Identical to H 506, filed 3/24/25.

Section 1.

Reorganizes Article 6 of GS Chapter 147 (concerning the State Treasurer [Treasurer]) into five parts: Part 1, “General,” Part 2, “Investments and Funds,” Part 3, “Reports and Audits,” Part 4, “NC Investment Authority (Authority),” and Part 5, “Department Bookkeeping and Deposits,” as described. Repeals GS 147-72 (concerning the ex officio treasurer of State institutions) and GS 147-73 (abolishing the office of treasurer of each State institution). Recodifies the provisions of Chapter GS 147 specified. 

Section 2.

Enacts a definitions provision (GS 147-65.1) to new Part 1 defining eight terms. Defines retirement systems to include the following systems: Teachers' and State Employees' Retirement System, the Consolidated Judicial Retirement System, the Firefighters' and Rescue Workers' Pension Fund, the Local Governmental Employees' Retirement System, the Legislative Retirement System, the North Carolina National Guard Pension Fund, the Registers of Deeds' Supplemental Pension Fund, the Retiree Health Benefit Fund, and the Teachers' and State Employees' Benefit Trust.

Enacts GS 147-70.1 to new Part 4, creating the Authority as a State agency in perpetual succession for the performance of essential governmental and public functions. Places the Authority within, but independent from the control of, the Treasurer. Instructs that the Authority is independent of any fiscal control exercised by the Director of the Budget (Director), the Department of Administration (DOA), and the Treasurer, including for organizational, staffing, procurement, and budgetary purposes. Except as provided by the fiduciary funds provisions of GS 147-70.1 (discussed below) or other law, exempts the Authority from the State Budget Act (SBA) in GS Chapter 143C. Designates all funds while under management of the Authority as Fiduciary Funds described under subdivisions (8) through (10) of GS 143C-1-3(a) (SBA fund types) and should be accounted for as specified in GS 147-69.3(f)(administration of Treasurer’s investment programs).

Grants the Authority all powers necessary to execute the provisions of Part 4, including at minimum, the following: (1) the right to sue and be sued; (2) to take, demand, receive, and possess all kinds of real and personal property necessary and proper for its purposes; and (3) to bargain, sell, grant, alienate, or dispose of all real and personal property as it may lawfully acquire. Authorizes the Authority to acquire fidelity bonds, fiduciary insurance, directors' and officers' insurance, or errors and omissions coverage, as determined by the Investment Authority Board of Directors (Board), independent of any purchase of insurance by the Treasurer. Exempts the Authority and its property from State and local taxes as well as State income tax in GS 147-70.3. Clarifies that the exemptions do not apply to the individual members of the Board or any employee of the Authority. Designates any record or other information received or generated by the Authority in order to negotiate at arm's length investment transactions that constitute a trade secret as exempt from State public records law until the applicable negotiation is completed and unless the record or information substantiates a conflict with the duties of the Authority as described. Authorizes the Authority to obtain criminal background checks of its employees, contractors, volunteers, or other individual engaged by the Authority who will have access to health or financial information or data maintained by the Authority that is confidential or otherwise nonpublic in GS 147-70.5, with power to deny employment or dismiss any individual who refuses to consent to the background check.  

Establishes a five-member Board in GS 147-71.1 with terms and qualifications described.  Provides for vacancies, reappointments, designees, oaths, compensation and reimbursement, meetings and voting, as described. Sets forth five disqualifying events that would render a person ineligible to serve on the Board, including being indicted or charged with, been convicted of, pleaded guilty or nolo contendere to, or forfeited bail concerning a felony, or a misdemeanor involving fraud, theft, or dishonesty under the laws of any US jurisdiction. Enacts GS 147-71.2, setting forth the Board’s duties, including its investment-related powers and duties, approval of an annual internal budget, contracting for services, and setting of compensation plans, as described. Provides for individual immunity for Board members from civil liability for monetary damages, except to the extent covered by insurance, for any act or failure to act arising out of that service except where any five specified acts apply. Designates the Chief Investment Officer (CIO) as the Authority’s principal executive officer and is responsible to the Board in GS 147-72.1. Provides an appointment and term, staff, and the power to negotiate and execute contracts with third parties in the performance of their duties and responsibilities, as described. Replaces the references to the Treasurer with the Authority in GS 147-73.2 (ethics policies pertaining to investment programs) and makes conforming changes.

Specifies that rules, codes of ethics, policies, and procedures adopted by the Treasurer in effect on June 30, 2025, that are impacted by the change in authority from the Treasurer to the Investment Authority under this Part, will remain in effect until amended by law, amended by the Investment Authority, or repealed. Provides that before January 1, 2026, when the Investment Authority begins managing investments under Part III of this act, funds appropriated to the Department of State Treasurer and funds that are available to it under GS 147-69.3 may be used to pay any expenses of the Investment Authority.

Effective July 1, 2025.

Section 3.

Amends new Part 2 as created and amended by the act, as follows. Adds the Authority as an entity to also advise and assist the Governor and Council of State with investment under GS 147-69.1. Now makes it the Authority’s duty to invest the cash of the General Fund and the Highway Fund and Highway Trust Fund (was, Treasurer’s duty), as described. Makes technical changes.

Now makes it the Authority’s duty to invest the cash of the 39 listed special funds held by the Treasurer in GS 147-69.2 (was, Treasurer’s duty), as described. Makes technical and conforming changes. Makes conforming change so that reference to retirement system means the nine systems contained in the definition, described in Section 2 above (was, eight of the systems contained in new definition without the Teachers' and State Employees' Benefit Trust). Removes caps on the amount of the Retirement Systems’ assets that (1) may be invested, within or outside the United States, in obligations, debt securities, and asset-backed securities, whether considered debt or equity, including obligations and securities convertible into other securities, that do not meet the requirements of GS 147-69.2 pertaining to those investment vehicles; (2) investments primarily for real estate or related debt financing, as described; (3) equity securities traded on a public securities exchange or market organized and regulated pursuant to the laws of the jurisdiction of the exchange or market and issued by any company incorporated or otherwise created or located within or outside the United States so long as they meet the statute’s requirements; (4) assets composed primarily of private equity, or corporate buyout transactions with the primary purpose to engage in other strategies not expressly authorized by any other part of GS 147-69.2; and (5) assets invested as specified for the primary purpose of owning real assets, including those described. Now limits the aggregate market value of those asset investments at 80% (was, 35%) of the market value of all of the retirement systems invested assets, including any digital assets invested pursuant to GS 147-69.2E, as enacted by the act. Limits the market value of illiquid investments as determined by the Board at 40% of the market value of all invested retirement system assets. Raises the cap on the amount of total Escheat Fund assets that may be invested under GS 147-69.2 to up to 80% (was, 10%) of those assets. Grants the Authority (was, Treasurer) the authority to invest an additional 10% of the Escheat Fund’s assets. Removes provisions that established an Investment Advisory Committee. Removes requirement that any investments made through a third-party investment management arrangement must be with an investment manager that has total assets under management of at least $100 million at the inception of the arrangement. Makes technical and conforming changes.

Amends GS 147-69.2A (concerning investments and special funds), as follows. Removes provisions requiring a public procurement process for a designee of the Governor, a designee of the State Treasurer, a designee of the Speaker of the House of Representatives, and a designee of the President Pro Tempore of the Senate to select a third-party professional investment management firm. Instead, creates the Venture Capital Multiplier Fund where the Authority is authorized to select the third-party professional investment firm to invest assets of the Escheat Fund (under procurement model, only 10% of the net assets of the Escheat Fund are managed by third-party firm).  Removes provisions designating records under GS 147-69.2A as public records. Requires the Authority to develop a conflict of interest of policy, as described. Makes conforming and technical changes.

Enacts GS 14-69.2E, investments in digital assets, as follows. Defines four terms, including digital asset (a virtual currency, cryptocurrency, native electronic asset, stablecoin, nonfungible token, or any other asset that is only digital and that confers economic, proprietary, or access rights or powers) and designated funds (any of funds described in GS 147-69.1(b) (General Fund and Highway Funds) and GS 147-69.2(a) (39 special funds)). Authorizes the Authority to invest the cash of the designated funds in digital assets only after approval by the Board. Requires Board approval to be based on an independent assessment by a third-party consultant that all of the following requirements for proposed investments have been met:  

1. The digital assets are maintained with a secure custody solution.
2. The risk and reward profile, including under adverse scenarios, is appropriate for the designated fund's circumstances from a total portfolio perspective.
3. The control environment meets institutional investment industry requirements for independent risk and compliance oversight, operational robustness, and regulatory compliance.  

Limits investment in digital assets from any of the designated funds to no more than 5%, in the aggregate, of the balance of the designated fund for an initial period of time that is set by the Board. Requires the Board to annually review the percentage limit on digital assets investments and may raise or lower the limit after the initial period.

Allows the Authority to charge administrative fees for the operation of investment programs in GS 147-69.3. Makes technical and conforming changes. Requires the Authority’s designated attorneys to review all proposed investment contracts and all proposed contracts for investment-related services entered into pursuant to the Authority's authority under Article 6 of GS Chapter 147, as described. Removes requirement that the Treasurer report the incentive bonus to the CIO to the described NCGA Committee.

Enacts GS 147-69.4A, permitting the Supplemental Retirement Board of Trustees to request the Authority to provide monitoring, evaluation, reporting, and other support or assistance for the investments of the Supplemental Retirement Income Plan of North Carolina and the North Carolina Public Employee Deferred Compensation Plan. Requires the Authority, in providing any such support, to discharge its duties as a fiduciary to those plans.

Changes the managing entity of the following funds from the Treasurer to the Authority: the Local Government Law Enforcement Special Separation Allowance Fund under GS 147-69.45, and the Swain County Settlement Trust Fund under GS 147-69.6. Makes conforming changes to GS 147-69.8 (annual report on new investment authority).  Requires the Treasurer to engage the active assistance of the Authority in preparing the annual financial statements described in GS 147-69.9 (third-party audits of Treasurer investments) and makes technical and conforming changes.  Requires that the management discussion and analysis section of the report accompanying those statements be prepared by the Authority (was, Treasurer).  Now requires the CIO to present an investment policy statement to the Board for approval on at least a biennial basis in GS 147-69.10 (was, treasurer to the investment advisory committee for consultation). Shifts the remainder of the Treasurer’s obligations under the statute to the Authority. Makes conforming changes.

Sets forth the Authority’s monthly reporting requirements on its investments, as described, in GS 147-69.2. Removes provisions pertaining to the Treasurer’s reporting requirements. Replaces references to “investment grade fixed income or public equity investments” with “public market investment manager accounts.” Removes annual reporting requirement on the aggregate management fees and incentive fees for the underlying investment managers or investment vehicles used by the external investment manager for any fund of funds investment vehicles. Makes technical and conforming changes, including to the statute's title.

Shifts the Treasurer’s responsibilities set forth in GS 147-70.6 (concerning discharge of duties to funds) to the Authority, including the Board. Expands the funds to include the special investment funds in GS 147-69.2. Removes requirement that the Authority only invest in those investments authorized by law under GS Chapter 147 Article 6. Makes technical and conforming changes. Adds liquidity monitoring duties as specified to the Board’s powers and responsibilities in GS 147-71.2 as enacted by the act. Amends GS 147-72.1 as enacted by the act to require the CIO to manage the retirement systems investments to remain within the absolute risk operating range set by the Board. Specifies that rules adopted by the Treasurer in effect as of December 31, 2025, and impacted by the change in authority under section 3 of the act remain in effect until amended by the Authority, amended by law, or repealed.

Effective January 1, 2026.

Section 4.

Adds the CIO and employees of the Authority to those State employees who are exempt from the State Human Resources Act under GS 126-5, makings conforming change to statutory citation. Makes technical and conforming changes to GS 147-65.2. Applies to employees hired on or after July 1, 2025.

Makes conforming changes to GS 135-7, effective January 1, 2026.  Makes conforming changes to GS 143C-1-3 (funds under the State Budget Act).  Effective July 1, 2025.