ENGROSSED
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 81
(By Senators Tomblin, Mr. President, and Boley;
By Request of the Executive)
____________
[Originating in the Committee on Finance;
reported February 16, 1996.]
____________

A BILL to repeal sections six, nine, nine-a, nine-b, nine-d, nine-f and eleven, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact section one, article ten-d, chapter five of said code; to amend and reenact section thirteen, article one, chapter twelve of said code; to amend and reenact sections two, three, five, eight, ten, twelve, thirteen and fifteen, article six of said chapter; to further amend said article by adding thereto a new section, designated section nine-g; and to amend chapter forty-four of said code by adding thereto a new article, designated article six-b, all relating to transferring the consolidated pension fund and workers' compensation and pneumoconiosis funds from the board of investments to the newly created West Virginia trust fund for the purpose of investment; creation of consolidated retirement board and its duties; transferring public retirement plans' employee and employer contributions except defined contribution and voluntary deferred compensation funds by the consolidated retirement board; payment for services relating to banking services and to the pursuit of claims against third party investment losses; the board of investments; defining terms; board composition and reappointment of members; powers of the board; removal of authority to invest public retirement funds; management of consolidated fund; purchase of loans from the consolidated public retirement fund; restrictions on investments; establishment of policy guidelines and setting a standard of care; removing requirement for a continuous postaudit; requiring monthly itemized statements; West Virginia trust fund; how article cited; legislative findings and purpose and disclaimer of state ownership; workers' compensation and pneumoconiosis funds declared to be trust funds; defining terms; West Virginia trust fund created; body corporate; board created; nomination and appointment of trustees; qualifications, terms of appointment and compensation; operational, annual and other meetings; designation of representatives and committees; management and control of the fund; officers; staff; surety bonds for trustees; limits on personal liability of trustees and employees; corporate powers; annual audits; reports and information to constitutional and legislative officers, council of finance and administration, and consolidated public retirement board; statements and reports open for inspection; fees for service; transfers to the trust; requiring a trust indenture and setting forth required provisions of the trust indenture and powers of the trustees; reservation of rights and powers by the Legislature; setting a standard of care on investments; and limitations on investments.

Be it enacted by the Legislature of West Virginia:
That sections six, nine, nine-a, nine-b, nine-d, nine-f and eleven, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that section one, article ten-d, chapter five of said code be amended and reenacted; that section thirteen, article one, chapter twelve of said code be amended and reenacted; that sections two, three, five, eight, ten, twelve, thirteen and fifteen, article six of said chapter be amended and reenacted; that said article be further amended by adding thereto a new section, designated section nine-g; and that chapter forty-four of said code be amended by adding thereto a new article, designated article six-b, all to read as follows:
CHAPTER 5. GENERAL POWERS AND AUTHORITY OF THE
GOVERNOR, SECRETARY OF STATE AND ATTORNEY GENERAL;
BOARD OF PUBLIC WORKS; MISCELLANEOUS AGENCIES,
COMMISSIONS, OFFICES, PROGRAMS, ETC.

ARTICLE 10D. CONSOLIDATED PUBLIC RETIREMENT BOARD.

§5-10D-1. Consolidated public retirement board created; transition; members; vacancies.

(a) There is hereby created a consolidated public retirement board to administer all public retirement plans in this state. It shall administer the public employees' retirement system established in article ten of this chapter; the teachers retirement system established in article seven-a, chapter eighteen of this code; the teachers' defined contribution retirement system created by article seven-b, chapter eighteen of this code; the death, disability and retirement fund of the department of public safety created by article two, chapter fifteen of this code; and the judges' retirement system created under article nine, chapter fifty-one of this code.
(b) The consolidated public retirement board shall begin administration of the systems listed in subsection (a) of this section on the first day of July, one thousand nine hundred ninety-one: Provided, That the board shall begin administration of the teachers' defined contribution retirement system established in article seven-b, chapter eighteen of this code on the first day of January, one thousand nine hundred ninety-one. Prior to that date the existing entities which administer the system shall cooperate with the board in the orderly transition of all duties, responsibilities, records and other materials in their possession.
(c) The membership of the consolidated public retirement board consists of:
(1) The governor or his or her designee;
(2) The state treasurer or his or her designee;
(3) The state auditor or his or her designee;
(4) The secretary of the department of administration or his or her designee;
(5) Four residents of the state, who are not members, retirants or beneficiaries of any of the public retirement systems, to be appointed by the governor, with the advice and consent of the Senate; and
(6) A member, annuitant or retirant of the public employees' retirement system who is or was a state employee; a member, annuitant or retirant of the public employees' retirement system who is not or was not a state employee; a member, annuitant or retirant of the teachers retirement system; a member, annuitant or retirant of the department of public safety death, disability and retirement fund; and a member, annuitant or retirant of the teachers' defined contribution retirement system, all to be appointed by the governor, with the advice and consent of the Senate.
(d) The appointed members of the board shall serve five-year terms. Of the members initially appointed, three shall be appointed for two-year terms; three shall be appointed for three- year terms; and three shall be appointed for five-year terms. Thereafter, all members shall serve full five-year terms. A member appointed pursuant to subdivision (5), subsection (c) of this section ceases to be a member of the board if he or she ceases to be a member of the represented system. If a vacancy occurs in the appointed membership, the governor, within sixty days, shall fill the vacancy by appointment for the unexpired term. No more than five appointees shall be of the same political party.
(e) The consolidated public retirement board shall have all the powers, duties, responsibilities and liabilities of the public employees' retirement system established pursuant to article ten of this chapter; the teachers retirement system established pursuant to article seven-a, chapter eighteen of this code; the teachers' defined contribution system established pursuant to article seven-b, chapter eighteen of this code; the death, disability and retirement fund of the department of public safety created pursuant to article two, chapter fifteen of this code; and the judges' retirement system created pursuant to article nine, chapter fifty-one of this code and their appropriate governing boards. The consolidated public retirement board may promulgate propose for promulgation all rules necessary to effectuate its powers, duties and responsibilities pursuant to article three, chapter twenty- nine-a of this code: Provided, That the board may adopt any or all of the rules, previously promulgated, of a retirement system which it administers.
(f) Effective on the first day of July, one thousand nine hundred ninety-six, the consolidated public retirement board shall, within two business days of receipt, transfer all funds received by the consolidated public retirement board for the benefit of the retirement systems within the consolidated pension plan as defined in section three-c, article six-b, chapter forty-four of this code, including, but not limited to, all employer and employee contributions, to the West Virginia trust fund: Provided, That the employer and employee contributions of the teachers' defined contribution system, and voluntary deferred compensation funds invested by the West Virginia consolidated public retirement board pursuant to section five, article ten-b, of this chapter, shall not be transferred to the West Virginia trust fund.
(g) The consolidated public retirement board shall be a trustee for all public retirement plans, except with regard to the investment of funds: Provided, That the consolidated public retirement board shall be a trustee with regard to the investments of the teachers' defined contribution system, and voluntary deferred compensation funds invested pursuant to section five, article ten-b, of this chapter.
CHAPTER 12. PUBLIC MONEYS AND SECURITIES.

ARTICLE 1. STATE DEPOSITORIES.

§12-1-13. Payment of banking services and litigation costs for prior investment losses.

(a) The board of investments is authorized to pay for banking services, and services ancillary thereto, by either a compensating balance in a noninterest bearing noninterest-bearing account maintained at the financial institution providing the services or with a state warrant as described in section one, article five of this chapter.
(b) The board of investments is authorized to pay for the investigation and pursuit of claims against third parties for the investment losses incurred during the period beginning on the first day of August, one thousand nine hundred eighty-four, and ending on the thirty-first day of August, one thousand nine hundred eighty- nine. The payment may be in the form of a state warrant.
(c) If payment is made by a state warrant, the board of investments is authorized to establish within the consolidated fund an investment pool which will generate sufficient income to pay for all banking services provided to the state and to pay for the investigation and pursuit of the prior investment loss claims. All income earned by the investment pool shall be paid into a special account of the state board of investments to be known as the banking services account and shall be used solely for the purpose of paying for all banking services and services ancillary thereto to the banking services provided to the state and for the investigation and pursuit of the prior investment loss claims.

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 (b 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;
(4) "Local government account" means the account within the consolidated fund established pursuant to subsection (b), section eight of this article;
(5)(3) "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 in the local government account;
(6) "Pension funds" means and includes the worker's compensation fund; the state teachers retirement system funds; the death, disability and retirement fund for members of the department of public safety; the public employees' retirement system funds; the judges retirement fund; and such other retirement or pension funds and systems as may be hereafter established on behalf of public employees of the 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;
(7)(4) "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;
(8)(5) "Securities" means all bonds, notes, debentures or other evidences of indebtedness, and corporate stock;
(9) "State account" means the account within the consolidated fund established pursuant to subsection (b), section eight of this article; and
(10)(6) "State funds" means all moneys of the state which may be lawfully invested except (a) the pension fund (as defined in subdivision (6) of this section) and (b) 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.

§12-6-3. State board of investments continued; body corporate; members; appointment of certain members; qualifications and term of office.

(a) The state board of investments is hereby continued as a body corporate of the state authorized to exercise all of the powers and functions granted to it pursuant to this article. There shall be seven members of the state board of investments. The governor, or his or her designee, state treasurer and state auditor shall be the members of the board. There shall be four members appointed by the governor: Provided, That no more than three such appointed members may belong to the same political party.
(b) The members appointed by the governor shall be appointed from a list of twelve persons submitted jointly by the governor, the state treasurer and the state auditor. No more than two names submitted by the governor may be appointed as members to the board. Of the members appointed by the governor, two shall be members of the financial community, one shall be a certified public accountant and one shall be an attorney with experience in finance and investment matters. Appointments shall be made by the governor with the advice and consent of the Senate.
(c) Appointed members shall serve for a term of six years and may be reappointed at the expiration of their terms. In the event of a vacancy among appointed members, an appointment shall be made to fill the unexpired term. Upon the expiration of terms on the thirtieth day of April, two thousand one, the governor shall appoint or reappoint one member to a three-year term; one to a four-year term; one to a five-year term; and one to a six -year term. Thereafter, all terms shall be six years.
(d) Appointed members of the board shall serve without compensation, but shall be are entitled to their reasonable and necessary expenses actually incurred in discharging their duties under this article.

§12-6-5. Powers of the board.

The board may exercise all powers necessary or appropriate to carry out and effectuate its corporate purposes. The board may:
(1) Adopt and use a common seal and alter the same at pleasure;
(2) Sue and be sued;
(3) Enter into contracts and execute and deliver instruments;
(4) Acquire (by purchase, gift or otherwise), hold, use and dispose of real and personal property, deeds, mortgages and other instruments;
(5) Promulgate and enforce bylaws and rules for the management and conduct of its affairs;
(6) Retain and employ legal, accounting, financial and investment advisors and consultants;
(7) Acquire (by purchase, gift or otherwise), hold, exchange, pledge, lend and sell or otherwise dispose of securities and invest funds in interest earning deposits;
(8) Maintain accounts with banks, securities dealers and financial institutions both within and outside this state;
(9) Engage in financial transactions whereby securities are purchased by the board under an agreement providing for the resale of such the securities to the original seller at a stated price;
(10) Engage in financial transactions whereby securities held by the board are sold under an agreement providing for the repurchase of such the securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other assets of the pension funds and other funds and accounts of the state and the moneys of political subdivisions which may be made available to it under the provisions of this article;
(12) Enter into agreements with political subdivisions of the state whereby moneys of such the political subdivisions are invested on their behalf by the board;
(13) Charge and collect administrative fees from political subdivisions for its services;
(14) Exercise all powers generally granted to and exercised by the holders of investment securities with respect to management thereof of the investment securities;
(15) Contract with one or more banking institutions in or outside the state for the custody, safekeeping and management of securities held by the board; and
(16) Develop and implement a centralized receipts processing center.

§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 pension fund" for the common investment of pension funds. All administrators, custodians or trustees of the various pension funds are hereby authorized to make moneys available to the board for investment. Pension funds received by the board shall be deposited in the consolidated pension fund. Any security deposited by the various pension funds shall be valued at the prevailing market price on the day of deposit.
(b)(a) There is hereby also established a special investment fund to be managed by the board and designated as the "consolidated fund". The consolidated fund shall consist of a special account for the common investment of state funds designated as the "state account" and a special account for the common investment of local government funds designated as the "local government account." Moneys in both accounts may be combined for the common investment of the consolidated fund on an equitable basis.
(c)(b) Each board, commission, department, official or agency charged with the administration of state funds is hereby authorized to make moneys available to the board for investment. State funds received by the board shall be deposited in the state account.
(d)(c) Each political subdivision of this State state through its treasurer or equivalent financial officer is hereby authorized to enter into agreements with the board for the investment of moneys of such the political subdivision: Provided, That it first be determined by the treasurer for such political subdivision that the available interest rate offered by an acceptable depository in such treasurer's county 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. Local government funds received by the board pursuant to such agreements shall be deposited in the local government account. Any political subdivision may enter into an agreement with any state agency from which it receives funds to allow such the funds to be transferred to their investment account with the state board of investments.
(e) Each county board of education through its treasurer is hereby authorized to enter into agreements with the board of investments for the investment of moneys of such county board of education: Provided, however, That it first be determined by the treasurer for such county board of education that the available interest rate offered by an acceptable depository in such treasurer's county 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.
(f)(d) Moneys held in the various funds and accounts administered by the board shall be invested as permitted in section nine 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 shall deem considers necessary for the administration thereof 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; (3) provision for payment of expenses from earnings; and (4) distribution of the earnings in excess of such expenses or allocation of losses to the several participants in an equitable manner: 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 such those moneys in accordance with the restrictions specially applicable thereto to those moneys.
(g) The board shall at all times maintain and have available for public inspection a report containing monthly balances in the treasury, which said balances shall include, but not be limited to, the following:
(a) Total local government account balance.
(b) General revenue surplus balance.
(c) General revenue surplus appropriation account balance.
(d) State general revenue reappropriated account balance.
(e) State general revenue current account balance.
(f) Total state account balance.
(g) Total general revenue.
(h) Total of state account balance which is invested longer than overnight.
(i) Total of state account balance which is invested overnight.
The board shall not be required to make such information available until January 1, 1984: Provided, That the board shall have such reports available on a daily basis for each day the Legislature is in session.

§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 loans 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.

§12-6-10. Restrictions on investments.

Notwithstanding any other provision in this code, Moneys moneys on deposit in the consolidated fund and the consolidated pension fund shall be invested as permitted by section nine twelve of this article subject to the restrictions and conditions contained in this section:
(1) At no time shall more than seventy-five percent of the portfolio of either consolidated fund be invested in securities described in subdivision (g) of said section nine any bond, note, debenture, commercial paper or other evidence of indebtedness of any private corporation or association. Any such security, at the time of its acquisition, shall be investment grade paper;
(2) At no time shall more than twenty percent of the portfolio of either fund be invested in securities described in said subdivision (g) which mature within one year from the date of issuance thereof;
(3)(2) At no time shall more than three five percent of the portfolio of either consolidated fund be invested in securities issued by a single private corporation or association; and
(3) At no time shall less than fifteen percent of the consolidated fund be invested in any direct obligation of or obligation guaranteed as to the payment of both principal and interest by the United States of America.
(4) At no time shall more than twenty percent of the portfolio of the consolidated pension fund be invested in securities described in subdivision (j) of section nine of this article; and
(5) At no time may any of the consolidated fund be invested in securities described in subdivision (j) of section nine of this article.
For the purpose of making the computations required by this section, securities shall be valued in accordance with generally accepted accounting principles.

§12-6-12. Investment policy; duties of board and state treasurer; standard of care.

The board shall establish policy guidelines for the investment of moneys on deposit in each of the funds managed by the board based on the needs of the participants in the various funds: Provided, That the board shall review such the investments at least every three months and may require the purchase or sale of any investments. In order to effectuate its investment policies, the board may shall require from each participant a schedule, on an annual or more frequent basis, of anticipated deposits and withdrawals.
The office of the state treasurer shall administer the investment of each of such funds subject at all times to the policy guidelines established by the board.
Any investment made under this article shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, which men of experience, prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived.
Any investments made under this article shall be made with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Fiduciaries shall diversify plan investments so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

§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, and the board shall be is the sole agency entity for the investment of the consolidated pension plan funds and state 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 shall apply applies to the "board of the school fund" and the "school fund" established by section 4, article XII of the state constitution: Provided however further, 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.

§12-6-15. Audits.

There shall be a continuous postaudit conducted by the legislative auditor of the investment transactions of the board, and a copy thereof for the preceding calendar year shall be furnished to each member of the Legislature on or before the first day of February of each year. The board shall further cause to be conducted a quarterly internal audit, by the state treasurer's staff using generally accepted government auditing standards, of all investment transactions of the board and an annual external audit, by a nationally recognized accounting firm in conjunction with the annual federal audit, of all investment transactions of the board: Provided, That the board shall on a monthly basis provide to each political subdivision, state agency and any other entity investing moneys in the consolidated fund or consolidated pension fund an itemized account statement reflecting the portfolio value of the investments of each said political subdivision, state agency and any other entity of the agency's or the entity's account in the consolidated fund. or consolidated pension fund The board shall further provide a monthly statement reflecting the interest earned by each said political subdivision, state agency or other investing entity and the method by which said interest has been calculated. The statement shall include the beginning balance, contributions, withdrawals, income distributed, change in value and ending balance.
CHAPTER 44. ADMINISTRATION OF ESTATES AND TRUSTS.

ARTICLE 6B. WEST VIRGINIA TRUST FUND.

§44-6B-1. How article cited.

This article shall be known and may be cited as the "West Virginia Trust Fund Act".

§44-6B-2. Legislative findings and purpose.

(a) The Legislature hereby finds and declares that all the public employees covered by the public employees' retirement system, the teachers retirement system, the West Virginia state police retirement system, the death disability and retirement fund of the department of public safety and the judges' retirement system should benefit from a prudent and conscientious staff of financial professionals dedicated to the administration, investment and management of those employees' and employer's financial contributions and that an independent trust fund board and staff should be immune to changing political climates and should provide a stable and continuous source of professional financial investment and management.
(b) The Legislature hereby finds and declares further that prudent investment provides diversification and beneficial return not only for public employees but for all citizens of the state and that in order to have access to this sound fiscal policy, public employee and employer contributions are declared to be an irrevocable trust, available for no use or purpose other than for the benefit of those public employees.
(c) The Legislature hereby finds and declares further that the state and other public employers that made or make contributions to the West Virginia irrevocable trust fund have no proprietary interest in the fund or in the contributions made to the fund by them and that the state and other public employers disclaim any right to reclaim those contributions and waive any right of reclamation they may have in the fund: Provided, That the provisions of this subsection do not prohibit alterations or refunds of employer contributions in the event of erroneous payment.
(d) The Legislature hereby finds and declares further that the workers' compensation funds and coalworkers' pneumoconiosis fund are trust funds to be used exclusively for those workers, miners and their beneficiaries who have sacrificed their health in the performance of their jobs, and further finds that the assets available to pay awarded benefits should be prudently invested so that awards may be paid.
(e) The Legislature hereby finds and declares further that a not-for-profit, nonstock corporate structure with appropriate governance shall be the best means of assuring prudent financial management of this nonstate trust fund under rapidly changing market conditions and regulations.
(f) The Legislature hereby finds and declares further that in accomplishing this purpose, the West Virginia trust fund, hereafter created and established by section four of this article, is acting in all respects for the benefit of the state's public employees and ultimately the citizens of the state, and the West Virginia trust fund is empowered by this article to act as trustee for the irrevocable trust created by this article, and the interests of citizens of the state shall be best met by carrying out the provisions of this trust.
(g) The Legislature hereby finds and declares further that the standard of care and prudence applied to trustees and the conduct of the affairs of the irrevocable trust created by this article is intended to be that applied to the administration of private pension plans as described in federal statutory law and by the common law of the United States.

§44-6B-3. Definitions.

As used in this article unless a different meaning clearly appears from the context:
(a) "Beneficiaries" means those individuals entitled to benefits from the consolidated pension plan;
(b) "Board" means the governing body for the West Virginia trust fund;
(c) "Consolidated pension plan" means the public employees' retirement system established in article ten, chapter five of this code, the teachers retirement system established in article seven- a, chapter eighteen of this code, the West Virginia state police retirement system established in article two-a, chapter fifteen of this code, the death, disability and retirement fund of the department of public safety established in article two, chapter fifteen of this code, the judges' retirement system established in article nine, chapter fifty-one of this code, the workers' compensation fund established in article three, chapter twenty- three and the coalworkers' pneumoconiosis plan established in article four-b, chapter twenty-three of this code;
(d) "Participant plan" means any component system, plan or fund of the consolidated pension plan within the definition set forth in subdivision (c) of this section;
(e) "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;
(f) "State" means the state of West Virginia;
(g) "Trust fund" means the West Virginia trust fund; and
(h) "Trustee" means any member serving on the West Virginia trust fund board: Provided, That in section ten of this article wherein the terms of the trust indenture are set forth, "trustee" means the West Virginia trust fund.

§44-6B-4. West Virginia trust fund created; body corporate; board created; trustees; nomination and appointment of trustees, qualifications and terms of appointment; annual and other meetings; designation of representatives and committees; board meetings with committees regarding investment policy statement required.

(a) There is hereby created the West Virginia trust fund. The fund is created as a public body corporate and established to provide prudent fiscal administration, investment and management for the pension funds and workers' compensation and pneumoconiosis funds formerly invested by this state. The corporation shall be organized as a nonprofit, nonstock corporation under the general corporation laws of the state.
(b) The trust fund shall be governed by a board of trustees, consisting of seven members:
(1) Four members shall be appointed by the governor from a list of twelve persons having experience in pension management, institutional management or financial markets. The list of twelve shall consist of four groups of three nominations, and no more than two of the three nominations in each group may be from the same political party, which appointments shall be subject to the advice and consent of the Senate. The president of the Senate, speaker of the House of Delegates, state auditor and state treasurer each shall submit one group of three nominations to the governor, who shall appoint one member from each group of three, which appointments shall be subject to the advice and consent of the Senate.
(2) The remaining three members shall be appointed from the general public by the governor, which appointments shall be subject to the advice and consent of the Senate. Of the members of the general public appointed by the governor, one shall be an attorney experienced in finance and investment matters, one shall be a certified public accountant and one shall be experienced in pension management, institutional management or financial markets.
(3) The governor shall make appointments to the trust fund board within sixty days of the effective date of this act. Nominations for the appointments shall be submitted to the governor within thirty days of the effective date of this act.
(c) Two members shall serve for a term of three years, two members for a term of four years and three members for a term of five years respectively as the governor shall designate. Thereafter, at the end of each term, the governor may reappoint or appoint a successor following the same procedure as specified in subsection (b) of this section, who shall serve for five-year terms. No more than four of the trustees may belong to the same political party.
(d) In the event of a vacancy among the trustees, an appointment shall be made by the governor to fill the unexpired term. The governor shall fill the vacancy, by appointment from a new list of nominees, following the same procedure established in subsection (b) of this section.
(e) The governor may remove any trustee in case of gross negligence or misfeasance and may declare that position vacant and may appoint a person for the vacancy as provided in subsection (d) of this section.
(f) Trustees shall receive compensation in the amount of five thousand dollars per year and additional compensation in the amount of five hundred dollars per meeting attended by the trustee in excess of the four quarterly meetings required by this section. In addition, trustees shall receive reasonable and necessary expenses actually incurred in discharging trustee duties pursuant to this article.
(g) The board shall meet quarterly and may include in its bylaws procedures for the calling and holding of additional meetings. For any quarterly or additional meeting in which the board shall review or modify its securities list or its investment objectives pursuant to subsections (f) and (g), section twelve of this article, the board shall give ten days' notice in writing to the designated representative of each participant plan selected pursuant to subdivision (1), subsection (j) of this section, and the meeting shall be open to the members and beneficiaries of the participant plans for that portion of the meeting in which the board undertakes the review or modification.
(h) The West Virginia trust fund board shall meet prior to the first day of July, one thousand nine hundred ninety-six, to organize and structure its operations.
(i) The board shall hold an annual meeting within forty-five days after the issuance of the year-end financial report. The annual meeting may also serve as a quarterly meeting. The annual meeting shall be open to the public, and the board shall receive oral and written comments from representatives, members and beneficiaries of the participant plans and from other citizens of the state. At the annual meeting, the board shall adopt a fee schedule and a budget reflecting fee structures for the year.
(j) Pursuant to subsection (k) of this section, the board shall meet with committees representing the participant plans to discuss the board's drafting, reviewing or modifying the written investment policy of the trust with respect to that committee's participant plan pursuant to section twelve of this article. Representatives and committees shall be designated as follows:
(1) On or before the first day of May, one thousand nine hundred ninety-six, the West Virginia consolidated public retirement board shall promulgate procedural rules by which each pension system named in subdivisions c-one through c-five of subsection two, section ten of this article, shall designate an individual representative of each said pension system, and the West Virginia workers' compensation commission shall promulgate procedural rules by which the pneumoconiosis fund and the workers' compensation fund named in subdivisions (6) and (7) of said subsection shall designate an individual representative of each said fund.
(2) On or before the first day of June, one thousand nine hundred ninety-six, and on or before the same date each year thereafter, the consolidated public retirement board shall submit in writing to the West Virginia trust fund board the names of the said five designated representatives, and the workers' compensation commission shall so submit the names of the said two representatives.
(3) Each designated representative shall provide to the West Virginia trust fund board his or her current address, updated each year on or before the first day of July, to which address the board shall provide notice of meetings of the board pursuant to subsection (g) of this section.
(4) Each designated representative shall submit in writing to the board on or before the first day of July, one thousand nine hundred ninety-six, and on or before the same date each year thereafter, the names of no more than three persons comprising a committee representing the beneficiaries of that representative's participant plan.
(k) At its initial meeting, and thereafter at its annual meeting, the board shall meet with each of the seven committees, formed pursuant to subsection (j) of this section, for the purpose of receiving input from the committees regarding the board's drafting, reviewing or modifying its written investment policy statement for the trust. In developing the trust investment policy statement, the trustees shall receive each committee's stated objectives and policies regarding the risk tolerances and return expectations of each participant plan, with attention to the factors enumerated in subsection (g), section twelve of this article, in order to provide for the continuing financial security of the trust and its participant plans. The board may meet with the said committees or any of them at its quarterly and additional meetings for the same purpose.

§44-6B-5. Management and control of fund; officers; staff; surety bonds for trustees.

(a) The management and control of the fund shall be vested solely in the board of trustees in accordance with the provisions of this article.
(b) The board of trustees shall elect a chairman to serve for a term of two years. The election shall be held at the board's first meeting after the effective date of this act. Effective with any vacancy in the chairmanship, the board shall elect a chairman to a new two-year term. Annually, beginning with the first meeting, the trustees shall elect a secretary, who need not be a member of the board, to keep a record of the proceedings of the board.
(c) The trustees shall appoint a chief executive officer of the trust fund and shall fix his or her duties and compensation. The chief executive officer shall have five years' experience in investment management with public or private funds within the ten years next preceding the date of appointment. The chief executive officer additionally shall have academic degrees, professional designations and other investment management or investment oversight or institutional investment experience in such combination as the trustees consider necessary to carry out the responsibilities of the chief executive officer position as defined by the trustees.
(d) The trustees shall retain an internal auditor to report directly to the trustees and shall fix his or her compensation. The internal auditor shall be a certified public accountant with at least three years' experience as an auditor. The internal auditor shall develop an internal audit plan, with board approval, for the testing of procedures and the security of transactions.
(e) Each trustee shall give a separate fidelity bond from a surety company qualified to do business within this state in a penalty amount of one million dollars for the faithful performance of his or her duties as a trustee. The board shall purchase a blanket bond for the faithful performance of its duties in the amount of ten million dollars which is in addition to the one million dollar individual bond required of each trustee 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 the fidelity bond shall be fixed by the board. The premiums payable on all fidelity bonds shall be an expense of the board.
(f) The trustees and employees of the West Virginia trust fund are not liable personally, either jointly or severally, for any debt or obligation created by the West Virginia trust fund: Provided, That the trustees and employees of the West Virginia trust fund are liable for acts of misfeasance or gross negligence.

§44-6B-6. Corporate powers.

The fund may exercise all powers necessary or appropriate to carry out and effectuate its corporate purposes. The fund may:
(1) Adopt and use a common seal and alter the same at pleasure;
(2) Sue;
(3) Enter into contracts and execute and deliver instruments;
(4) Acquire (by purchase, gift or otherwise), hold, use and dispose of real and personal property, deeds, mortgages and other instruments;
(5) Promulgate and enforce bylaws and rules for the management and conduct of its affairs;
(6) Retain and employ legal, accounting, financial and investment advisors, managers and consultants;
(7) Acquire (by purchase, gift or otherwise), hold, exchange, pledge, lend and sell or otherwise dispose of securities and invest funds;
(8) Maintain accounts with banks, securities dealers and financial institutions both within and outside this state;
(9) Consolidate and manage moneys, securities and other assets of the pension plans and other funds and accounts of the state and the moneys of political subdivisions which may be made available to it under the provisions of this article;
(10) Enter into agreements with political subdivisions of the state whereby moneys of the political subdivisions are invested on their behalf by the fund;
(11) Charge and collect administrative investment and management fees for its services;
(12) Exercise all powers generally granted to and exercised by the holders of investment securities with respect to management of the securities;
(13) Make, and from time to time, amend and repeal bylaws, regulations and procedures not inconsistent with the provisions of this article;
(14) Hire its own employees, consultants, managers and advisors as it considers necessary, and fix their compensation and prescribe their duties;
(15) Develop, implement and maintain its own banking accounts, investments and employee benefit plans;
(16) Borrow or open lines of credit; and
(17) Do all such things necessary to implement and operate the trust fund and carry out the intent of this article.

§44-6B-7. Annual audits; reports and information to constitutional and legislative officers, council of finance and administration and consolidated public retirement board; statements and reports open for inspection.

(a) The trust fund shall cause an annual financial and compliance audit to be made by a certified public accounting firm having a minimum staff of ten certified public accountants and being a member of the American institute of certified public accountants, and, if doing business in West Virginia, being a member of the West Virginia society of certified public accountants. The financial and compliance audit shall be made of the trust fund's books, accounts and records, with respect to its receipts, disbursements, investments, contracts and all other matters relating to its financial operations. Copies of the audit report shall be furnished to the governor, state treasurer, state auditor, president of the Senate, speaker of the House of Delegates, council of finance and administration and consolidated public retirement board.
(b) The trust fund shall produce monthly financial statements and deliver them to each member of the board.
(c) The trust fund shall deliver in each quarter to the council of finance and administration and the consolidated public retirement board a report detailing the investment performance of the retirement plans.
(d) The trust fund shall cause an annual performance audit to be made by a nationally recognized fiduciary service and shall furnish copies of the audit report to the governor, state treasurer, state auditor, president of the Senate, speaker of the House of Delegates, council of finance and administration and consolidated public retirement board.
(e) The trust fund shall provide any other information requested in writing by the council of finance and administration.
(f) All statements and reports required in this section shall be available for inspection by the members and beneficiaries and designated representatives of the participant plans.

§44-6B-8. Fees for service.

The trust fund shall charge fees, as adopted at the annual meeting, for the reasonable and necessary expenses incurred by the trust fund in rendering services to the participant plans. The fees shall be subtracted from the total return of the trust fund, and the net return shall be credited to the participant plans. All fees which are dedicated or identified or readily identifiable to an individual participant plan shall be charged against that plan, and all other fees shall be charged as a percentage of assets under management. At its annual meeting, the board shall adopt a fee schedule and a budget reflecting fee structures.

§44-6B-9. Transfers to the trust.

(a) The West Virginia state board of investments shall transfer to the West Virginia trust fund the computers, and other necessary items of equipment associated with each position at the board of investments whose responsibilities and obligations shall as of the effective date of this section be performed by the West Virginia trust fund.
(b) Any state employee who terminates his or her state employment and becomes employed by the West Virginia trust fund may at his or her option defer retirement within the public employees' retirement system pursuant to section twenty-one, article ten, chapter five of this code, or, may elect to transfer to the West Virginia trust fund his or her employee contributions, with accrued interest, and, if vested, his or her employer contributions, with accrued interest. The West Virginia consolidated public retirement board shall transfer to the West Virginia trust fund the said contributions and accrued interest of terminating employees who so elect. The trust fund shall establish a private, nonstate retirement plan for the West Virginia trust fund employees, and the said transferred employee and employer contributions and interest shall be deposited to the private retirement plan.
(c) Upon the effective date of this article, no more than five hundred thousand dollars of those funds remaining in the special revenue accounts known as the "loss legal expense fund" and the "security lending fund" and further known as WVFIMS accounts 8563 and 8565 shall be transferred to the West Virginia trust fund board for its use in the beginning operations of the trust fund.

§44-6B-10. Trust indenture.

The governor, on behalf of the state, shall enter into a trust indenture with the West Virginia trust fund as trustee, effective on the first day of July, one thousand nine hundred ninety-six. The trust indenture shall contain the following provisions:
(a) Simultaneously with the execution of the trust indenture, the state shall have delivered to the trustee all the assets of the consolidated pension fund with any other property that may be transferred hereafter to the trustee by the state, or by any other person or entity, which shall be used as provided in the trust indenture and which constitutes the trust estate. The trustee shall acknowledge receipt of the assets and agree to hold the assets, and any other property that later may be added to the trust, and to perform the duties of trustee, according to the terms and conditions set forth in this trust indenture and in the provisions of this article.
(b) The Legislature hereby reserves the following rights and powers:
(1) The right by supplemental agreement to amend, modify or alter the terms of this trust without consent of the trustee, or any beneficiary; and
(2) The right to request and receive additional information from the trustee at any time.
(c) The state directs the trustee to establish a trust for the participant plans specified by the state with the earnings and losses accounted for and charged individually to each participant plan, including, but not limited to, the following:
(1) The public employees' retirement system;
(2) The teachers retirement system;
(3) The West Virginia state police retirement system;
(4) The death, disability and retirement fund of the department of public safety;
(5) The judges' retirement system;
(6) The pneumoconiosis fund; and
(7) The workers' compensation fund.
(d) In the administration of the trust created by the trust indenture, the trustee has the following powers:
(1) To purchase, retain, hold, transfer and exchange, and to sell, at public or private sale, the whole or any part of the trust estate upon such terms and conditions as it considers advisable;
(2) To invest and reinvest the trust estate or any part thereof, in any kind of property, real or personal, including, but not limited to, mortgage or mortgage participations, common stocks, preferred stocks, common trust funds, bonds, notes or other securities, notwithstanding the provisions of articles five and six of this chapter;
(3) To carry the securities and other property held under the trust indenture either in the name of the trustee or in the name of its nominee;
(4) To vote, in person or by proxy, all securities held under the trust indenture, to join in or to dissent from and oppose the reorganization, recapitalization, consolidation, merger, liquidation or sale of corporations or property; to exchange securities for other securities issued in connection with or resulting from any such transaction; to pay any assessment or expense which the trustee considers advisable for the protection of its interest as holder of any such securities; to deposit securities in any voting trust or with any protective or like committee, or with a trustee depository; to exercise any option appurtenant to any securities for the conversion of any securities into other securities; and to exercise or sell any rights issued upon or with respect to the securities of any corporation, all upon terms the trustee considers advisable;
(5) To prosecute, defend, compromise, arbitrate or otherwise adjust or settle claims in favor of or against the trustee or other trust estate;
(6) To employ and pay from the trust estate legal and investment counsel, brokers and such other assistants and agents as the trustee considers advisable; and
(7) To develop, implement and modify asset allocation plans for each participant plan, which asset allocation plans shall be implemented within the management and investment of the trust fund. (e) All trust income shall be free from anticipation, alienation, assignment or pledge by, and free from attachment, execution, appropriation or control by or on behalf of, any and all creditors of any beneficiary by any proceeding at law, in equity, in bankruptcy or insolvency.
(f) The trustee may receive any other property, real or personal, tangible or intangible, of any kind whatsoever, that may be granted, conveyed, assigned, transferred, devised, bequeathed or made payable to it by the state, or by any other person or entity, for the purposes of the trust created by the trust indenture, and all such properties shall be held, managed, invested and administered by the trustee as provided in the trust indenture and in this article.
(g) The trustee shall promptly cause to be paid to the state the amounts certified by the governor as necessary for the monthly payment of benefits to the beneficiaries of the trust.
(h) The trustees shall render an annual accounting to the state not more than one hundred twenty days following the close of the fiscal year of the trust.
(i) The trust created by this article is not invalid by reason of any existing law or rule against perpetuities or against accumulations or against restraints upon the power of alienation, but the trust may continue for such time as necessary to accomplish the purposes for which it is established.
(j) If any provision of the trust indenture is void, invalid or unenforceable, the remaining provisions are nevertheless valid and shall be carried into effect.

§44-6B-11. Standard of care.

Any investments made under this article shall be made with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
(a) Trustees shall discharge their duties for the exclusive purpose of providing benefits to participants and their beneficiaries;
(b) Trustees shall diversify fund investments so as to minimize the risk of large losses unless, under the circumstances, it is clearly prudent not to do so;
(c) Trustees shall defray reasonable expenses of investing and operating the fund; and
(d) Trustees shall discharge their duties in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this article.

§44-6B-12. Limitations on investments.

The trust fund shall limit its asset allocation and types of securities to the following:
(a) Through the first day of July, one thousand nine hundred ninety-seven, the trust fund shall hold in equity investments no more than twenty percent of its total portfolio and no more than twenty percent of the assets of any individual participant plan; after the first day of July, one thousand nine hundred and ninety- seven, and through the first day of July, two thousand, the trust fund shall hold in equity investments no more than forty percent of its total portfolio and no more than forty percent of the assets of any individual participant plan; after the first day of July, two thousand, the trust fund shall hold in equity investments no more than sixty percent of its total portfolio and no more than sixty percent of the assets of any individual participant plan.
(b) The trust fund shall hold in international securities no more than twenty percent of its portfolio and no more than twenty percent of the assets of any individual participant plan.
(c) The trust fund may not at the time of purchase hold more than five percent of its equity portfolio in the equity securities of any single company or association: Provided, That if a company or association has a market weighting of greater than five percent in the standard & poor's 500 index of companies, the trust fund may hold securities of that equity equal to its market weighting.
(d) The trust fund may not hold more than twenty percent of its portfolio in commercial paper, which at the time of its acquisition, is in one of the two highest rating categories by an agency nationally known for rating commercial paper.
(e) At no time shall the trust fund hold more than seventy- five percent of its portfolio in corporate debt, which corporate debt security at the time of its acquisition is rated in one of the four highest rating categories by a nationally recognized rating agency.
(f) No security may be purchased by the trust fund unless the type of security is on a list approved by the trust fund board. The board may modify the said securities list at any time, and must give notice of that action pursuant to subsection (g), section four of this article, and must review the said list at its annual meeting.
(g) The board, at the annual meeting provided for in subsection (i), section four of this article, shall review, establish and modify, if necessary, the investment objectives of the individual participant plans of the trust, as incorporated in the investment policy statement of the trust, so as to provide for the financial security of the trust fund, giving consideration to the following:
(1) Preservation of capital;
(2) Diversification;
(3) Risk tolerance;
(4) Rate of return;
(5) Stability;
(6) Turnover;
(7) Liquidity; and
(8) Reasonable cost of fees.