(a) In the resolution authorizing the issuance of bonds, the board may make additional covenants with respect to the bonds and the pledged revenues and may provide for the flow of funds and the establishment, maintenance, and investment of funds. The funds established may include an interest and sinking fund, a reserve fund, and other funds that will be kept and maintained by or under the direction of the board.
(b) The board may by resolution provide for the establishment, maintenance, and investment of additional funds into which the board may deposit revenues from any financial assistance program under this chapter that are not pledged to bonds, including any gifts, grants, or donations accepted by the board for the support, acquisition, construction, operation, enlargement, improvement, furnishing, or equipping of veterans homes or veterans cemeteries.

(c) Funds established by the board under this chapter are not to be part of the State Treasury and are not subject to Subchapter F, Chapter 404, Government Code. Any provision of this chapter or other law that provides for the deposit of money or another thing of value into the funds prevails over the requirements of Subchapter F, Chapter 404, Government Code. The funds shall remain under the control of the board but, at the direction of the board, may be kept and held in escrow and in trust by the comptroller on behalf of the board and the owners of the bonds and used only as provided by this chapter.
(d) Money in a fund shall be invested in investments authorized as provided by a resolution or order of the board.
(e) Legal title to money in a fund is in the board unless or until paid from the fund as provided by this chapter or the resolution authorizing the issuance of the bonds or the establishment of the fund.
(f) The board shall select the comptroller or one or more commercial banks, depository trust companies, or other entities to serve as custodian of the cash or securities of a fund and may authorize the custodian to invest the cash in investments as determined by the board.
(g) In managing the assets of a fund, the board may permit the custodian of the fund’s securities to lend the securities as provided by this section and by rules adopted by the board.
(h) To be eligible to lend securities under this section, a custodian selected under Subsection (f) must be experienced in the operation of a fully secured securities loan program and must:
(1) maintain adequate capital in the prudent judgment of the board to assure the safety of the securities;
(2) execute an indemnification agreement satisfactory in form and content to the board fully indemnifying the board against loss resulting from the custodian’s operation of a securities loan program for the fund’s securities; and
(3) require any securities broker or dealer to whom it lends securities of the fund to deliver and maintain with the custodian collateral in the form of cash, United States government securities, or letters of credit that are issued by banks rated as to investment quality not less than A or its equivalent by a nationally recognized investment rating firm in an amount equal to at least 100 percent of the market value, from time to time, of the loaned securities.
(i) The board shall require the custodian or custodians of a fund to administer the fund solely and strictly as provided by this chapter and the resolution authorizing the issuance of the bonds, and the state may not take any other action relating to the fund except those specified in this chapter and the resolution authorizing the issuance of the bonds or the establishment of the fund.