Senate State Affairs Interim Report to the 88th Legislature

The Senate Committee on State Affairs interim report to the 88th Legislature covers human trafficking, biometric identifiers, and investment practices, particularly in relation to state pension systems. Recommendations on each charge assigned to the committee are highlighted below, for more information see the full report here.

Spotlight on Recommendations

Charge 1. Human Trafficking: Examine opportunities and make recommendations to reduce the profitability of and demand for human trafficking in Texas.

• Reduce Demand and Profitability
  • Continue to Stop IMBs and other venues that allow human trafficking
    • Human trafficking is an illicit economy fueled by demand. Without demand, human trafficking would cease to exist. To reduce demand for and profitability of human trafficking, the state should continue to take action to make venues for human trafficking more difficult to operate. Because many IMBs are owned by shell companies to hide the true identity of the owners, the state should further evaluate requiring massage business to register official operators and primary owners with valid phone numbers and addresses so that law enforcement agents can easily identify corporate owners.
    • The state should further consider requiring ATM registration with similar ownership and location data as other types of business registrations and penalize the owner if the owner changes the location of the ATM without updating the registration. Law enforcement can use these ATM records to help develop cases against traffickers and uncover other illicit activity like money laundering.
  • Continue to utilize the DTPA in the fight against Human Trafficking
    • To reduce human trafficking through the operation of IMBs, the Office of the Attorney General should continue to use the DTPA to protect Texans from human trafficking. Some have suggested allowing local county and district attorneys to also pursue penalties against local IMBs in violation of the DTPA. In the regular session of the 87th Legislature, Senator Huffman introduced SB 1214 which would have allowed local county and district attorneys to collect penalty fees against IMBs in violation of the DTPA. This bill could provide funds to law enforcement and local attorneys to further incentivize the investigation and prosecution of IMBs.57
    • The state should continue to pursue ways to utilize the DTPA in the fight against human trafficking.
  • Continue to focus Law Enforcement efforts on buyers
    • To further reduce the demand for human trafficking, the state should continue its work on adequately punishing buyers. HB 1540 established the new offense of solicitation of prostitution with the Texas Department of Public Safety making a large number of arrests as a result. Although great strides have been made in this area, the state should continue to train law enforcement and prosecutors to focus their investigations on buyers instead of victims.
• Increase Public Awareness and Victim Services
  • Require trainings in fields likely to come into contact with victims
    • The state has already increased public awareness on human trafficking exponentially with required trainings in the occupations most likely to come into contact with victims. The state should continue to partner with prosecutors, law enforcement agents, and nonprofit organizations to provide trainings among other industries likely to come into contact with victims, such as hotels, convenience stores, and oil and gas industries. Local and statewide task forces should invite members of the media to participate in task force operations to learn more about the issue.
  • Continue to expose and eliminate IBMs
    • In addition to the work to increase public awareness on human trafficking, over the past few years, the Office of the Attorney General has notified landlords of potential IMBs on their properties. The types of red flags that suggest the presence of a potential IMB include: primarily female employees, workers living at the business, workers transported to the location by the owner or manager, “massage therapists” who are unlicensed, mostly male customers, and customers parking away from the business and watching for law enforcement.58 As a result, the Office of the Attorney General has notified 34 landlords of these potential industries on their property, which has resulted in the closure of 17 IMBs.59
    • Current law allows landlords to seek forcible eviction upon a reasonable belief that a tenant is engaging in prostitution or human trafficking on the premises. However, the state should continue to find ways to require or incentivize landlords to terminate their leases with these businesses, thereby limiting the locations where IMBs operate.
  • Increase victim services
    • Victims of human trafficking suffer complex, life-altering trauma and deserve comprehensive resources that will allow them to leave their trafficker, start the healing process from their trauma, and begin a new life. Numerous state agencies and nonprofit organizations are already working toward these goals, but more can always be done to help victims.
    • The state should continue to financially support and work with nonprofit organizations to provide more emergency shelters for victims removed from a trafficking situation, drop-in centers for youth experiencing homelessness, and long-term housing and financial support for victims on their way to recovery.

Charge 2. Privacy and Transparency: Review the current state laws that protect and secure individuals’ biometric identifiers.

• Biometric Identifier Protection
  • The State should continue to monitor the implementation of SB 475 by the various state agencies, and ensure they are taking the necessary steps to prevent unintended use of an individual’s biometric identifiers. It is also recommended that to the extent possible, state agencies should model the safety and security procedures used by DPS when they do acquire, retain, or disseminate a person’s biometric data, including the notice provided to an individual to obtain his/her written or electronic consent. If not already occurring, an audit, whether by the State Auditor’s Office or another recognizable entity, should be conducted periodically of the agencies subjected to SB 475 to ensure adequate cyber security and preventative measures are in place.
• Fraudulent Government Websites
  • Any state agency that is not already using a .gov domain should go ahead and register for one. Local and state government entities should be notified about the current no-charge registration for a .gov domain registration. Given the host of available resources to help prevent cyber crime, it is recommended to raise public awareness and education to government entities and the general public about these resources, how to prevent cyber crime, how to recognize cyber crime, and what do to when a government’s website has been falsely imitated.

Charge 3. Investment Practices: Study the investment practices of financial services firms and how those practices affect the state’s public pensions.

• Asset Managers and Advisors
  • The state should consider requiring that all asset managers and advisors use only a fiduciary standard in investing public retiree money, so that maximizing returns for all is the universal standard. The public advisors and managers should consider only financial factors in deciding how to invest assets and how to vote shares, not factors that stem from commitments to other politically motivated groups. Where a public pension system hires mangers or advisors who invest money by a standard other than the maximization of return, the state has an interest in creating accountability for pension board members to the retirees.
• Proxy Advisory Firms
  • On proxy advisory firms, other options exist. Proxy advisory firms (or any other firms providing voting advice) should be required to demonstrate annually that their vote recommendations are in the best economic interest of shareholders, other than (1) with respect to company-sponsored proposals, such as the election of directors and the appointment of the independent auditor, or (2) where the proxy advisory firm recommended a vote consistent with the recommendation of a board of directors composed of a majority of independent directors.
  • Before adopting changes to their proxy voting policies, proxy advisory firms should be required to disclose the reasons for the proposed changes, including an analysis of how the proposed changes will enhance shareholder value, and provide a reasonable period during which all relevant constituencies could comment on the proposed changes. The final voting policies should only be issued following a reasonable time during which the proxy advisory firms must carefully consider the views expressed during the comment period. Comment letters should be required to be made publicly available on the websites of the proxy advisory firms.