II 109th CONGRESS 1st Session S. 1474 IN THE SENATE OF THE UNITED STATES July 22, 2005 Mrs. Hutchison (for herself and Mr. Cornyn) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Deficit Reduction Act of 1984 to clarify the Permanent University Fund arbitrage exception and to increase from 20 percent to 30 percent the amount of securities and obligations benefitting from the exception.

1.

Modification of special arbitrage rule for certain funds

(a)

In general

Paragraph (1) of section 648 of the Deficit Reduction Act of 1984 (98 Stat. 941) is amended to read as follows: (1)such securities or obligations are held in a fund— (A)which, except to the extent of the investment earnings on such securities or obligations, cannot be used, under State constitutional or statutory restrictions continuously in effect since October 9, 1969, through the date of issue of the bond issue, to pay debt service on the bond issue or to finance the facilities that are to be financed with the proceeds of the bonds, or (B)the annual distributions from which cannot exceed 7 percent of the average fair market value of the assets held in such fund except to the extent distributions are necessary to pay debt service on the bond issue, . (b)

Conforming amendment

Paragraph (3) of such section is amended by striking the investment earnings of both places it occurs and inserting distributions from. (c)

Change of date relating to amount benefitting from rule

Paragraph (4) of such section is amended by striking October 9, 1969 and inserting March 1, 1985. (d)

Effective date

The amendments made by this section shall take effect on the date of enactment of this Act.