Proposed Amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.5, Code of Ethics
(Second Reading and Final Adoption)
March 12, 2010
COMMITTEE OF THE FULL BOARD: ACTION
STATE BOARD OF EDUCATION: ACTION
SUMMARY: This item presents for second reading and final adoption proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.5, Code of Ethics. The proposed amendment would clarify and update the code of ethics policy.
STATUTORY AUTHORITY: Texas Education Code (TEC), §43.0031, and the Texas Constitution, Article VII, §5(f).
EFFECTIVE DATE: The proposed effective date of the proposed amendment to 19 TAC §33.5 would be 20 days after filing as adopted with the Texas Register in order to implement the latest policy in a timely manner. Under TEC, §7.102(f), the State Board of Education (SBOE) must approve the rule action at second reading and final adoption by a vote of two-thirds of its members to specify an effective date earlier than the beginning of the 2010-2011 school year.
PREVIOUS BOARD ACTION: The SBOE adopted 19 TAC §33.5, Code of Ethics, to be effective September 1996. Section 33.5 was last amended to be effective August 24, 2008. A discussion item regarding the code of ethics contained in 19 TAC §33.5 was included on the agenda for the October 16, 2009 meeting of the Committee on School Finance/Permanent School Fund and on the agenda for the November 18, 2009 meeting of the Committee of the Full Board. The SBOE approved the proposed amendment presented in this item for first reading and filing authorization at its January 2010 meeting.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: The rules in 19 TAC Chapter 33 establish provisions supporting the management and investment of the Permanent School Fund. Section 33.5 establishes procedures and requirements for a code of ethics policy relating to the Texas Permanent School Fund.
In October and November 2009, the Texas Education Agency (TEA) ethics advisor and general counsel and the fiduciary counsel for the SBOE presented possible changes to the code of ethics policy. Members of the Committee on School Finance/Permanent School Fund and the Committee of the Full Board discussed and made suggestions regarding the possible changes. At the November 2009 meeting, the SBOE chair announced that proposed changes would be presented at the January 2010 meeting for first reading and filing authorization. The SBOE approved for first reading and filing authorization changes to the code of ethics policy.
The proposed amendment to 19 TAC §33.5 shown in Attachment II reflects proposed changes that would clarify and update the code of ethics policy. The proposed changes include clarification of definitions of SBOE member and Permanent School Fund service providers and provisions relating to ethical standards and conflicts of interest, parties responding to requests for proposals or requests for qualifications, prohibited transactions and interests, and limits on the value of gifts and entertainment.
Other technical corrections and updates would be made throughout the section.
In accordance with the TEC, §43.0031(c), a copy of the proposed amendment to 19 TAC §33.5 was submitted to the Texas Ethics Commission and the state auditor for review and comment following SBOE approval of the proposed amendment for first reading and filing authorization at the January 2010 meeting. The SBOE is to consider any comments from the commission or state auditor received prior to final adoption. At this time this item was prepared, no formal comments had been received from the Texas Ethics Commission and the state auditor.
FISCAL IMPACT: The TEA has determined that there are no additional costs to the state or persons required to comply with the proposed rule action. In addition, there is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.
PUBLIC AND STUDENT BENEFIT: The proposed amendment would update and clarify provisions supporting the management and investment of the Permanent School Fund. The distribution of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.
PROCEDURAL AND REPORTING IMPLICATIONS: The proposed amendment would have no procedural and reporting requirements.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: The proposed amendment would have no locally maintained paperwork requirements.
PUBLIC COMMENTS: Following the January 2010 SBOE meeting, notice of the proposed amendment to 19 TAC §33.5 was filed with the Texas Register initiating the official public comment period. No comments had been received at the time this item was prepared. A summary of any public comments received, including any from the Texas Ethics Commission and/or the state auditor, and corresponding agency responses regarding the proposal will be provided to the SBOE at the March 2010 meeting.
ALTERNATIVES: None.
OTHER COMMENTS AND RELATED ISSUES: None.
COMMISSIONER'S RECOMMENDATION: I recommend that the State Board of Education:
By an affirmative vote of two-thirds of the members of the board, approve for second reading and final adoption proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.5, Code of Ethics, with an effective date of 20 days after filing as adopted with the Texas Register.
Respectfully submitted,
Robert Scott
Commissioner of Education
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund
Attachments:
I. Statutory Citations
II. Text of Proposed Amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.5, Code of Ethics