Senate Bill No. 563
(By Senator Craigo)
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[Originating in the Committee on Finance;
reported April 2, 1997.]
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A BILL to amend and reenact sections two, four, eight, nine-g and
thirteen, article six, chapter twelve of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated section eight-a, all relating to the West
Virginia State board of investments; defining terms;
designating the state treasurer as chairman of the board and
custodian of the funds; authorizing the board to employ an
internal auditor; requiring consolidated public retirement
board to promulgate rules; requiring consolidated public
retirement board to submit names of designated representatives
to the board of investments; designated representatives to
provide information to the board; requiring board to meet with committees representing beneficiaries; review of investment
policy board meetings; confidentiality; executive sessions of
the board; establishing the consolidated pension fund; repeal
of trust fund; transfer of assets and funds.
Be it enacted by the Legislature of West Virginia:
That sections two, four, eight, nine-g, and thirteen of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that said article be further
amended by adding thereto a new section, designated section
eight-a, all to read as follows:
ARTICLE 6. WEST VIRGINIA STATE BOARD OF INVESTMENTS.
§12-6-2. Definitions.
As used in this article, unless a different meaning clearly
appears from the context:
(1) "Board" means the West Virginia state board of
investments;
(2) "Consolidated fund" means the investment fund managed
by the board and established pursuant to subsection (a), section
eight of this article;
(3) "Consolidated pension fund" means the investment fund
managed by the board and established pursuant to subsection (a),
section eight of this article.
(3)(4) "Local government funds" means the moneys of a
political subdivision, including policemen's pension and relief
funds, firemen's pension and relief funds and volunteer fire
departments, transferred to the board for deposit;
(4)(5) "Political subdivision" means and includes a county,
municipality or any agency, authority, board, county board of
education, commission or instrumentality of a county or
municipality and regional councils created pursuant to the
provisions of section five, article twenty-five, chapter eight of
this code;
(5)(6) "Securities" means all bonds, notes, debentures or
other evidences of indebtedness;
(6)(7) "State funds" means all moneys of the state which may
be lawfully invested except the "school fund" established by
section four, article XII of the state constitution; and
(7) "West Virginia trust fund" means the entity created by
the provisions of article six-b, chapter forty-four of this code.
(8) "Pension funds" means and includes the workers'
compensation fund; the pneumoconiosis fund; the state teachers
retirement system funds; the death disability and retirement fund
for members of the division of public safety; the West Virginia
state police retirement system; the judges retirement fund; the
public employees retirement system funds; and any other retirement
or pension funds and systems as may be hereafter established on
behalf of public employees of this State or of its political subdivisions and administered by the State; or pension funds
established on behalf of public employees of its political
subdivisions and administered by the political subdivisions.
(9) "Beneficiaries" means those people entitled to benefits
from the consolidated pension fund.
§12-6-4. Officers; executive secretary; term; organization; board
staff; surety bonds for members and employees.
(a) The governor treasurer shall be the chairman of the board
and the custodian of all funds, securities and assets held by the
board. The board shall elect an executive secretary to serve for a
term of six years. such election to be held at the board's first
meeting after the first effective date of this article. Effective
with any If a vacancy occurs in the position of executive
secretary, the board shall appoint an executive secretary to serve
at the will and pleasure of the board. which The executive
secretary may not be a member of the board: Provided,
That the
executive secretary shall have at least a bachelor's degree in
either business administration or accounting in an accredited
program and/or have at least five years' experience in investment
management or securities markets, said the experience to have
occurred within the ten years next preceding the date of
appointment of the secretary: Provided, however,
That the
executive secretary may be paid a salary as determined by the board
out of appropriations by the Legislature: Provided further,
That the board treasurer shall appoint a staff to act for the board:
And, Provided, further, That the board may employ an internal
auditor who shall report directly to the board concerning all
investment activities. The internal auditor shall be paid a salary
as determined by the board out of appropriations of the
Legislature.
(b) The board shall meet quarterly and may include in its
bylaws procedures for the calling and holding of additional
meetings.
(c) Each member of the board shall give a separate and
additional fidelity bond from a surety company qualified to do
business within this state in a penalty amount of two hundred fifty
thousand dollars for the faithful performance of his or her duties
as a member of the board. In addition, the board will purchase a
blanket bond for the faithful performance of its duties in the
amount of five million dollars excess of the two hundred fifty
thousand dollar individual bond required of each member by the
provisions of this section. The board may require a fidelity bond
from a surety company qualified to do business in this state for
any person who has charge of, or access to, any securities, funds
or other moneys held by the board, and the amount of such the
fidelity bond shall be fixed by the board. The premiums payable on
all fidelity bonds shall be an expense of the board.
(d) On or before the first day of July, one thousand nine
hundred ninety-seven, the West Virginia consolidated public retirement board shall promulgate procedural rules requiring each
pension system to designate an individual representative of that
pension system and the West Virginia workers' compensation
commission shall promulgate procedural rules by requiring the
pneumoconiosis fund and the workers' compensation fund to designate
an individual representative of their respective fund.
(e) On or before the first day of July, one thousand nine
hundred ninety-seven, and annually thereafter on the first day of
July, the consolidated public retirement board shall submit in
writing to the board, the names of the five designated
representatives of the pension systems, and the workers'
compensation commission shall submit the names of the two
representatives of its funds.
(f) Each designated representative shall provide to the board
of investments his or her current address and shall annually update
the information on or before the first day of July. The board
shall provide notice of meetings of the board pursuant to
subsection (g) of this section.
(g) Each designated representative shall submit in writing to
the board on or before the first day of July, one thousand nine
hundred ninety-seven, and annually thereafter on or before the same
date, the names of no more than three persons comprising a
committee representing the beneficiaries of that representative's
participant plan.
(h) The board shall meet with each of the seven committees for the purpose of receiving input from the committees regarding the
board's written investment policy and the need for the board to
review or modify its policy. In reviewing the investment policy
statement, the board shall receive each committee's stated
objectives and policies regarding the risk tolerances and return
expectations of each participant plan. The board may meet with all
of the committees or any of them at its quarterly meeting or at any
additional meetings for the same purpose.
(I) All meetings of the board shall be open to the designated
representatives of the participant plans. The representatives are
subject to any rules, guidelines, requirements and standards
promulgated by the board. The representatives shall observe
standards of decorum established by the board. The representatives
are subject to the same code of conduct applicable to the board
members and are subject to all the board's rules. The
representatives are also subject to any requirements of
confidentiality applicable to the members of the board. Each
representative is liable for any act which he or she undertakes
which violates any rule, statute governing ethical standards,
confidentiality standards or other standard of conduct imposed upon
the members of the board or the designated representatives. Any
meeting of the board may be closed, upon adoption of a motion by
any member, when necessary to preserve the attorney-client
privilege, to protect the privacy interests of individuals, to
review personnel matters or to maintain confidentiality when confidentiality is in the best interest of the beneficiaries.
§12-6-8. Investment funds established; management thereof.
(a) There is hereby established a special investment fund to
be managed by the board and designated as the "consolidated fund".
(b) There is hereby established a special investment fund to
be managed by the board and designated as the "consolidated pension
fund" for the common investment of pension funds. All
administrators, custodians or trustees of the various pension funds
may make money available to the board of investments. Pension
funds received by the board shall be deposited in the consolidated
pension fund.
(b)(c) Each board, commission, department, official or agency
charged with the administration of state funds is hereby authorized
to may make moneys available to the board for investment.
(c)(d) Each political subdivision of this state through its
treasurer or equivalent financial officer is hereby authorized to
may enter into agreements with the board for the investment of
moneys of the political subdivision. Any political subdivision may
enter into an agreement with any state agency from which it
receives funds to allow the funds to be transferred to their
investment account with the state board of investments.
(d)(e) Moneys held in the various funds and accounts
administered by the board shall be invested as permitted in section
twelve of this article and subject to the restrictions contained in section ten of this article. The board shall maintain records of
the deposits and withdrawals of each participant and the
performance of the various funds and accounts. The board shall
also establish such rules and regulations for the administration of
the various funds and accounts established by this section as it
considers necessary for the administration of the funds and
accounts, including, but not limited to: (1) The specification of
minimum amounts which may be deposited in any fund or account and
minimum periods of time for which deposits will be retained; and
(2) creation of reserves for losses: Provided, That in the event
any moneys made available to the board may not lawfully be combined
for investment or deposited in the consolidated funds established
by this section, the board may create special accounts and may
administer and invest those moneys in accordance with the
restrictions specially applicable to those moneys.
12-6-8a Transfers from the West Virginia Trust Fund.
(1) On the effective date of this article, the West Virginia
trust fund created in article six-b, chapter forty-four of this
code shall be repealed and the West Virginia trust fund shall
deliver all the assets of the pension funds, workers' compensation
fund and the pneumoconiosis fund to the board.
(2) The West Virginia trust fund shall transfer all funds to
a special account of the state treasurer and shall transfer all
computers and other necessary items of equipment associated with each position at the trust fund whose responsibilities and
obligations shall be as of the effective date of this section
performed by the state treasurer.
(3) The state treasurer may pay the expenses associated with
the transfer of assets from the West Virginia trust fund to the
special account.
§12-6-9g. Transfer of loans to consolidated fund.
The Legislature hereby finds and declares that with the
establishment of the West Virginia trust fund as provided in
article six-b, chapter forty-four of this code, and the transfer of
the retirement systems' and workers' compensation and
pneumoconiosis funds' investments to the West Virginia trust fund,
those mortgage and economic development loans which the board
determines cannot be actively traded and which are currently held
by the retirement systems and workers' compensation and
pneumoconiosis funds should remain as investments of the state.
Effective on the thirtieth day of June, one thousand nine
hundred ninety-six, the board of investments is hereby directed to
purchase the workers' compensation loan pool, public employees
retirement system loan pool and teachers retirement loan pool. The
amount to be paid shall be the loan's current amortized cost value
plus any accrued interest as of the purchase date. The purchased
loans shall then be recorded in the consolidated fund's state loan
pool.
§12-6-13. Board as sole agency for investments; exceptions.
All duties vested by law in any agency, commission, official
or other board of the state relating to the investment of moneys,
and the acquisition, sale, exchange or disposal of securities or
any other investment are hereby transferred to the board:
Provided, That the West Virginia trust fund, is the sole entity for
the investment of the consolidated pension plan funds in accordance
with article six-b, chapter forty-four of this code: Provided,
however, That neither this section nor any other section of this
article applies to the "board of the school fund" and the "school
fund" established by section 4, article XII of the state
constitution: Provided further however, That funds under the
control of the municipal bond commission may, in the discretion of
the commission, be made available to the board for investment to be
invested by the commission as provided in article three, chapter
thirteen of this code.
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FINANCE COMMITTEE AMENDMENTS
On page four, section four, line fourteen, by striking out the
word "treasurer" and inserting in lieu thereof the word "governor";
And,
On page five, section four, line nine, by striking out the
word "treasurer" and inserting in lieu thereof the word "board".