Relating to the investment of public funds by a local government in investment pools.

SB 404 requires Texas local governments (such as cities and counties) to invest public funds only in investment pools managed by the state comptroller or the Texas Treasury Safekeeping Trust Company. It mandates that local governments divest all funds from pools not managed by these entities within 180 days (with at least 50% removed by then) and fully divest within 360 days of discovery. Local governments may delay divestment only if they provide documented justification showing potential financial loss, and must submit a report to the legislature, attorney general, and comptroller explaining the delay. The bill directly affects all local governments using investment pools for public funds, setting clear timelines for compliance with state-managed investment options.