Bill Summary for H 1209 (2013-2014)
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AN ACT TO ENHANCE THE ACCOUNTABILITY AND TRANSPARENCY OF THE STATE RETIREMENT SYSTEMS' INVESTMENT PROGRAMS BY PROVIDING FOR AUDITED FINANCIAL STATEMENTS, PERFORMANCE REVIEWS, EXPANDED AND MODERNIZED REPORTING, A SUNSET ON THE CONFIDENTIALITY OF PROPRIETARY INFORMATION, RESOURCE FLEXIBILITY FOR THE INVESTMENT MANAGEMENT DIVISION, AND OTHER MEASURES.Intro. by Dollar, Collins, S. Ross.
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Enacts new GS 147-69.9 to require the State Treasurer to issue financial statements, at the end of each fiscal year, regarding the investment programs for the Retirement Systems in GS 147-69.2(b)(8) (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, and the Retiree Health Benefit Fund). Requires the statements to be audited by a commercial independent third party audit firm, who is selected based on criteria developed by the State Auditor in consultation with the State Treasurer. Requires that the audit firm's report and the financial statements be provided to the General Assembly within six months after the reporting period closes. Specifies supplementary information that must accompany the financial statements. Effective for audits and reports relating to the 2014-15 fiscal year. Provides that for 2014-15, the requirements must be met by an independent review of the Retirement Systems' pro forma financial statements. Requires for 2015-16 and thereafter that the audit requirement take the form of an independent opinion concerning the Retirement System's initial financial statements. Requires that an audit firm be selected by January 1, 2105, and that the Treasurer separately account for any Retirement Systems investment portfolios commingled with the Treasurer's other investment programs by June 30, 2015. The above provisions are effective July 1, 2014.
Enacts new GS 147-69.10 to require the State Treasurer to, at least once every four years, engage a commercial independent expert firm to evaluate the governance, operations, and investment practices of the State Treasurer to develop recommendations for improvement; the firm's report must be provided to the General Assembly.
Enacts new GS 147-69.11 to require the State Treasurer to make public a report on the fees and performance of external investment managers engaged for the Retirement Systems as of the end of each fiscal year. Specifies entities that are to receive a copy of the report within nine months of the end of the fiscal year. Specifies eight items that are to be included in the report, including the value of the State Treasurer's investment as of the end of the fiscal year, the amount of the management fees and incentive fees paid to the external investment manager, and whether any placement agent fees were borne by the Retirement System. Enacts new GS 132-1.14 to specify that those eight items that are to be listed in the State Treasurer's report are also public record for each Treasurer investment. Provides that these records are not public record until 90 days after the transaction has closed, in order to prevent investment traders from using knowledge of potential or pending investment trades for personal gain. Specifies six items that are not public record until 10 years after the termination of an investment vehicle in which the State Treasurer has made an investment, including information regarding the portfolio positions in which the investment vehicle invests, capital call and distribution notices to investors of the investment vehicle, and the investment's contractual documents, to the extent stated in any clauses that place a duty of confidentiality on the State Treasurer. Provides that any information described in these six items is to be available to the General Assembly and State Auditor at any time, even if it is not public record. Effective July 1, 2014, with the reporting requirements applicable to the reports for the 2013-14 fiscal year.
Amends GS 147-69.3(f) to delete the requirement that the costs of administration, management, and operation of investment programs established under the statute be deposited with the State Treasure as a General Fund nontax revenue. Requries that the costs of investment programs established under the statue be reported to the General Assembly by June 15 of each year, providing the actual incurred costs for the previous fiscal year, the estimated costs for the current fiscal year and next fiscal year. Deletes the provision requiring these costs, if they are not not directly paid from the income or assets of the program, be covered by an appropriation. Amends GS 147-69.3 to allow the State Treasurer to appoint employees possessing specialized skills or knowledge necessary for the proper administration of investment programs created under the statute. Amends GS 147-69.3(i2) to authorize the State Treasurer to establish market-oriented compensation plans, including salaries and performance-related bonuses, for employees possessing specialized skills or knowledge, who will be exempt from the classification and compensation rules established by the Office of State Human Resources (was, the State Treasurer may establish compensation, including bonuses for the Chief Invsetment Officer and Investment Directors). Makes conforming changes. Amends GS 126-5(c1) to make employees of the State Treasurer's Investment Management Division exempt from GS Chapter 126, State Personnel System [except as to Articles 6 (Equal Employment and Compensation Opportunity; Assisting in Obtaining State Employment) and Article 7 (Privacy of State Employee Personnel Records)].
Enacts new GS 147-69.12 to require that a person acting as a placement agent in connection with any Treasurer investment be registered as a lobbyist. Defines placement agent as any person or entity directly or indirectly hired, used, engaged, retained, compensated, or otherwise given anything having monetary value or benefit by an external investment manager to assist in securing investment commitments or other ongoing investment management business from any Treasure investment funds.
Amends GS 147-69.3 to require the State Treasurer to adopt, publish, and regularly review investment policy statements for each investment program. Also amends the statute to require the State Treasurer's report to the Finance Committee to include a summary (was, a statement) of the investment policies for the revenues invested. Amends the definition of rule in GS 150B-2(8a) to also exclude investment policy statements. Effective July 1, 2014, for the Retirement Systems and becomes effective July 1, 2015, for the other investment programs created under GS 147-69.3.
Amends GS 147-69.3(j) to allow the State Treasurer to adopt any rules necessary to establish, operate, conduct, and carry out all activities related to the investment program established under the statute (was, the State Treasurer must adopt rules necessary to carry out the provisions of the statute).
Repeals GS 128-29.1 (Authority of the Board of Trustees to the Counties, Cities, and Towns Retirement System to invest in certain common and preferred stocks). Amends GS 147-69.2(b) to specify that investments made pursuant to (b)(1) through (6) of the statute may be made directly by the State Treasurer, through investment companies registered under the Investment Company Act of 1940, individual, common, or collective trust funds of banks and trust companies, group trusts, and limited partnerships, limited liability companies or other limited liability investment vehicles that invest primarily in investments authorized by subdivisions (1) through (6) of the subsection, or through other specified agreements.
Unless otherwise indicated, effective July 1, 2014.