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Texas House State Affairs Committee Hears SDSI Bill HB 2024
Monday, March 16, 2015 6:50 AM

The State Affairs committee met on March 11, 2015, to consider HB 2024 by Rep. Larry Gonzales (R-Round Rock). HB 2024 establishes a process for agencies to be added or removed from the Self-Directed, Semi-Independent Agency (SDSI) program. The bill includes language that the Texas Credit Union Association (TXCUA) worked with Rep. Richard Raymond (D-Laredo) on in December 2014 to prevent sweeping of funds from the Texas Credit Union Department (TCUD) account to the general revenue fund for penalties imposed by the Department. It also includes the TXCUA-supported provision allowing the Department to continue to own property.

The bill increases the details and lays out the method of reporting by SDSI agencies to the Legislature. It would also move the SDSI authority for financial regulators (Credit Union Commission and the Finance Commission) from the Finance Code to the Government Code in the SDSI Act, to have all SDSI agencies under the same section of the law. While this change may not substantially impact the current operation of the TCUD SDSI authority, the current legal construct is working well under the Finance Code, and it is impossible to tell what issues the TCUD SDSI authority may face going forward if moved into the Government Code.

TXCUA has met with Rep. Gonzales to provide input about the current SDSI structure and advise him that the current program is working well under the Finance Code. Rep. Gonzales advised the committee that he continues to work with all the interested parties on a committee substitute to address as many issues as he can.

During the hearing, State Affairs Committee member Rep. Helen Giddings (Dallas-D) stated that she had been involved in moving the financial regulatory agencies out of appropriations and into the SDSI program, and she asked if there was a problem. Rep. Gonzales responded there was not, commending the agencies and industries for working with him.

Gonzales did state they wanted both greater transparency and consistency relating to SDSI agencies going forward, while recognizing that there are significant differences between some of the agencies, and that he and the Sunset staff are drafting changes to try to address these issues. This bill came out of a report by the Sunset Commission staff late last year to review and make recommendations relating to the SDSI program and how agencies could be added or removed from the SDSI program.

The TCUD and the Finance Commission were granted SDSI status in 2009 by the Legislature, which allows the agencies to establish their own budgets rather than go through the appropriations process. At one point prior to the SDSI authority being granted to the TCUD, the agency had a 63 percent turnover ratio, as it could not pay competitive salaries for examiners due to the limits the Legislature had imposed on increasing their budget. The Texas Credit Union League worked with appropriators to increase funding to the agency to resolve the turnover problems and also pushed for the TCUD to receive SDSI status in 2009. Only eight state agencies in Texas have been granted SDSI status.

The bill was left pending in committee.

View the recommendations from the Sunset staff to the Legislature that were issued in February 2015 on SDSI.

Contact Jeff Huffman, President, Texas Credit Union Association, 469-385-6488 or jhuffman@txcua.coop, for additional information.