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PAG LIN
1 1 Section 1. NEW SECTION. 12E.1 TITLE.
1 2 This chapter shall be known and may be cited as the
1 3 "Tobacco Settlement Authority Act".
1 4 Sec. 2. NEW SECTION. 12E.2 FINDINGS.
1 5 The general assembly finds all of the following:
1 6 1. Certain leading United States tobacco product
1 7 manufacturers have entered into the master settlement
1 8 agreement with various states and commonwealths of the United
1 9 States, including this state, obligating the manufacturers, in
1 10 return for a release of past, present, and certain future
1 11 claims against them as described in the agreement, to pay
1 12 substantial sums to the state, subject to future adjustments.
1 13 2. Due to the uncertainties related to any future
1 14 adjustments in the sums to be paid under the master settlement
1 15 agreement, it is in the best interest of the state to
1 16 establish a plan which provides for conversion of all or a
1 17 portion of the future payments into current funds, which, in
1 18 turn, would be invested to provide a stable and secure source
1 19 of future revenue. This plan would include, but would not be
1 20 limited to, provisions to allow for the selling or pledging of
1 21 all or a portion of the state's share to the authority created
1 22 under this chapter to issue bonds to provide for future
1 23 revenues. Any bonds issued would be payable solely from and
1 24 secured solely by the sums received under the master
1 25 settlement agreement and other funds pledged by the authority.
1 26 The bonds would not, in any event, constitute a claim against
1 27 the full faith and credit or taxing powers of the state.
1 28 3. In order to provide for the receipt of payments under
1 29 the master settlement agreement, to provide for issuance of
1 30 bonds, and to provide that the bonds and the administration of
1 31 the bonds be separate from the general credit of the state, it
1 32 is in the best interest of the state to create a separate and
1 33 distinct state instrumentality to which all or a portion of
1 34 the amounts received under the master settlement agreement may
1 35 be transferred and to grant this instrumentality the necessary
2 1 powers and duties prescribed in this chapter.
2 2 4. The establishment of a tobacco settlement authority is
2 3 for the benefit of the people of the state in that such action
2 4 will better secure a future source of revenues to meet the
2 5 needs and goals of the state and to avoid obligations by the
2 6 state.
2 7 5. The tobacco settlement authority will perform an
2 8 essential government function in carrying out its powers and
2 9 duties under this chapter.
2 10 6. All of the findings stated in this section are
2 11 legislative goals and public purposes and uses for which
2 12 public moneys, as identified in this chapter, may be borrowed,
2 13 expended, advanced, loaned, or granted.
2 14 Sec. 3. NEW SECTION. 12E.3 DEFINITIONS.
2 15 As used in this chapter, unless the context otherwise
2 16 requires:
2 17 1. "Authority" means the tobacco settlement authority
2 18 created in this chapter.
2 19 2. "Board" means the governing board of the authority.
2 20 3. "Bonds" means bonds, notes, and other obligations and
2 21 financing arrangements issued or entered into by the authority
2 22 pursuant to this chapter.
2 23 4. "Financial institution" means a bank or credit union as
2 24 defined in section 12C.1.
2 25 5. "Master settlement agreement" means the master
2 26 settlement agreement as defined in section 453C.1.
2 27 6. "Notes" means notes, warrants, loan agreements, and all
2 28 other forms of evidence of indebtedness authorized under this
2 29 chapter.
2 30 7. "Program plan" means the tobacco settlement program
2 31 plan established in this chapter to provide for the
2 32 implementation of the findings and purposes of this chapter.
2 33 8. "Qualified investments" means investments of the
2 34 authority authorized by this chapter.
2 35 9. "Sales agreement" means any agreement authorized
3 1 pursuant to this chapter in which the state provides for the
3 2 sale of all or a portion of the state's share to the
3 3 authority.
3 4 10. "State's share" means all of the state's monetary
3 5 rights and interests, all rights of enforcement, and all
3 6 rights necessary and convenient for enforcement of those
3 7 monetary rights and interests in the master settlement
3 8 agreement.
3 9 11. "Tobacco settlement endowment fund" means the tobacco
3 10 settlement endowment fund created in section 12.65.
3 11 12. "Tobacco settlement trust fund" means the tobacco
3 12 settlement trust fund created in this chapter.
3 13 Sec. 4. NEW SECTION. 12E.4 TOBACCO SETTLEMENT AUTHORITY
3 14 – CREATED – PURPOSES – POWERS – RESTRICTIONS.
3 15 1. A tobacco settlement authority is created and
3 16 constitutes a public instrumentality and agency of the state,
3 17 separate and distinct from the state, exercising public and
3 18 essential governmental functions.
3 19 2. The purposes of the authority include all of the
3 20 following:
3 21 a. To implement and administer the program plan and to
3 22 establish a stable source of revenue to be used for the
3 23 purposes designated in section 12.65.
3 24 b. To enter into sales agreements.
3 25 c. To issue bonds and enter into funding options,
3 26 consistent with this chapter, including refunding and
3 27 refinancing its debt and obligations.
3 28 d. To sell, pledge, or assign, as security, all or a
3 29 portion of the state's share, to provide for and secure the
3 30 issuance of its bonds.
3 31 e. To invest funds available under this chapter to provide
3 32 for a source of revenue in accordance with the program plan.
3 33 f. To enter into agreements with the state for the
3 34 periodic distribution of amounts due the state under any sales
3 35 agreement.
4 1 g. To refund and refinance the authority's debts and
4 2 obligations, and to manage its funds, obligations, and
4 3 investments as necessary and if consistent with its purpose.
4 4 h. To sell, pledge, or assign, as security or
4 5 consideration, all or a portion of the state's share to
4 6 implement alternative funding options.
4 7 i. To implement the purposes of this chapter as stated in
4 8 the findings of the general assembly in section 12E.2.
4 9 3. The authority shall invest its funds and accounts in
4 10 accordance with this chapter and shall not take action or
4 11 invest in any manner that would cause the state to become a
4 12 stockholder in any corporation or that would cause the state
4 13 to assume or agree to pay the debt or liability of any
4 14 corporation in violation of the United States Constitution or
4 15 the Constitution of the State of Iowa.
4 16 4. The authority shall not create any obligation of this
4 17 state or any political subdivision of this state within the
4 18 meaning of any constitutional or statutory debt limitation.
4 19 5. The authority shall not pledge the credit or taxing
4 20 power of this state or any political subdivision of this
4 21 state, or make its debts payable out of any moneys except
4 22 those of the authority specifically pledged for their payment.
4 23 6. The authority shall not pledge or make its debts
4 24 payable out of the moneys deposited in the tobacco settlement
4 25 trust fund.
4 26 Sec. 5. NEW SECTION. 12E.5 POWERS NOT RESTRICTED – LAW
4 27 COMPLETE IN ITSELF.
4 28 This chapter shall not restrict or limit the powers which
4 29 the authority has under any other law of this state, but is
4 30 cumulative as to any such powers. A proceeding, notice, or
4 31 approval is not required for the creation of the authority or
4 32 the issuance of obligations or an instrument as security,
4 33 except as provided in this chapter.
4 34 Sec. 6. NEW SECTION. 12E.6 GOVERNING BOARD.
4 35 1. The powers of the authority are vested in and shall be
5 1 exercised by a board consisting of the treasurer of state, the
5 2 auditor of state, and the director of the department of
5 3 management. Notwithstanding the provisions of section 12.30,
5 4 subsection 2, regarding ex officio nonvoting status, the
5 5 treasurer of state shall act as a voting member of the
5 6 authority.
5 7 2. Two members of the board constitute a quorum.
5 8 3. The members shall elect a chairperson, vice
5 9 chairperson, and secretary, annually, and other officers as
5 10 the members determine necessary. The treasurer of state shall
5 11 serve as treasurer of the authority.
5 12 4. Meetings of the board shall be held at the call of the
5 13 chairperson or when a majority of the members so requests.
5 14 5. The members of the board shall not receive compensation
5 15 by reason of their membership on the board.
5 16 Sec. 7. NEW SECTION. 12E.7 STAFF – ASSISTANCE BY STATE
5 17 OFFICERS, AGENCIES, AND DEPARTMENTS.
5 18 1. The staff of the office of the treasurer of state shall
5 19 also serve as staff of the authority under the supervision of
5 20 the treasurer.
5 21 2. State officers, agencies, and departments may render
5 22 services to the authority within their respective functions,
5 23 as requested by the authority.
5 24 Sec. 8. NEW SECTION. 12E.8 LIMITATION OF LIABILITY.
5 25 Members of the board and persons acting in the authority's
5 26 behalf, while acting within the scope of their employment or
5 27 agency, are not subject to personal liability resulting from
5 28 carrying out the powers and duties conferred on them under
5 29 this chapter.
5 30 Sec. 9. NEW SECTION. 12E.9 GENERAL POWERS.
5 31 1. The authority has all the general powers necessary to
5 32 carry out its purposes and duties and to exercise its specific
5 33 powers, including but not limited to all of the following
5 34 powers:
5 35 a. The power to issue its bonds and to enter into other
6 1 funding options as provided in this chapter.
6 2 b. The power to have perpetual succession as a public
6 3 instrumentality and agency of the state, until dissolved in
6 4 accordance with this chapter.
6 5 c. The power to sue and be sued in its own name.
6 6 d. The power to make and execute agreements, contracts,
6 7 and other instruments, with any public or private person, in
6 8 accordance with this chapter.
6 9 e. The power to hire and compensate legal counsel,
6 10 notwithstanding chapter 13.
6 11 f. The power to hire investment advisors and other persons
6 12 as necessary to fulfill its purpose.
6 13 g. The power to invest or deposit moneys of the authority
6 14 in any manner determined by the authority, notwithstanding
6 15 chapter 12B or 12C.
6 16 h. The power to procure insurance, other credit
6 17 enhancements, and other financing arrangements to fulfill its
6 18 purposes under this chapter, including but not limited to
6 19 municipal bond insurance and letters of credit.
6 20 i. The power to accept appropriations, gifts, grants,
6 21 loans, or other aid from public or private entities.
6 22 j. The power to adopt rules, consistent with this chapter
6 23 and in accordance with chapter 17A, as the board determines
6 24 necessary.
6 25 2. The authority is exempt from the requirements of
6 26 chapter 18.
6 27 Sec. 10. NEW SECTION. 12E.10 AUTHORIZATON OF THE SALE OF
6 28 RIGHTS IN THE MASTER SETTLEMENT AGREEMENT.
6 29 1. Subject to the program plan, and following its review
6 30 by the legislative council and certification by the executive
6 31 council pursuant to section 12E.11, the governor shall sell
6 32 and assign all or a portion of the state's share to the
6 33 authority. The attorney general shall assist the governor in
6 34 the preparation and review of all necessary documentation to
6 35 effect such a sale by the date specified in the program plan.
7 1 The terms and conditions of the sale shall be established in
7 2 the program plan in order to accomplish the purpose and intent
7 3 of this chapter.
7 4 2. The sale made under this section shall be irrevocable
7 5 during the time when bonds are outstanding under this chapter,
7 6 and shall be a part of the contractual obligation owed to the
7 7 bondholders. The sale shall constitute and be treated as a
7 8 true sale and absolute transfer of the property so transferred
7 9 and not as a pledge or other security interest for any
7 10 borrowing. The characterization of such a sale as an absolute
7 11 transfer shall not be negated or adversely affected by the
7 12 fact that only a portion of the state's share is being sold,
7 13 or by the state's acquisition or retention of an ownership
7 14 interest in the residual assets.
7 15 3. On or after the effective date of such sale, the state
7 16 shall not have any right, title, or interest in the portion of
7 17 the master settlement agreement sold and such portion shall be
7 18 the property of the authority and not the state, and shall be
7 19 owned, received, held, and disbursed by the authority or its
7 20 trustee or assignee, and not the state.
7 21 4. On or before the effective date of the sale, the state
7 22 shall notify the escrow agent under the master settlement
7 23 agreement of the sale and shall instruct the escrow agent that
7 24 subsequent to that date, all payments constituting the portion
7 25 sold shall be made directly to the authority.
7 26 5. The authority, the treasurer of state, and the attorney
7 27 general shall report to the legislative council and the
7 28 executive council on or before the date specified in the
7 29 program plan, advising them of the accomplishment of the sale,
7 30 its terms and conditions.
7 31 Sec. 11. NEW SECTION. 12E.11 TOBACCO SETTLEMENT PROGRAM
7 32 PLAN.
7 33 1. The authority shall establish a tobacco settlement
7 34 program plan, in accordance with this chapter, to provide the
7 35 state with a secure and stable source of revenue for purposes
8 1 designated by section 12.65. The authority shall submit a
8 2 report of the proposed program plan to the legislative council
8 3 and the executive council. Following review by the
8 4 legislative council, if the legislative council determines
8 5 that the plan is satisfactory, the legislative council shall
8 6 inform the executive council of its determination. In making
8 7 the determination regarding whether the plan is satisfactory,
8 8 the legislative council shall determine if the plan
8 9 satisfactorily fulfills the purposes of this chapter and
8 10 provides prudent measures that reasonably secure an
8 11 appropriate investment return to the state. If the executive
8 12 council agrees with the determination, the executive council
8 13 shall certify its determination to the authority. Following
8 14 such certification by the executive council, the authority may
8 15 implement the program plan and may proceed to enter into any
8 16 sales agreement between the state and the authority, and may
8 17 take any other necessary action in accordance with the program
8 18 plan and this chapter.
8 19 2. The program plan shall include but is not limited to
8 20 inclusion of all of the following:
8 21 a. The structure of any sales agreement between the state
8 22 and the authority.
8 23 b. The terms of payment of amounts due from the authority
8 24 to the state.
8 25 c. The investment criteria of funds of the authority
8 26 including those held for payment to the state in accordance
8 27 with this chapter.
8 28 d. An analysis of alternative funding options, with or
8 29 without the use of the authority and issuance of bonds.
8 30 e. Recommendations to the governor and the general
8 31 assembly regarding any necessary changes in existing law
8 32 relating to this chapter.
8 33 f. A date by which any sale from the state to the
8 34 authority of all or a portion of the state's share should be
8 35 consummated, the specified period during which the state shall
9 1 be paid, and the date by which the bonds or alternative
9 2 funding options should be concluded.
9 3 g. Any other terms or provisions necessary to implement
9 4 this chapter.
9 5 3. This chapter shall not be interpreted to authorize the
9 6 state, the governor, or the authority to enter into any sales
9 7 agreement or to issue bonds or implement a program plan prior
9 8 to review by the legislative council and certification by the
9 9 executive council.
9 10 Sec. 12. NEW SECTION. 12E.12 AUTHORITY – BONDS.
9 11 1. The authority may issue bonds and use the proceeds from
9 12 the bonds for the purpose of providing a secure and stable
9 13 source of funding to the state, consistent with the purposes
9 14 of this chapter. Bonds issued pursuant to this section may be
9 15 secured by a pledge of all or a portion of the state's share
9 16 and any moneys derived from the state's share, and any other
9 17 sources available to the authority with the exception of
9 18 moneys in the tobacco settlement trust fund. The authority
9 19 may also issue refunding bonds, including advance refunding
9 20 bonds, for the purpose of refunding previously issued bonds,
9 21 and may issue other types of bonds, debt obligations, and
9 22 financing arrangements necessary to fulfill its purposes or
9 23 the purposes of this chapter.
9 24 2. The authority may issue its bonds in principal amounts
9 25 which, in the opinion of the authority, are necessary to
9 26 provide sufficient funds for achievement of its purposes, the
9 27 payment of interest on its bonds, the establishment of
9 28 reserves to secure the bonds, the costs of issuance of its
9 29 bonds, and all other expenditures of the authority incident to
9 30 and necessary to carry out it purposes or powers. The bonds
9 31 are investment securities and negotiable instruments within
9 32 the meaning of and for the purposes of the uniform commercial
9 33 code.
9 34 3. Bonds issued by the authority are payable solely and
9 35 only out of the moneys, assets, or revenues pledged by the
10 1 authority and are not a general obligation or indebtedness of
10 2 the authority or an obligation or indebtedness of the state or
10 3 any subdivision of the state. The authority shall not pledge
10 4 the credit or taxing power of the state or any political
10 5 subdivision of the state, or create a debt or obligation of
10 6 the state, or make its debts payable out of any moneys except
10 7 those of the authority, excluding those moneys deposited in
10 8 the tobacco settlement trust fund.
10 9 4. Bonds shall state on their face that they are payable
10 10 both as to principal and interest solely out of the assets of
10 11 the authority pledged for their purpose and do not constitute
10 12 an indebtedness of the state or any political subdivision of
10 13 the state, are secured solely by and payable solely from
10 14 receipts under the master settlement agreement, constitute
10 15 neither a general, legal, or moral obligation of the state or
10 16 any of its political subdivisions, and that the state has no
10 17 obligation or intention to satisfy any deficiency or default
10 18 of any payment of the bonds.
10 19 5. Any amount pledged by the authority to be received
10 20 under the master settlement agreement shall be valid and
10 21 binding at the time the pledge is made. Receipts so pledged
10 22 and then or thereafter received by the authority shall
10 23 immediately be subject to the lien of such pledge without any
10 24 physical delivery thereof or further act. The lien of any
10 25 such pledge shall be valid and binding as against all parties
10 26 having claims of any kind against the authority, whether such
10 27 parties have notice of the lien. Notwithstanding any other
10 28 provision to the contrary, the resolution of the authority or
10 29 any other instrument by which a pledge is created need not be
10 30 recorded or filed to perfect such pledge.
10 31 6. The proceeds of bonds issued by the authority and not
10 32 required for deposit in the tobacco settlement trust fund may
10 33 be invested in any manner approved by the board and specified
10 34 in the trust indenture or resolution pursuant to which the
10 35 bonds must be issued, notwithstanding any other provision to
11 1 the contrary.
11 2 7. The bonds shall comply with all of the following:
11 3 a. The bonds shall be in a form, issued in denominations,
11 4 executed in a manner, and payable over terms and with rights
11 5 of redemption, as the board prescribes in the resolution
11 6 authorizing their issuance.
11 7 b. The bonds shall be fully negotiable instruments under
11 8 the laws of this state and may be sold at prices, at public or
11 9 private sale, and in a manner as prescribed by the board.
11 10 Chapters 73A, 74, 74A, and 75 shall not apply to the sale or
11 11 issuance of bonds under this chapter.
11 12 c. The bonds shall be subject to the terms, conditions,
11 13 and covenants providing for the payment of the principal,
11 14 redemption premiums, if any, interest, and other terms,
11 15 conditions, covenants, and protective provisions safeguarding
11 16 payment, not inconsistent with this chapter and as determined
11 17 by resolution of the board authorizing their issuance.
11 18 8. The bonds issued under this chapter are securities in
11 19 which insurance companies and associations and other persons
11 20 engaged in the business of insurance; banks, trust companies,
11 21 savings associations, savings and loan associations, and
11 22 investment companies; administrators, guardians, executors,
11 23 trustees, and other fiduciaries; and other persons authorized
11 24 to invest in bonds or other obligations of the state may
11 25 properly and legally invest funds, including capital, in their
11 26 control or belonging to them.
11 27 9. Bonds must be authorized by a resolution of the board.
11 28 However, a resolution authorizing the issuance of bonds may
11 29 delegate to an officer of the authority the power to negotiate
11 30 and fix the details of an issue of bonds by an appropriate
11 31 certificate of the authorized officer.
11 32 10. To comply with federal law with respect to the
11 33 issuance of bonds, the interest of which is tax-exempt
11 34 pursuant to the Internal Revenue Code, the authority may issue
11 35 a certain series of bonds, or periodically issue several
12 1 series of bonds, so that interest on the bonds remains exempt
12 2 from federal taxation or to comply with the purposes specified
12 3 in this chapter.
12 4 Sec. 13. NEW SECTION. 12E.13 TOBACCO SETTLEMENT TRUST
12 5 FUND – ESTABLISHED – INVESTMENT – LIABILITY.
12 6 1. A tobacco settlement trust fund is established,
12 7 separate and apart from all other public moneys or funds of
12 8 the state, under the control of the authority. The fund shall
12 9 consist of moneys paid to the authority and not pledged to the
12 10 payment of bonds or otherwise obligated. Such moneys shall
12 11 include but are not limited to payments received from the
12 12 master settlement agreement which are not pledged to the
12 13 payment of bonds or which are subsequently released from a
12 14 pledge to the payment of any bonds; payments which, in
12 15 accordance with any sales agreement with the state, are to be
12 16 paid to the state and not pledged to the bonds, including that
12 17 portion of the proceeds of any bonds designated for purchase
12 18 of all or a portion of the state's share, which are designated
12 19 for deposit in the fund, together with all interest,
12 20 dividends, and rents on the bonds; and all securities or
12 21 investment income and other assets acquired by and through the
12 22 use of the moneys belonging to the fund and any other moneys
12 23 deposited in the fund. Moneys in the fund are to be used
12 24 solely and only for the payment of all amounts due and to
12 25 become due to the state, and shall not be used for any other
12 26 purpose. Such moneys shall not be available for the payment
12 27 of any claim against the authority or subject to any debt or
12 28 obligation of the authority.
12 29 2. The treasurer of the authority shall act as custodian
12 30 and trustee of the fund and shall administer the fund as
12 31 directed by the authority. The treasurer of the authority
12 32 shall do all of the following:
12 33 a. Hold the funds.
12 34 b. Invest the portion of the funds which, as deemed by the
12 35 authority, is not necessary for current payment of sums to the
13 1 state under this chapter or the program plan.
13 2 c. Disburse funds, if directed by the authority.
13 3 d. Sell any securities or other property held by the fund
13 4 and reinvest the proceeds as directed by the authority, when
13 5 deemed advisable by the authority for the protection of the
13 6 fund or the preservation of the value of the investment. Such
13 7 sale of securities or other property held by the fund shall
13 8 only be made with the advice of the board in the manner and to
13 9 the extent provided in this chapter with regard to the
13 10 purchase of investments.
13 11 e. Subscribe, at the direction of the authority, for the
13 12 purchase of securities for future delivery in anticipation of
13 13 future income. Such securities shall be paid for by such
13 14 anticipated income or from funds from the sale of securities
13 15 or other property held by the fund.
13 16 f. Pay for securities, as directed by the authority, on
13 17 the receipt of the purchasing financial institution's paid
13 18 statement or paid confirmation of purchase.
13 19 3. The authority shall execute the disposition and
13 20 investment of moneys in the fund in accordance with the
13 21 investment policy and goal statement established by the board.
13 22 a. In establishing the investment policy and goal
13 23 statement of the fund, the standard utilized by the board
13 24 shall be the exercise of judgment and care, under the
13 25 prevailing circumstances, which persons of prudence,
13 26 discretion, and intelligence exercise in the management of
13 27 their own financial affairs, not for the purpose of
13 28 speculation, but with regard to the permanent disposition of
13 29 the funds, considering the probable income, as well as the
13 30 probable safety, of their capital.
13 31 b. Within the limitations of the standard prescribed in
13 32 this subsection and the program plan, the treasurer of the
13 33 authority, the authority, and the board may acquire and retain
13 34 any type of property or investment which persons of prudence,
13 35 discretion, and intelligence would acquire or retain for their
14 1 own financial interests.
14 2 c. The authority and the board shall give appropriate
14 3 consideration to those facts and circumstances that the
14 4 authority and board know or should know are relevant to the
14 5 particular investment or investment policy involved, including
14 6 the role the investment plays in the total value of the fund.
14 7 For the purposes of this paragraph, appropriate consideration
14 8 includes, but is not limited to, a determination by the
14 9 authority and the board that the particular investment or
14 10 investment policy is reasonably designed to further the
14 11 purposes of the tobacco settlement program plan, taking into
14 12 consideration the risk of loss and the opportunity for gain or
14 13 other return associated with the investment or investment
14 14 policy and consideration of all of the following as they
14 15 relate to the tobacco settlement trust fund:
14 16 (1) The composition of the fund with regard to
14 17 diversification.
14 18 (2) The liquidity and current return of the investments in
14 19 the fund relative to the anticipated cash flow requirements of
14 20 the program plan.
14 21 (3) The projected return of the investments relative to
14 22 the funding objectives of the program plan.
14 23 d. Investments of moneys in the funds are not subject to
14 24 sections 73.15 through 73.21.
14 25 4. The authority, its staff, members of the board, and the
14 26 treasurer of the authority are not personally liable for
14 27 actions or omissions under this chapter that do not involve
14 28 malicious or wanton misconduct even if those actions or
14 29 omissions violate the standards established in this section.
14 30 5. Except as provided in this section, if there is loss to
14 31 the fund, the treasurer, the authority, the board, and the
14 32 staff are not personally liable, and the loss shall be charged
14 33 against the fund. The amount required to cover a loss may be
14 34 paid from the fund.
14 35 6. a. Expenses incurred in the sale and purchase of
15 1 securities belonging to the fund shall be charged to the fund,
15 2 and the amount required for the investment management expenses
15 3 may be paid from the fund, subject to the limitations stated
15 4 in this subsection. The amount paid for investment management
15 5 expenses for a fiscal year under this section shall not exceed
15 6 the reasonable and customary charge to similar funds for
15 7 similar purposes. The authority shall report the investment
15 8 management expenses for a fiscal year as a percent of the
15 9 market value of the fund in the annual report to the governor
15 10 submitted pursuant to section 12E.16.
15 11 b. A person who has entered into a contract with the
15 12 authority for investment management purposes shall meet the
15 13 requirements for doing business in Iowa sufficient to be
15 14 subject to taxation under the rules of the department of
15 15 revenue and finance.
15 16 7. All moneys paid to or deposited in the fund are
15 17 available to the authority to be used for the exclusive
15 18 purpose of the program plan in accordance with this chapter,
15 19 including but not limited to all of the following:
15 20 a. For payment of amounts due to the state pursuant to the
15 21 terms of the sales agreements entered into between the state
15 22 and the authority.
15 23 b. For payment of other amounts provided for in the
15 24 program plan.
15 25 c. For payment of the costs of administering the program
15 26 plan and the costs of the authority.
15 27 Sec. 14. NEW SECTION. 12E.14 MONEYS OF THE AUTHORITY.
15 28 1. Moneys of the authority, except as otherwise provided
15 29 in this chapter or specified in a trust indenture or
15 30 resolution pursuant to which the bonds are issued, shall be
15 31 paid to the authority and shall be deposited in a financial
15 32 institution designated by the authority. The moneys shall be
15 33 withdrawn on the order of the authority or its designee.
15 34 Deposits shall be secured in the manner determined by the
15 35 authority.
16 1 2. The auditor of state or the auditor's designee, which
16 2 may include a person hired by the auditor with the approval of
16 3 the board, may periodically examine the accounts and books,
16 4 including its receipts, disbursements, contracts, leases,
16 5 sinking funds, investments, and any other records and papers
16 6 relating to its financial standing. The authority shall pay
16 7 the costs of any such examination.
16 8 3. The authority may contract with the holders of its
16 9 bonds relating to the custody, collection, security,
16 10 investment, and payment of moneys of the authority, and
16 11 relating to the moneys held in trust or otherwise for payment
16 12 of bonds, with the exception of moneys in the tobacco
16 13 settlement trust fund. Moneys held in trust or otherwise for
16 14 the payment of bonds or in any way to secure bonds and
16 15 deposits of the moneys may be secured in the same manner as
16 16 moneys of the authority, and financial institutions, trust
16 17 companies, and other financial institutions may provide
16 18 security for the deposits.
16 19 4. The authority shall submit to the governor, the
16 20 attorney general, the auditor of state, the department of
16 21 management, and the legislative fiscal bureau, within thirty
16 22 days of its receipt, a copy of the report of every external
16 23 examination of the books and accounts of the authority, other
16 24 than copies of the reports of examinations of the auditor of
16 25 state.
16 26 5. All moneys of the authority or moneys held by the
16 27 authority shall be invested and held in the name of the
16 28 authority, whether they are held for the benefit, security, or
16 29 future payment to holders of bonds or to the state. All such
16 30 moneys and investments shall be considered moneys and
16 31 investments of the authority.
16 32 Sec. 15. NEW SECTION. 12E.15 EXEMPTION FROM COMPETITIVE
16 33 BID LAWS.
16 34 The authority and contracts entered into by the authority
16 35 in carrying out its public and essential governmental
17 1 functions are exempt from the laws of the state which provide
17 2 for competitive bids and hearings in connection with
17 3 contracts, except as provided in section 12.30.
17 4 Sec. 16. NEW SECTION. 12E.16 ANNUAL REPORT.
17 5 1. The authority shall submit to the governor, the general
17 6 assembly, and the attorney general, on or before December 31,
17 7 annually, a report including information regarding all of the
17 8 following:
17 9 a. Its operations and accomplishments.
17 10 b. Its receipts and expenditures during the previous
17 11 fiscal year, in accordance with classifications it establishes
17 12 for its operating and capital accounts.
17 13 c. Its assets and liabilities at the end of the previous
17 14 fiscal year and the status of reserve, special, and other
17 15 funds.
17 16 d. A schedule of its bonds outstanding at the end of the
17 17 previous fiscal year, and a statement of the amounts redeemed
17 18 and issued during the previous fiscal year.
17 19 e. A statement of its proposed and projected activities.
17 20 f. Recommendations to the governor and the general
17 21 assembly, as deemed necessary.
17 22 g. Any other information deemed necessary.
17 23 2. The annual report shall identify performance goals of
17 24 the authority, and clearly indicate the extent of progress,
17 25 during the reporting period, in attaining these goals.
17 26 Sec. 17. NEW SECTION. 12E.17 BANKRUPTCY.
17 27 Prior to the date which is three hundred sixty-six days
17 28 after which the authority no longer has any bonds outstanding,
17 29 the authority is prohibited from filing a voluntary petition
17 30 under chapter 9 of the federal bankruptcy code or such
17 31 corresponding charter or section as may, from time to time, be
17 32 in effect, and a public official or organization, entity, or
17 33 other person shall not authorize the authority to be or become
17 34 a debtor under chapter 9 or any successor or corresponding
17 35 chapter or sections during such periods. The provisions of
18 1 this section shall be part of any contractual obligation owed
18 2 to the holders of bonds issued under this chapter. Any such
18 3 contractual obligation shall not subsequently be modified by
18 4 state law, during the period of the contractual obligation.
18 5 Sec. 18. NEW SECTION. 12E.18 DISSOLUTION OF THE
18 6 AUTHORITY.
18 7 The authority shall dissolve no later than two years from
18 8 the date of final payment of all outstanding bonds and the
18 9 satisfaction of all outstanding obligations of the authority,
18 10 except to the extent necessary to remain in existence to
18 11 fulfill any outstanding covenants or provisions with
18 12 bondholders or third parties made in accordance with this
18 13 chapter. Upon dissolution of the authority, all assets of the
18 14 authority shall be returned to the state and shall be
18 15 deposited in the tobacco settlement endowment fund, unless
18 16 otherwise directed by the general assembly, and the authority
18 17 shall execute any necessary assignments or instruments,
18 18 including any assignment of any right, title, or ownership to
18 19 the state for receipt of payments under the master settlement
18 20 agreement.
18 21 Sec. 19. NEW SECTION. 12E.19 LIBERAL INTERPRETATION.
18 22 This chapter, being deemed necessary for the welfare of the
18 23 state and its people, shall be liberally construed to effect
18 24 its purpose.
18 25 Sec. 20. Section 12.30, subsection 1, paragraph a, Code
18 26 1999, is amended to read as follows:
18 27 a. "Authority" means a department, or public or quasi-
18 28 public instrumentality of the state including, but not limited
18 29 to, the authority created under chapter 12E, 16, 16A, 175,
18 30 257C, 261A, or 327I, which has the power to issue obligations,
18 31 except that "authority" does not include the state board of
18 32 regents or the Iowa finance authority to the extent it acts
18 33 pursuant to chapter 260C.
18 34 Sec. 21. Section 12.65, Code 1999, is amended by striking
18 35 the section and inserting in lieu thereof the following:
19 1 12.65 TOBACCO SETTLEMENT ENDOWMENT FUND.
19 2 1. A tobacco settlement endowment fund is created in the
19 3 office of the treasurer of state. After payment of litigation
19 4 costs, all moneys paid to the state by the tobacco settlement
19 5 authority pursuant to chapter 12E shall be deposited in the
19 6 fund. Additionally, the state share of the moneys paid
19 7 pursuant to the master settlement agreement, as defined in
19 8 section 453C.1, which are not sold to the tobacco settlement
19 9 authority pursuant to chapter 12E shall be deposited in the
19 10 fund.
19 11 2. Moneys deposited in the fund shall be used only in
19 12 accordance with appropriations from the fund for purposes
19 13 related to health care, substance abuse treatment and
19 14 enforcement, tobacco use prevention and control, and other
19 15 purposes related to the needs of children, adults, and
19 16 families in the state.
19 17 3. A savings account for healthy Iowans is created within
19 18 the tobacco settlement endowment fund. Moneys, appropriated
19 19 annually, shall be deposited in the account and shall be
19 20 invested to provide an ongoing source of investment earnings.
19 21 4. Notwithstanding section 8.33, any unexpended balance in
19 22 the fund at the end of the fiscal year shall be retained in
19 23 the fund. Notwithstanding section 12C.7, subsection 2,
19 24 interest or earnings on investments or time deposits of the
19 25 moneys in the tobacco settlement endowment fund, in the
19 26 savings account for healthy Iowans, and in any other account
19 27 established within the fund shall be credited to the tobacco
19 28 settlement endowment fund, to the savings account for healthy
19 29 Iowans, or to any other account established, respectively.
19 30 5. For the purposes of this section, "litigation costs"
19 31 are those costs itemized by the attorney general and submitted
19 32 to and approved by the attorney general.
19 33 Sec. 22. Section 12B.10, subsection 6, Code 1999, is
19 34 amended by adding the following new paragraph:
19 35 NEW PARAGRAPH. i. Investments by the tobacco settlement
20 1 authority governed by chapter 12E.
20 2 Sec. 23. Section 12B.10A, subsection 6, Code 1999, is
20 3 amended by adding the following new paragraph:
20 4 NEW PARAGRAPH. i. The tobacco settlement authority
20 5 governed by chapter 12E.
20 6 Sec. 24. Section 12B.10B, subsection 3, Code 1999, is
20 7 amended by adding the following new paragraph:
20 8 NEW PARAGRAPH. i. The tobacco settlement authority
20 9 governed by chapter 12E.
20 10 Sec. 25. Section 12B.10C, Code 1999, is amended by adding
20 11 the following new subsection:
20 12 NEW SUBSECTION. 8. The tobacco settlement authority
20 13 governed by chapter 12E.
20 14 Sec. 26. EFFECTIVE DATE. This Act, being deemed of
20 15 immediate importance, takes effect upon enactment.
20 16 EXPLANATION
20 17 This bill establishes a new Code chapter 12E, the tobacco
20 18 settlement authority Act.
20 19 Code section 12E.1 provides the title of the chapter, the
20 20 "Tobacco Settlement Authority Act".
20 21 Code section 12E.2 provides findings relating to the
20 22 development of a plan to provide options for investment of the
20 23 state's share of the tobacco settlement agreement. The
20 24 findings are legislative goals and public purposes and uses
20 25 for which public moneys, as identified in the chapter, may be
20 26 borrowed, expended, advanced, loaned, or granted.
20 27 Code section 12E.3 provides definitions used in the
20 28 chapter.
20 29 Code section 12E.4 creates the tobacco settlement
20 30 authority, and provides the purposes, powers, and restrictions
20 31 of the authority.
20 32 Code section 12E.5 provides that the chapter does not
20 33 restrict or limit the powers of the authority otherwise
20 34 provided by law but that the chapter is cumulative as to such
20 35 powers.
21 1 Code section 12E.6 establishes the governing board of the
21 2 authority which consists of the treasurer of state, the
21 3 auditor of state, and the director of the department of
21 4 management.
21 5 Code section 12E.7 provides that the staff of the office of
21 6 the treasurer of state is also the staff of the authority, and
21 7 provides that other state officers, agencies, and departments
21 8 may provide services within their respective functions, as
21 9 requested by the authority.
21 10 Code section 12E.8 provides for limitation of personal
21 11 liability for members of the board and persons acting in the
21 12 authority's behalf and in the scope or their employment or
21 13 agency.
21 14 Code section 12E.9 provides the general powers of the
21 15 authority, including the power to issue its bonds and to enter
21 16 into other funding options.
21 17 Code section 12E.10 authorizes the sale of the state's
21 18 share of the master settlement agreement, entered into by the
21 19 state with the tobacco companies, to the authority, pursuant
21 20 to a program plan. Prior to any such sale, the program plan
21 21 is to be developed, reviewed by the legislative council, and
21 22 certified by the executive council. If the plan is reviewed
21 23 and certified, the sale may take place. The terms and
21 24 conditions of any sale are to be included in the program plan.
21 25 Code section 12E.11 provides criteria for the program plan.
21 26 The program plan is a means by which alternatives relating to
21 27 investment of the state's share are reviewed and recommended
21 28 for further action. The program plan is to include the
21 29 structure of any sales agreement between the state and the
21 30 authority; the terms of payment of amounts due the state by
21 31 the authority; the investment criteria of funds of the
21 32 authority; an analysis of funding options with or without the
21 33 use of the authority and the issuance of bonds;
21 34 recommendations for changes in the law relating to the
21 35 chapter; a date certain for the sale of the state's share to
22 1 the authority; the period during which the state should be
22 2 paid, and the date by which the bonds or alternative funding
22 3 options should be concluded; and any other terms or provisions
22 4 necessary to implement the chapter.
22 5 Code section 12E.12 authorizes the authority to issue bonds
22 6 to provide a secure and stable source of funding to the state,
22 7 consistent with the purposes of the chapter.
22 8 Code section 12E.13 establishes a tobacco settlement trust
22 9 fund, separate and apart from all other public moneys or funds
22 10 of the state, under the control of the authority. The fund is
22 11 to consist of moneys paid to the authority and not pledged to
22 12 the payment of bonds or otherwise obligated. The bill
22 13 provides duties of the treasurer of the authority relating to
22 14 the fund; provides that the authority is to execute the
22 15 disposition and investment of moneys in the fund in accordance
22 16 with the investment policy and goal statement established by
22 17 the board, and provides the standard to be used in developing
22 18 the policy and goal statement; provides limitation of personal
22 19 liability of the authority, its staff members of the board and
22 20 the treasurer of the authority relating to the fund; provides
22 21 for payment of expenses relating to the fund; and provides the
22 22 purposes for which moneys in the fund may be expended.
22 23 Code section 12E.14 establishes provisions relating to the
22 24 moneys of the authority, including providing for examination
22 25 of the accounts and books of the authority.
22 26 Code section 12E.15 provides that the authority is not
22 27 subject to competitive bid laws and hearings, except as
22 28 provided in section 12.30 which establishes provisions
22 29 relating specifically to authorities established by law.
22 30 Code section 12E.16 provides for the submission of an
22 31 annual report to the governor, the general assembly, and the
22 32 attorney general relating to the chapter.
22 33 Code section 12E.17 provides limitations on the authority
22 34 in filing for bankruptcy.
22 35 Code section 12E.18 provides for dissolution of the
23 1 authority no later than two years from the date of final
23 2 payment of all outstanding bonds and the satisfaction of all
23 3 outstanding obligations of the authority, with exceptions.
23 4 Code section 12E.19 provides for the liberal interpretation
23 5 of the chapter to effect its purpose.
23 6 The remainder of the bill makes conforming changes,
23 7 including changes to the existing tobacco settlement fund, by
23 8 changing the name of that fund to the tobacco settlement
23 9 endowment fund and providing for use of the moneys in that
23 10 fund.
23 11 The bill takes effect upon enactment.
23 12 LSB 7326XS 78
23 13 pf/cls/14
Text: SF02460 Text: SF02462 Text: SF02400 - SF02499 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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