Senate committee hears proposal to create $5 billion Texas Future Fund within ESF

Chairman Bonin's House Bill 104, presented in the Senate Finance Committee, would create a Texas Future Fund as a separately managed account within the Economic Stabilization Fund (ESF). The proposal would set aside $5 billion of ESF assets for a new investment vehicle overseen by a nine-member investment review board with appointments by the governor, lieutenant governor, speaker and comptroller.

Sponsor remarks said the fund is intended to pursue higher long-term returns through investments in public equities, private markets and debt instruments while adhering to the Uniform Prudent Investor Act. The bill would require an investment policy, statutory guidelines, professional management and limits to single-company concentration. The sponsor described the ESF as the State’s primary reserve and said the Future Fund aims to preserve liquidity in the ESF while creating a vehicle to seek higher returns.

Committee discussion included clarifying questions about the target return relative to inflation and the composition of the existing ESF and Texas Economic Stabilization Investment Fund (which currently holds a large majority of ESF assets). Senator Shortner and others asked about the benchmark and whether the Future Fund would set a new benchmark for state investments; the sponsor said the goal would be growth above inflation but left specifics to board policy and later drafting. The chair left the bill pending for potential changes later in the week.