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 introduced through the addition of Subsection (l), which restricts local governments from investing in any other investment pools. Furthermore, the bill adds Section 2256.0175, which mandates that local governments must divest from any restricted investment pools—defined as those not managed by the comptroller or the Texas Treasury Safekeeping Trust Company—within specified timeframes. Specifically, at least 50% of the funds must be removed within 180 days of discovery, and 100% must be divested within 360 days.

Additionally, 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 such decisions to legislative leaders and the attorney general. This report must include evidence supporting the local government's determination that divestment would result in a loss of value or benchmark deviation. The changes introduced by this bill will only apply to contracts entered into after its effective date of September 1, 2025, ensuring that existing contracts remain governed by the previous law.

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