Committee Substitute
House Bill 4387 History
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Introduced Version
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COMMITTEE SUBSTITUTE
FOR
H.
B.
4387
(By Delegates Burk and Anderson)
(Originating in the Committee on Finance)
(March 1, 1994)
A BILL to amend and reenact section twenty-two-a, article thirteen, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to further amend said article by adding thereto a new section, designated section twenty-two-c; to amend and reenact section eleven, article twenty-two of said chapter; and to further amend said article by adding thereto a new section, designated section eleven-a, all relating to the approved means of investing municipal funds; permitting investments in federally-issued, backed or guaranteed instruments, including mortgages on real property situate in the state or in highly rated pooled trusts; opening investment options in certain mutual funds and in the securities and commercial paper of private organizations, banks, trusts and savings organizations; and imposing portfolio limitations on specified investments; establishing approved investment instruments for the retirement system assets of Class I, II and III municipalities; permitting investments in federally guaranteed, backed or issued instruments, including mortgages on real property situate in the state or in highly rated pooled trusts; opening investment options in certain mutual funds and in the securities and commercial paper of private corporations, banks, trusts and savings organizations; and imposing portfolio limitations on specified investments.
Be it enacted by the Legislature of West Virginia:
That section twenty-two-a, article thirteen, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that said article thirteen be further amended by adding thereto a new section, designated section twenty-two-c; that section eleven, article twenty-two of said chapter be amended and reenacted; and to further amend said article by adding thereto a new section, designated section eleven-a, all to read as follows:
ARTICLE 13. TAXATION AND FINANCE.
PART VI. ACCOUNTING PRINCIPLES; FUNDS; DISBURSEMENTS.
§
8
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13
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22a. Investment of municipal funds.
All municipal funds, the investment of which is not governed by other provisions of this code and not required for the payment of current obligations and not otherwise prohibited, may be invested and reinvested in:
(1) Made available by the municipal treasurer to the state board of investments for investment in accordance with the provisions of article six, chapter twelve of this code, if it be determined by such municipal treasurer that the available interest rate offered by an acceptable depository in such treasurer's municipality be less than the interest rate, net of administrative fees referred to in article six, chapter twelve of this code, offered it through the state board of investments; or
(2) Invested by such treasurer in the following classes of securities and accounts which securities and accounts mature on such dates as will make available such amount of cash as is required:
(a) Obligations of the United States or any agency thereof, which are guaranteed by the United States or for which the full faith and credit of the United States is pledged for the payment of principal and interest, or any obligation of an agency of the United States designated in section nine, article six, chapter twelve of this code.
(b) Certificates of deposit secured by (1) obligations as listed in the preceding paragraph of this subdivision, (2) general obligation or revenue bonds of the state of West Virginia, (3) general obligation bonds of any other state, (4) general obligation bonds of any county in this state or of any county board of education in this state, or (5) general obligation bonds of any municipality in this state.
(c) Interest bearing savings accounts in banking institutions, the accounts of which are insured by the federal deposit insurance corporation, or in federal savings and loan associations, the accounts of which are insured by the federal savings and loan insurance corporation, or in building and loan associations, the accounts of which are insured by the federal savings and loan insurance corporation:
Provided,
That an investment in any such savings account in excess of the amount insured by the federal deposit insurance corporation or the federal savings and loan insurance corporation, as the case may be, shall not be made unless such banking institution, federal savings and loan association or building and loan association provides adequate bond or other adequate security for the amount of the proposed municipal investment in excess of such insurance coverage, the adequacy of any such bond or other security to be determined by the treasurer of such municipality.
(1) Any direct obligation of, or obligation guaranteed as to the payment of both principal and interest by, the United States of America;
(2) Any evidence of indebtedness issued by any United States government agency guaranteed as to the payment of both principal and interest, directly or indirectly, by the United States of America including, but not limited to, the following: Government national mortgage association, federal land banks, federal home loan banks, federal intermediate credit banks, banks for cooperatives, Tennessee valley authority, United States postal service, farmers home administration, export-import bank, federal financing bank, federal home loan mortgage corporation, student loan marketing association and federal farm credit banks;
(3) Any evidence of indebtedness issued by the federal national mortgage association to the extent such indebtedness is guaranteed by the government national mortgage association;
(4) Any evidence of indebtedness that is secured by a first lien deed of trust or mortgage upon real property situate within this state, if the payment thereof is substantially insured or guaranteed by the United States of America of any agency thereof;
(5) Direct and general obligations of this state;
(6) Any undivided interest in a trust, the corpus of which is restricted to mortgages on real property and, unless all of such property is situate within the state and insured, such trust at the time of the acquisition of such undivided interest, is rated in one of the three highest rating grades by an agency which is nationally known in the field of rating pooled mortgage trusts;
(7) Any bond, note, debenture, commercial paper or other evidence of indebtedness of any private corporation or association:
Provided,
That any such security is, at the time of its acquisition, rated in one of the three highest rating grades by an agency which is nationally known in the field of rating corporate securities:
Provided, however,
That if any commercial paper or any such security will mature within one year from the date of its issuance, it shall, at the time of its acquisition, be rated in one of the two highest rating grades by any such nationally known agency and commercial paper or other evidence of indebtedness of any private corporation or association shall be purchased only upon the written recommendation from an investment advisor that has over three hundred million dollars in other funds under its management;
(8) Negotiable certificates of deposit issued by any bank, trust company, national banking association or savings institution which mature in less than one year and are fully collateralized;
(9) Interest earning deposits including certificates of deposit, with any duly designated state depository, which deposits are fully secured by a collaterally secured bond as provided in section four, article one, chapter twelve of this code; and
(10) Mutual funds registered with the securities and exchange commission which have assets in excess of three hundred million dollars.
§
8-13-22c. Restrictions on investment.
Moneys invested as permitted by section eleven of this article are subject to the restrictions and conditions contained in this section:
(1) At no time may more than seventy-five percent of the portfolio of either fund be invested in securities described in subdivision (7), section eleven of this article;
(2) At no time may more than twenty percent of the portfolio of either fund be invested in securities described in subdivision (7) of section eleven of this article which mature within one year from the date of issuance thereof;
(3) At no time may more than nine percent of the portfolio be invested in securities issued by a single private corporation or association; and
(4) At no time may more than sixty percent of the portfolio be invested in equity mutual funds under subdivision (10) of section eleven of this article.
ARTICLE 22. RETIREMENT BENEFITS GENERALLY; POLICEMEN'S PENSION
AND RELIEF FUND; FIREMEN'S PENSION AND RELIEF
FUND; PENSION PLANS FOR EMPLOYEES OF WATERWORKS
SYSTEM, SEWERAGE SYSTEM OR COMBINED WATERWORKS AND
SEWERAGE SYSTEM.
PART II. GENERAL RETIREMENT SYSTEMS FOR CLASS I,
II AND III CITIES.
§
8
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22
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11. Investment of funds.
The board shall keep as an available sum for the purpose of making retirement, disability and death payments and administration expense an amount estimated to meet such payments for a period not to exceed ninety days. The board in acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of the fund shall exercise judgment and care which persons of experience, prudence, discretion and intelligence exercise in the management of financial affairs, considering the probable income as well as the probable security of the investment and with regard to the permanent disposition of the fund. Within the limitations of the foregoing standard, the board is authorized It shall have full power and authority in its sole discretion to invest and reinvest any moneys funds received by it in the following: types of securities:
(a) Direct general obligations of the United States government or of this state; (b) direct general obligations of any municipality, county or school district in this state; (c) bonds or debentures of any utility corporation, industrial corporation or railroad corporation organized under the laws of any state of the United States, rated "A" or better by any two security rating concerns, provided interest shall have been paid by the corporation on its indebtedness for at least the ten years last past; and (d) federally insured mortgages under sections two hundred three and two hundred seven of the National Housing Act.
(1) Any direct obligation of, or obligation guaranteed as to the payment of both principal and interest by, the United States of America;
(2) Any evidence of indebtedness issued by any United States government agency guaranteed as to the payment of both principal and interest, directly or indirectly, by the United States of America including, but not limited to, the following: Government national mortgage association, federal land banks, federal home loan banks, federal intermediate credit banks, banks for cooperatives, Tennessee valley authority, United States postal service, farmers home administration, export-import bank, federal financing bank, federal home loan mortgage corporation, student loan marketing association and federal farm credit banks;
(3) Any evidence of indebtedness issued by the federal national mortgage association to the extent such indebtedness is guaranteed by the government national mortgage association;
(4) Any evidence of indebtedness that is secured by a first lien deed of trust or mortgage upon real property situate within this state, if the payment thereof is substantially insured or guaranteed by the United States of America of any agency thereof;
(5) Direct and general obligations of this state;
(6) Any undivided interest in a trust, the corpus of which is restricted to mortgages on real property and, unless all of such property is situate within the state and insured, such trust at the time of the acquisition of such undivided interest, is rated in one of the three highest rating grades by an agency which is nationally known in the field of rating pooled mortgage trusts;
(7) Any bond, note, debenture, commercial paper or other evidence of indebtedness of any private corporation or association:
Provided,
That any such security is, at the time of its acquisition, rated in one of the three highest rating grades by an agency which is nationally known in the field of rating corporate securities:
Provided, however,
That if any commercial paper or any such security will mature within one year from the date of its issuance, it shall, at the time of its acquisition, be rated in one of the two highest rating grades by any such nationally known agency and commercial paper or other evidence of indebtedness of any private corporation or association shall be purchased only upon the written recommendation from an investment advisor that has over three hundred million dollars in other funds under its management;
(8) Negotiable certificates of deposit issued by any bank, trust company, national banking association or savings institution which mature in less than one year and are fully collateralized;
(9) Interest earning deposits including certificates of deposit, with any duly designated state depository, which deposits are fully secured by a collaterally secured bond as provided in section four, article one, chapter twelve of this code; and
(10) Mutual funds registered with the securities and exchange commission which have assets in excess of three hundred million dollars.
§
8-22-11a. Restrictions on investment.
Moneys invested as permitted by section eleven of this article are subject to the restrictions and conditions contained in this section:
(1) At no time may more than seventy-five percent of the portfolio of either fund be invested in securities described in subdivision (7), section eleven of this article;
(2) At no time may more than twenty percent of the portfolio of either fund be invested in securities described in subdivision (7), section eleven of this article which mature within one year from the date of issuance thereof;
(3) At no time may more than nine percent of the portfolio be invested in securities issued by a single private corporation or association;
(4) At no time may more than sixty percent of the portfolio be invested in equity mutual funds under subdivision (10), section eleven of this article.
(5) Notwithstanding any other provision of this article, any investments in equity mutual funds under subdivision (10), section eleven of this article by a policemen's pension and relief fund or a firemen's pension and relief fund shall be in a securities and exchange commission registered no sales-load equity mutual funds whose stated investment policy requires investment in a portfolio of securities which are at least eighty-five percent in New York Stock Exchange instruments and requires multi-industry diversification:
Provided,
That the value of such investments shall not exceed the lesser of (a) one percent times completed months since enactment of this section or (b) fifty percent of the total assets of said pension and relief fund.
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