Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 6. INVESTMENT MANAGEMENT

Subchapter A. STANDARDS OF CONDUCT FOR FINANCIAL ADVISORS

34 TAC §§6.1 - 6.5

The Comptroller of Public Accounts adopts new §§6.1, 6.2, 6.3, 6.4, and 6.5 concerning the standards of conduct and disclosure requirements applicable to financial advisors or service providers who provide financial services to the comptroller or advise the comptroller in connection with the management or investment of state funds, without changes to the proposed text as published in the December 12, 2003, issue of the Texas Register (28 TexReg 11086).

These new sections are adopted under Texas Administrative Code, Title 34, Part 1, new Chapter 6, Investment Management, new Subchapter A, Standards of Conduct for Financial Advisors. These new sections are proposed pursuant to Senate Bill 1059, 78th Legislature, Regular Session, 2003.

Senate Bill 1059, 78th Legislature, Regular Session, adopts Government Code, new Chapter 2263, regarding ethics and disclosure requirements for outside financial advisors and service providers. New Government Code, §2263.004, requires the governing body of a state governmental entity by rule to adopt standards of conduct applicable to financial advisors or service providers who provide financial services to the state governmental body or advise the state governmental body in connection with the management or investment of state funds. These provisions of Senate Bill 1059 were effective September 1, 2003.

New §6.1 outlines the definitions of comptroller and financial advisor applicable to this subchapter. New §6.2 addresses the applicability of the subchapter to financial advisors or service providers who render important investment or funds management advice to the comptroller with respect to state funds. New §6.3 outlines disclosure requirements for financial advisors or service providers, including a requirement to file an annual statement with the comptroller and the state auditor. New §6.4 outlines standards of conduct for financial advisors or service providers, which are in addition to any standards required by any contracts or service agreements. New §6.5 provides that a contract is voidable by the comptroller if a financial advisor or service provider violates a standard of conduct outlined in this subchapter.

No comments were received regarding adoption of the new sections.

These new sections are adopted under Government Code, new §2263.004 (as enacted by Senate Bill 1059, 78th Legislature, Regular Session, 2003), which requires the governing body of a state governmental entity by rule to adopt standards of conduct applicable to financial advisors or service providers who provide financial services to the state governmental body or advise the state governmental body in connection with the management or investment of state funds.

The new sections implement Government Code, Chapter 2263.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 14, 2004.

TRD-200400226

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: February 3, 2004

Proposal publication date: December 12, 2003

For further information, please call: (512) 475-0387

Chapter 41. HEALTH CARE AND INSURANCE PROGRAMS

Subchapter B. LONG-TERM CARE, DISABILITY AND LIFE INSURANCE

34 TAC §41.17

The Teacher Retirement System of Texas (TRS) adopts amendments to §41.17 relating to definitions for the Long-Term Care Insurance Program set out in chapters 1576 and 1577, Texas Insurance Code. The amendments clarify that the effective date of employment is the date on which an employee is a TRS member to reflect the changes made in House Bill 3459, 78th Legislature, Regular Session, 2003, which establishes a new 90-day waiting period for TRS membership for employees hired on or after September 1, 2003. The amendments are adopted without changes to the text as published in the October 24, 2003, issue of the Texas Register (28 TexReg 9202) and therefore, will not be republished.

The amendments change the definition of the effective date of employment so that an individual's effective date of employment is the day on which an individual: (1) is on active duty in his or her first TRS-covered position; and (2) is a participating TRS member. In addition, the amendments provide clarification and update references to reflect the recodified Insurance Code provisions that establish the program.

No comments on the proposed amendments were received.

The amendments are adopted under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The amendments are also adopted under §1576.006 and §1577.002, Insurance Code which authorize TRS to adopt rules to implement the chapters.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 15, 2004.

TRD-200400299

Ronnie Jung

Interim Executive Director

Teacher Retirement System of Texas

Effective date: February 4, 2004

Proposal publication date: October 24, 2003

For further information, please call: (512) 542-6115

34 TAC §41.101, §41.102

The Teacher Retirement System of Texas (TRS) adopts new §41.101 and §41.102 concerning organizations eligible to respond to and the proposal procedure for the new active employee Health Reimbursement Arrangement Program ("HRA Program") established by House Bill 3257, 78th Legislature, Regular Session, 2003, which amends article 3.50-8, Insurance Code. The new rules set out the criteria for organizations to be eligible to submit a proposal to be the HRA Program administrator and the proposal procedure for that procurement. The new sections are adopted without changes to the text as published in the October 24, 2003, issue of the Texas Register (28 TexReg 9202) and therefore, will not be republished.

New §41.101 addresses the criteria that an organization must meet to be eligible to submit a proposal to be the HRA administrator. Additionally, new §41.102 sets forth the procedures for submitting proposals in response to a request for proposals for the HRA program administrator.

No comments on the proposed rules were received.

The new rules are adopted under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The new rules are also adopted under Insurance Code, article 3.50-8, §4, which authorizes TRS, as trustee, to adopt rules to implement the HRA Program and §4A, which authorizes TRS to contract with an entity to be the independent administrator of the HRA Program.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 15, 2004.

TRD-200400300

Ronnie Jung

Interim Executive Director

Teacher Retirement System of Texas

Effective date: February 4, 2004

Proposal publication date: October 24, 2003

For further information, please call: (512) 542-6115