permanent |
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university fund as of August 31, 2017, plus the total amount of |
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distributions made from the permanent university fund in the state |
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fiscal biennium ending August 31, 2017, the comptroller shall |
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promptly transfer from the permanent university fund to the |
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permanent university fund II an amount equal to 99 percent of the |
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excess amount. |
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(e) Unless otherwise provided by this section, the |
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provisions of this constitution governing the investment of the |
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permanent university fund apply to the investment of the permanent |
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university fund II. |
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(f) The available university fund II consists of the |
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distributions made to it from the total return on all investment |
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assets of the permanent university fund II. The amount of any |
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distributions to the available university fund II shall be |
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determined jointly by the boards of regents of the University of |
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Houston System and the Texas Tech University System in a manner |
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intended to provide the available university fund II with a stable |
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and predictable stream of annual distributions and to maintain over |
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time the purchasing power of permanent university fund II |
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investments and annual distributions to the available university |
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fund II, taking into account any transfers from the permanent |
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university fund II to the permanent university fund III required by |
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Section 22 of this article. The amount distributed to the available |
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university fund II in a state fiscal year must be not less than the |
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amount needed to pay the principal and interest due and owing in |
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that fiscal year on bonds and notes issued under this section. If |
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the purchasing power of permanent university fund II investments |
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for any rolling 10-year period is not preserved, the boards of |
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regents may not increase annual distributions to the available |
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university fund II until the purchasing power of the permanent |
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university fund II investments is restored, except as necessary to |
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pay the principal and interest due and owing on bonds and notes |
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issued under this section. An annual distribution made to the |
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available university fund II during any state fiscal year may not |
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exceed an amount equal to seven percent of the average net fair |
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market value of permanent university fund II investment assets as |
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determined by the boards of regents, except as necessary to pay any |
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principal and interest due and owing on bonds and notes issued under |
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this section. The expenses of managing permanent university fund |
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II land and investments shall be paid by the permanent university |
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fund II. |
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(g) The boards of regents of the University of Houston |
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System and the Texas Tech University System may not make any |
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distributions to the available university fund II until a state |
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fiscal biennium that begins after the first state fiscal biennium |
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in which the total value of the permanent university fund II, as |
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determined by the comptroller, equals or exceeds the total value of |
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the permanent university fund as of August 31, 2017, plus the total |
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amount of distributions made from the permanent university fund in |
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the state fiscal biennium ending August 31, 2017. As soon as |
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practicable after the comptroller makes that determination, the |
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comptroller shall make an equitable distribution of the land in the |
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permanent university fund between the permanent university fund and |
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the permanent university fund II so that the value of the land and |
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related mineral interests in each fund are substantially equal, and |
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shall transfer funds from the permanent university fund II to the |
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permanent university fund equal to the value of the land and related |
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mineral interests transferred to the permanent university fund II |
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under this subsection. |
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(h) The Board of Regents of the University of Houston System |
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may issue bonds and notes not to exceed a total amount of 15 percent |
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of the cost value of the investments and other assets of the |
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permanent university fund II (exclusive of real estate) at the time |
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of the issuance of the bonds and notes, and may pledge all or any |
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part of its interest in the available university fund II to secure |
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the payment of the principal and interest of those bonds and notes, |
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for the purpose of acquiring land either with or without permanent |
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improvements, constructing and equipping buildings or other |
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permanent improvements, major repair and rehabilitation of |
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buildings and other permanent improvements, acquiring capital |
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equipment and library books and library materials, and refunding |
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bonds or notes issued under this section or other law for the |
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University of Houston System administration and any component |
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institution of higher education of the system. |
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(i) The Board of Regents of the Texas Tech University System |
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may issue bonds and notes not to exceed a total amount of 15 percent |
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of the cost value of the investments and other assets of the |
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permanent university fund II (exclusive of real estate) at the time |
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of the issuance of the bonds and notes, and may pledge all or any |
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part of its interest in the available university fund II to secure |
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the payment of the principal and interest of those bonds and notes, |
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for the purpose of acquiring land either with or without permanent |
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improvements, constructing and equipping buildings or other |
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permanent improvements, major repair and rehabilitation of |
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buildings and other permanent improvements, acquiring capital |
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equipment and library books and library materials, and refunding |
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bonds or notes issued under this section or other law for the Texas |
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Tech University System administration and any component |
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institution of higher education of the system. |
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(j) An institution of higher education that receives |
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funding under Section 17 of this article in a state fiscal year may |
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not participate in the funding provided by this section in that |
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year. |
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(k) The proceeds of the bonds or notes issued under this |
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section may not be used for the purpose of constructing, equipping, |
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repairing, or rehabilitating buildings or other permanent |
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improvements that are to be used for student housing, |
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intercollegiate athletics, or auxiliary enterprises. |
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(l) The bonds and notes issued under this section shall be |
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payable solely out of the available university fund II, mature |
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serially or otherwise in not more than 30 years from their |
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respective dates, and, except for refunding bonds, be sold only |
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through competitive bidding. All of these bonds and notes are |
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subject to approval by the attorney general and when so approved are |
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incontestable. The permanent university fund II may be invested in |
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these bonds and notes. |
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(m) To assure efficient use of construction funds and the |
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orderly development of physical plants to accommodate the state's |
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real need, the legislature may provide for the approval or |
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disapproval of all new construction projects at the institutions |
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entitled to participate in the funding provided by this section |
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except the University of Houston and Texas Tech University. |
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(n) The state systems and institutions of higher education |
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that receive funds under this section in a state fiscal year may not |
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receive any funds from the general revenue of the state in that |
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fiscal year for acquiring land with or without permanent |
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improvements, for constructing or equipping buildings or other |
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permanent improvements, or for major repair and rehabilitation of |
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buildings or other permanent improvements except that: |
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(1) in the case of fire or natural disaster the |
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legislature may appropriate from the general revenue an amount |
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sufficient to replace the uninsured loss of any building or other |
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permanent improvement; and |
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(2) the legislature, by two-thirds vote of each house, |
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may, in cases of demonstrated need, which need must be clearly |
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expressed in the body of the act, appropriate general revenue funds |
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for acquiring land with or without permanent improvements, for |
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constructing or equipping buildings or other permanent |
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improvements, or for major repair and rehabilitation of buildings |
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or other permanent improvements. |
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(o) This section is self-enacting and the comptroller shall |
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do all things necessary to effectuate this section. This section |
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does not impair any obligation created by the issuance of bonds or |
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notes in accordance with prior law, and all outstanding bonds and |
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notes shall be paid in full, both principal and interest, in |
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accordance with their terms, and nothing in this section shall |
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affect the pledges made in connection with such bonds or notes |
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previously issued. If the provisions of this section conflict with |
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any other provision of this constitution, then the provisions of |
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this section shall prevail, notwithstanding any such conflicting |
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provisions. |
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Sec. 22. (a) The comptroller of public accounts shall |
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establish the permanent university fund III as a trust fund outside |
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the state treasury. The legislature shall use the fund to provide a |
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permanent source of funding for the maintenance and support of |
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state institutions of higher education that do not benefit from the |
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funding provided by the permanent university fund or the permanent |
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university fund II. |
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(b) Subject to Subsection (c), beginning with the next state |
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fiscal biennium after the comptroller determines that, as of the |
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end of a state fiscal biennium, the total value of the permanent |
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university fund II equals or exceeds the total value of the |
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permanent university fund as of August 31, 2017, plus the total |
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amount of distributions made from the permanent university fund in |
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the state fiscal biennium ending August 31, 2017: |
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(1) the transfers from the permanent university fund |
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to the permanent university fund II under Section 21(d) of this |
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article shall cease, and the amount, if any, that would otherwise be |
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transferred from the permanent university fund in each subsequent |
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state fiscal biennium under Section 21(d) shall be transferred to |
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the permanent university fund III; and |
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(2) an amount equal to 99 percent of the amount by |
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which the total value of the permanent university fund II at the end |
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of a subsequent state fiscal biennium plus the total amount of |
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distributions made from the permanent university fund II in that |
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biennium exceeds the total value of the permanent university fund |
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as of August 31, 2017, plus the total amount of distributions made |
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from the permanent university fund in the state fiscal biennium |
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ending August 31, 2017, if any, shall be transferred from the |
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permanent university fund II to the permanent university fund III. |
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(c) If at the end of a state fiscal biennium the total value |
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of the permanent university fund III plus the amount of all |
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distributions made from the fund in that biennium is equal to or |
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exceeds the total value of the permanent university fund as of |
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August 31, 2017, plus the total amount of distributions made from |
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the permanent university fund in the state fiscal biennium ending |
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August 31, 2017, then in each subsequent state fiscal biennium the |
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transfers from the permanent university fund and the permanent |
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university fund II under Subsection (a) of this section shall |
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cease. |
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SECTION 2. Section 18(e), Article VII, Texas Constitution, |
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is amended to read as follows: |
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(e) The available university fund consists of the |
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distributions made to it from the total return on all investment |
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assets of the permanent university fund, including the net income |
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attributable to the surface of permanent university fund land. The |
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amount of any distributions to the available university fund shall |
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be determined by the board of regents of The University of Texas |
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System in a manner intended to provide the available university |
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fund with a stable and predictable stream of annual distributions |
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and to maintain over time the purchasing power of permanent |
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university fund investments and annual distributions to the |
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available university fund, taking into account any transfers from |
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the permanent university fund to the permanent university fund II |
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or permanent university fund III required by Section 21 or 22 of |
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this article. The amount distributed to the available university |
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fund in a fiscal year must be not less than the amount needed to pay |
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the principal and interest due and owing in that fiscal year on |
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bonds and notes issued under this section. If the purchasing power |
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of permanent university fund investments for any rolling 10-year |
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period is not preserved, the board may not increase annual |
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distributions to the available university fund until the purchasing |
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power of the permanent university fund investments is restored, |
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except as necessary to pay the principal and interest due and owing |
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on bonds and notes issued under this section. An annual |
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distribution made by the board to the available university fund |
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during any fiscal year may not exceed an amount equal to seven |
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percent of the average net fair market value of permanent |
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university fund investment assets as determined by the board, |
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except as necessary to pay any principal and interest due and owing |
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on bonds issued under this section. The expenses of managing |
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permanent university fund land and investments shall be paid by the |
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permanent university fund. |
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SECTION 3. This proposed constitutional amendment shall be |
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submitted to the voters at an election to be held November 7, 2017. |
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The ballot shall be printed to permit voting for or against the |
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proposition: "The constitutional amendment to establish permanent |
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funds for the support of state institutions and agencies of higher |
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education that do not participate in funding from the permanent |
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university fund." |