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  S.B. No. 1447
 
AN ACT
relating to the investment authority of the Teacher Retirement
System of Texas.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Section 825.301, Government Code, is amended by
adding Subsections (a-1), (a-2), (a-3), and (b-1) and amending
Subsection (b) to read as follows:
       (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 [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.
       SECTION 2.  Subchapter D, Chapter 825, Government Code, is
amended by adding Section 825.3011 to read as follows:
       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.
       SECTION 3.  Subchapter D, Chapter 825, Government Code, is
amended by adding Section 825.3012 to read as follows:
       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.
       SECTION 4.  This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution.  If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2007.
____________________________________________________________
President of the Senate             Speaker of the House
       I hereby certify that S.B. No. 1447 passed the Senate on
April 25, 2007, by the following vote:  Yeas 29, Nays 0.
______________________________ 
   Secretary of the Senate
       I hereby certify that S.B. No. 1447 passed the House on
May 4, 2007, by the following vote:  Yeas 141, Nays 0, one present
not voting.
______________________________ 
   Chief Clerk of the House
Approved:
______________________________ 
______________________________ 
            Date
______________________________ 
______________________________ 
          Governor