The Public Funds Investment Act imposes specific reporting and oversight obligations that every board director must understand — and that cannot be delegated away.
Texas Municipal Utility Districts hold public funds — money collected from ratepayers and bond proceeds held in trust for the community. The Public Funds Investment Act (PFIA), codified in Texas Government Code Chapter 2256, governs how those funds are invested and reported. Boards that ignore it expose themselves to audit findings, personal liability, and, in egregious cases, removal from office.
The PFIA requires that every district adopt a written investment policy approved by the board. That policy must be reviewed and re-adopted at least annually, even if unchanged. Most auditors will flag a district that has not done this — it is one of the first items on every Texas MUD audit checklist.
The act also requires that whoever manages the district's investments — whether an investment officer designated by the board or a third-party firm — file a quarterly investment report. That report must show each investment, its par value, book value, and market value as of the reporting date, along with how it fits within the adopted investment policy.
Authorized investment types under the PFIA are narrow. Districts may generally invest in: direct obligations of the United States or its agencies; fully collateralized direct repurchase agreements; no-load money market mutual funds rated AAA; local government investment pools; and certain certificates of deposit at FDIC-insured institutions. Anything outside this list requires board action and specific statutory authority. A bookkeeper who moves funds into an unauthorized vehicle — even a well-intentioned one — creates a material compliance finding.
The practical implication for boards: your investment report should be a standing agenda item at every regular meeting. Reviewing it is not a formality. Directors who cannot explain why the district holds its current instruments, or who have not seen the quarterly report in months, are not meeting their statutory duty of care. When SafeGov Financial handles your bookkeeping, PFIA compliance reports are generated directly from QuickBooks every quarter and included as a dedicated section of your board packet — ready for review and approval before the gavel falls.
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