The bill amends Section 2256.016 of the Government Code to specify that local governments may only invest in eligible investment pools managed by the comptroller or the Texas Treasury Safekeeping Trust Company. This change is aimed at ensuring that public funds are managed by reputable entities. Additionally, the bill introduces a new Section 2256.0175, which mandates that local governments must divest from any investment pools not managed by these entities, referred to as "restricted investment pools." The divestment must occur according to a specified timeline: at least 50% of the funds must be removed within 180 days of discovery, and 100% must be divested within 360 days.

Furthermore, the bill outlines conditions under which a local government may delay or cease divestment from a restricted investment pool, requiring them to provide a report justifying their decision to the legislature, attorney general, and comptroller. This report must include evidence supporting the claim that divestment would result in a loss of value or significant deviation from investment benchmarks. The changes in law will apply only to contracts entered into after the effective date of the Act, which is set for September 1, 2025.

Statutes affected:
Introduced: Government Code 2256.016 (Government Code 2256)