.        I



    .-                           -,




                           THE        ATTORNEY           GENERAL
                                         OF   %-EXAS
                                                                f ~za~‘“‘-A~i.“x’~~
                                                                        “---~‘-..---.
                                                                               --’
                                                                                “-.‘-‘..
                                                                                    1
                                       \ AUSTIN U.~XAS
               WILL WILSON
             Ax-rORNEY GENERAL
                                      December 8, 1960


             Honorable Leon Stone               Opinion Ro. m-971
             Vice Chairman
             Board of Trustees                  Bet Whether Opinion of the
             The Teacher Retirement                 Attorney General &XI.
               System of Texas                      WV-548 also applies to
             State Office Building                  investment of the funds
             Auetin, Texas                          of the Teacher Retire-
                                                    ment System of Teaa@.
             Dear Rx. Stoner

             In regueeting an opinion you ask whether Opinion Ho. UW-948,
             written to the mployeea Retirement System of Texas, applies
             to the Teacher Retirement System and Whether tlterules of tbe
             Board of Regents of The University of Texa8 may be followed by
             our system and bow much discxetion we have in following these
             policies:

             Opinion of the Attorney General Ho. WU-548, a copy -of which &
             attached, should be read aa a part of this opinion.

             Opinioa No. WW-548, dated January 16, 1959, concemw iare&-
             rent of the retirement funds of the Employees Retirement
             System in corporate stocks and bonds and ia based primarily upon
             the applicable language contained ia Section 62(a), an amended,
             of Article Xv1 of the Constitution of Texan, and in Section 71
             of Article 6228a, V.C.S., as amended.

             The investment of funda of the Teacher Retirement System in
             such securities is authorised by Sectioa 48a, aa amended, of
             Article III of the Constitution of Texas, and by Section 13 of
             Article 2922-1, V.C.S., as amended, and since tbe applicable
             portions of each of the said constitutional provisions are
             practically identical, as are the applicable portions of the
             two 6tatutes, Opinion Ho. NW-548 would apply also to such
             investment of Teacher Betiremeat funda.
Honorable Leon Stone, paga 2 (m-971   )


On October 22, 1960, the Board of Regents of The University
of Texas adopted certain amended policies l . . . as pro-
viding safeguards and standards of eligibility for invest-
ments which the Board of Regents deem proper investment8 for
the Permanent University Fund . . .,I such action being re-
flected by the following emcerpt from its ainutear

       "After presentation by Vice-Chancellor
       Uolley of the,amended and edited poli-
       cies governing the investment program
       for the Permanent University Pund of
       The University of Texas, a motion was
       aade by Regent Tbompocuaand seconded by
       Regent Rardie to adopt the polioiea an
       amended and edited as providing safeguards
       and standards of eligibility for invest-
       ments which the Board of Regents deem
       proper investments for the Permanent Uni-
       versity Fund under the provision6 of Sec-
       tion lla, Article VII, Constitution of
       the State oi?Texas, which amthoriaes in-
       vestment of up to 56% of the Fund in
       corporate securities.   The Board of
       Regents with eight member8 present unan'i-
       moualy adopted the policies ae amended
       and edited and directed tbe Secretary of
       the Board to spread the full copy of the
       'Policiee Governing Permanent Wniveneity
       Pund of The University of Texan Invest-
       ment Program," aa amended and edited
       through October 22, 1960, on the perma-
       nent minutes of the Board of Regents."

In the amended "Policies Qoverning Permanent Wniversity Pund
of The University of Texas Inveatment Program,* so adopted,
on pages 11 to 15, both inclusive. the Board of Regent8 has
formally approved by name more than one hundred thirty
(139) corporation8 whose corporate bonds, preferred etocka
and common stocks are eligible for purchase by the Permanent
University Fund. Additionally, in paragraph IV B oa page 3,
it is provided that corporate bonds issued by corporations
not on this approved list are approved by the Board of
Regents for purchase either on original offering or in the
Ronorable Leon Stone, Rage 3 (UU-921)



secondary market provided such corporate bonds meet the
etandarde and requirements there set out.

While the best evidence is the actual investmeat of the
?ermanent University Fund (see On-548). we believe that
thiaiminute order of October 22, lg60, by the Roard of
Regents also constitutes clear and sufficient evidence aa
to what corporate securities the Board of Regents deems to
be proper investments for the Permanent University Bund, and
that similar actions properly taken by that Roard in the
future will also afford, under aiotiag law, sufficient evi-
dence   thereof.

Accordingly, funds of both the Bployees Retirement and
Teacher Retirement Systems may properly be invested in ac-
cordance with the said minute order.


                                 SumwARY

                   Attorney general's Opinion Ro. WW-548
                   applies to investment of the funds of
                   the Teacher Retirement System, and said
                   funds may not be invested 1~ corporate
                   stocks and bonds other than tkoae In
                   which the Permanent University Fund of
                   The Rnivexsity of Texam is invested, or
                   may be invested under tke staadards es-
                   tablished by the Board of Regents.


                                     Very truly yours,

                                     WILL WI~QR
                                     Attorneir General of Texan




                                           Assistant     -        /
EWR-S
Honorable Leon Stone, page 4 (W-971 )




OPIlfIOBl
        ColllrlITTrn
W. V. Geppert, Chairman
Marietta HcOregor Payne
W. Ray Scraggs
IUner IleVey
Tom UcFarling

BEVIBWISDFOR !tT+IEATTQBlDIJlC)IMI=
By: Leonard Passnore
