Sec. 2256.006.  STANDARD OF CARE.  (a)  Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived.  Investment of funds shall be governed by the following investment objectives, in order of priority:
(1)  preservation and safety of principal;
(2)  liquidity;  and
(3)  yield.
(b)  In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration:
(1)  the investment of all funds, or funds under the entity's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investment;  and
(2)  whether the investment decision was consistent with the written investment policy of the entity.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.