Tex. Gov't Code Section 2256.0204
Authorized Investments: Independent School Districts


(a)

In this section, “corporate bond” means a senior secured debt obligation issued by a domestic business entity and rated not lower than “AA-” or the equivalent by a nationally recognized investment rating firm. The term does not include a debt obligation that:

(1)

on conversion, would result in the holder becoming a stockholder or shareholder in the entity, or any affiliate or subsidiary of the entity, that issued the debt obligation; or

(2)

is an unsecured debt obligation.

(b)

This section applies only to an independent school district that qualifies as an issuer as defined by Section 1371.001 (Definitions).

(c)

In addition to authorized investments permitted by this subchapter, an independent school district subject to this section may purchase, sell, and invest its funds and funds under its control in corporate bonds that, at the time of purchase, are rated by a nationally recognized investment rating firm “AA-” or the equivalent and have a stated final maturity that is not later than the third anniversary of the date the corporate bonds were purchased.

(d)

An independent school district subject to this section is not authorized by this section to:

(1)

invest in the aggregate more than 15 percent of its monthly average fund balance, excluding bond proceeds, reserves, and other funds held for the payment of debt service, in corporate bonds; or

(2)

invest more than 25 percent of the funds invested in corporate bonds in any one domestic business entity, including subsidiaries and affiliates of the entity.

(e)

An independent school district subject to this section may purchase, sell, and invest its funds and funds under its control in corporate bonds if the governing body of the district:

(1)

amends its investment policy to authorize corporate bonds as an eligible investment;

(2)

adopts procedures to provide for:

(A)

monitoring rating changes in corporate bonds acquired with public funds; and

(B)

liquidating the investment in corporate bonds; and

(3)

identifies the funds eligible to be invested in corporate bonds.

(f)

The investment officer of an independent school district, acting on behalf of the district, shall sell corporate bonds in which the district has invested its funds not later than the seventh day after the date a nationally recognized investment rating firm:

(1)

issues a release that places the corporate bonds or the domestic business entity that issued the corporate bonds on negative credit watch or the equivalent, if the corporate bonds are rated “AA-” or the equivalent at the time the release is issued; or

(2)

changes the rating on the corporate bonds to a rating lower than “AA-” or the equivalent.

(g)

Repealed by Acts 2019, 86th Leg., R.S., Ch. 1133 (H.B. 2706), Sec. 5, eff. September 1, 2019.
Added by Acts 2011, 82nd Leg., R.S., Ch. 1347 (S.B. 1543), Sec. 1, eff. June 17, 2011.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 1133 (H.B. 2706), Sec. 5, eff. September 1, 2019.

Source: Section 2256.0204 — Authorized Investments: Independent School Districts, https://statutes.­capitol.­texas.­gov/Docs/GV/htm/GV.­2256.­htm#2256.­0204 (accessed Jun. 5, 2024).

2256.001
Short Title
2256.002
Definitions
2256.003
Authority to Invest Funds
2256.004
Applicability
2256.005
Investment Policies
2256.006
Standard of Care
2256.007
Investment Training
2256.008
Investment Training
2256.009
Authorized Investments: Obligations Of, or Guaranteed by Governmental Entities
2256.010
Authorized Investments: Certificates of Deposit and Share Certificates
2256.011
Authorized Investments: Repurchase Agreements
2256.012
Authorized Investments: Banker’s Acceptances
2256.013
Authorized Investments: Commercial Paper
2256.014
Authorized Investments: Mutual Funds
2256.015
Authorized Investments: Guaranteed Investment Contracts
2256.016
Authorized Investments: Investment Pools
2256.017
Existing Investments
2256.019
Rating of Certain Investment Pools
2256.020
Authorized Investments: Institutions of Higher Education
2256.021
Effect of Loss of Required Rating
2256.022
Expansion of Investment Authority
2256.023
Internal Management Reports
2256.024
Subchapter Cumulative
2256.025
Selection of Authorized Brokers
2256.026
Statutory Compliance
2256.051
Electronic Funds Transfer
2256.052
Private Auditor
2256.053
Payment for Securities Purchased by State
2256.054
Delivery of Securities Purchased by State
2256.055
Deposit of Securities Purchased by State
2256.0115
Authorized Investments: Securities Lending Program
2256.0201
Authorized Investments
2256.0202
Authorized Investments: Municipal Funds from Management and Development of Mineral Rights
2256.0203
Authorized Investments: Ports and Navigation Districts
2256.0204
Authorized Investments: Independent School Districts
2256.0205
Authorized Investments
2256.0206
Authorized Investments: Hedging Transactions
2256.0207
Authorized Investments: Public Junior College District Funds from Management and Development of Mineral Rights
2256.0208
Local Government Investment of Bond Proceeds and Pledged Revenue

Accessed:
Jun. 5, 2024

§ 2256.0204’s source at texas​.gov