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PAG LIN 1 1 Section 1. Section 12.8, unnumbered paragraph 3, Code 1 2 2001, is amended to read as follows: 1 3 The treasurer of state, with the approval of the investment 1 4 board of the Iowa public employees' retirement system, may 1 5 conduct a program of lending securities in the Iowa public 1 6 employees' retirement system portfolio. When securities are 1 7 loaned as provided by this paragraph, the treasurer shall act 1 8 in the manner provided for investment of moneys in the Iowa 1 9 public employees' retirement fund under section97B.797B.7A. 1 10 The treasurer of state shall report at least annually to the 1 11 investment board of the Iowa public employees' retirement 1 12 system on the program and shall provide additional information 1 13 on the program upon the request of the investment board or the 1 14 employees of the Iowa public employees' retirement system 1 15 division of the department of personnel. 1 16 Sec. 2. Section 12B.10, subsection 4, paragraph f, Code 1 17 2001, is amended to read as follows: 1 18 f. Investments authorized for the Iowa public employees' 1 19 retirement system in section97B.7, subsection 2, paragraph1 20"b"97B.7A, except that investment in common stocks is not 1 21 permitted. 1 22 Sec. 3. Section 12C.5, Code 2001, is amended to read as 1 23 follows: 1 24 12C.5 REFUSAL OF DEPOSITS – PROCEDURE. 1 25 If the approved depositories will not accept the deposits 1 26 under the conditions prescribed or authorized in this chapter, 1 27 the funds may be deposited, on the same or better terms as 1 28 were offered to the depositories, in one or more approved 1 29 depositories conveniently located within the state. 1 30 The treasurer of state may invest in any of the investments 1 31 authorized for the Iowa public employees' retirement system in 1 32 section97B.7, subsection 2, paragraph "b"97B.7A except that 1 33 investment in common stocks shall not be permitted. 1 34 Sec. 4. Section 12C.10, Code 2001, is amended to read as 1 35 follows: 2 1 12C.10 INVESTMENT OF FUNDS CREATED BY ELECTION. 2 2 The governing council or board, who by law have control of 2 3 any fund created by direct vote of the people, may invest any 2 4 portion of the fund not currently needed, in investments 2 5 authorized in section 12B.10. The treasurer of state may 2 6 invest in any of the investments authorized for the Iowa 2 7 public employees' retirement system in section97B.7,2 8subsection 2, paragraph "b"97B.7A except that investment in 2 9 common stocks shall not be permitted. Interest or earnings on 2 10 such funds shall be credited as provided in section 12C.7, 2 11 subsection 2. 2 12 Sec. 5. Section 19A.1, subsection 3, paragraph b, Code 2 13 2001, is amended to read as follows: 2 14 b. The investment board of the Iowa public employees' 2 15 retirement system created by section97B.897B.8A. 2 16 Sec. 6. Section 97A.7, subsection 2, Code 2001, is amended 2 17 to read as follows: 2 18 2. The several funds created by this chapter may be 2 19 invested in any investments authorized for the Iowa public 2 20 employees' retirement system in section97B.7, subsection 2,2 21paragraph "b"97B.7A. 2 22 Sec. 7. Section 97B.1, Code 2001, is amended to read as 2 23 follows: 2 24 97B.1 SYSTEM CREATED – ORGANIZATIONAL DEFINITIONS. 2 25 1. The "Iowa Public Employees' Retirement System" is 2 26 created. The Iowa public employees' retirement systemis2 27 division, a separate and distinct division within the 2 28 department of personnel, shall administer the system. 2 29 2. As used in this chapter unless the context requires 2 30 otherwise: 2 31 a. "Board" means the investment board created by section 2 3297B.897B.8A. 2 33 b. "Chief executive officer" means the chief executive 2 34 officer of the Iowa public employees' retirement system 2 35 division, notwithstanding section 7E.2, subsection 3, 3 1 paragraph "c", subparagraph (1). 3 2 c. "Committee" means the benefits advisory committee 3 3 created by section 97B.8B. 3 4b.d. "DepartmentDivision" means thedepartment of3 5personnelIowa public employees' retirement system division. 3 6c. "Director" means the director of the department of3 7personnel.3 8d.e. "System" means the Iowa public employees' retirement 3 9 system. 3 10 Sec. 8. NEW SECTION. 97B.3A CHIEF EXECUTIVE OFFICER – 3 11 APPOINTMENT AND QUALIFICATIONS. 3 12 1. The administrator of the division is the chief 3 13 executive officer. The chief executive officer shall be 3 14 appointed by the governor subject to confirmation by the 3 15 senate and shall serve for six years beginning and ending as 3 16 provided by section 69.19. A vacancy shall be filled for the 3 17 unexpired portion of the term in the same manner as a full- 3 18 term appointment is made. The governor may remove the chief 3 19 executive officer for malfeasance in office, or for any cause 3 20 that renders the chief executive officer ineligible, 3 21 incapable, or unfit to discharge the duties of the office. 3 22 2. The qualifications for appointment as the chief 3 23 executive officer shall include a demonstrated knowledge of 3 24 and extensive experience in all aspects of pension fund 3 25 administration, including financial management, investment 3 26 asset management, benefit design and delivery, legal 3 27 administration, and operations administration. The chief 3 28 executive officer shall not be selected on the basis of 3 29 political affiliation, and while employed as the chief 3 30 executive officer, shall not be a member of a political 3 31 committee, participate in a political campaign, or be a 3 32 candidate for a partisan elective office, and shall not 3 33 contribute to a political campaign fund, except that the chief 3 34 executive officer may designate on the checkoff portion of the 3 35 state or federal income tax return, or both, a party or 4 1 parties to which a contribution is made pursuant to the 4 2 checkoff. The chief executive officer shall not hold any 4 3 other office under the laws of the United States or of this or 4 4 any state and shall devote full time to the duties of office. 4 5 Sec. 9. Section 97B.4, Code 2001, is amended by striking 4 6 the section and inserting in lieu thereof the following: 4 7 97B.4 ADMINISTRATION OF SYSTEM – POWERS AND DUTIES OF 4 8 DIVISION – IMMUNITY. 4 9 1. CHIEF EXECUTIVE OFFICER. The division, through the 4 10 chief executive officer, shall administer this chapter. The 4 11 chief executive officer shall also be the division's statutory 4 12 designee with respect to the rulemaking power. 4 13 2. GENERAL AUTHORITY. 4 14 a. The division may adopt, amend, waive, or rescind rules, 4 15 employ persons, execute contracts with outside parties, make 4 16 expenditures, require reports, make investigations, and take 4 17 other action it deems necessary for the administration of the 4 18 system in conformity with the requirements of this chapter, 4 19 the applicable provisions of the Internal Revenue Code, and 4 20 all other applicable federal and state laws. The rules shall 4 21 be effective upon compliance with chapter 17A. 4 22 b. The division may delegate to any person such authority 4 23 as it deems reasonable and proper for the effective 4 24 administration of this chapter, and may bond any person 4 25 handling moneys or signing checks under this chapter. 4 26 c. In administering this chapter, the division shall enter 4 27 into a biennial agreement with the department of personnel 4 28 concerning the sharing of resources between the division and 4 29 department which are of benefit to each and which are 4 30 consistent with the mission of the division and the 4 31 department. The budget program for the division shall be 4 32 established by the chief executive officer in consultation 4 33 with the board and other staff of the division and shall be 4 34 compiled by the department of personnel in collaboration with 4 35 the division and submitted on behalf of the division by the 5 1 department pursuant to section 8.23. 5 2 3. PERSONNEL. 5 3 a. CHIEF INVESTMENT OFFICER. The chief executive officer, 5 4 following consultation with the board, shall employ a chief 5 5 investment officer who shall be appointed pursuant to chapter 5 6 19A and shall be responsible for administering the investment 5 7 program for the retirement fund pursuant to the investment 5 8 policies of the board. 5 9 b. CHIEF BENEFITS OFFICER. The chief executive officer, 5 10 following consultation with the benefits advisory committee, 5 11 shall employ a chief benefits officer who shall be appointed 5 12 pursuant to chapter 19A and shall be responsible for 5 13 administering the benefits and other services provided under 5 14 the system. 5 15 c. ACTUARY. The division shall employ an actuary who 5 16 shall be selected by the board and shall serve at the pleasure 5 17 of the board. The actuary shall be the technical advisor for 5 18 the system on matters regarding the operation of the 5 19 retirement fund. 5 20 d. DIVISION EMPLOYEES. Subject to other provisions of 5 21 this chapter, the division may employ all other personnel as 5 22 necessary for the administration of the system. The maximum 5 23 number of full-time equivalent employees specified by the 5 24 general assembly for the division for administration of the 5 25 system for a fiscal year shall not be reduced by any authority 5 26 other than the general assembly. The personnel of the 5 27 division shall be appointed pursuant to chapter 19A. The 5 28 division shall not appoint or employ a person who is an 5 29 officer or committee member of a political party organization 5 30 or who holds or is a candidate for a partisan elective public 5 31 office. 5 32 e. LEGAL ADVISORS. The division may employ attorneys and 5 33 contract with attorneys and legal firms for the provision of 5 34 legal counsel and advice in the administration of this chapter 5 35 and chapter 97C. 6 1 f. OUTSIDE ADVISORS. The division may execute contracts 6 2 with persons outside state government, including investment 6 3 advisors, consultants, and managers, in the administration of 6 4 this chapter. However, a contract with an investment manager 6 5 or investment consultant shall not be executed by the division 6 6 pursuant to this paragraph without the prior approval by the 6 7 board of the hiring of the investment manager or investment 6 8 consultant. 6 9 4. REPORTS. 6 10 a. ANNUAL REPORT TO GOVERNOR. Not later than the 6 11 fifteenth day of December of each year, the division shall 6 12 submit to the governor a report covering the administration 6 13 and operation of this chapter during the preceding fiscal year 6 14 and shall make recommendations for amendments to this chapter. 6 15 The report shall include a balance sheet of the moneys in the 6 16 retirement fund. The report shall also include information 6 17 concerning the investment management expenses for the 6 18 retirement fund for each fiscal year expressed as a percent of 6 19 the market value of the retirement fund investment assets, 6 20 including the information described in section 97B.7, 6 21 subsection 3, paragraph "d". The information provided under 6 22 this paragraph shall also include information on the 6 23 investment policies and investment performance of the 6 24 retirement fund. In providing this information, to the extent 6 25 possible, the division shall include the total investment 6 26 return for the entire fund, for portions of the fund managed 6 27 by investment managers, and for internally managed portions of 6 28 the fund, and the cost of managing the fund per thousand 6 29 dollars of assets. The performance shall be based upon market 6 30 value, and shall be contrasted with relevant market indices 6 31 and with performances of pension funds of similar asset size. 6 32 b. ANNUAL STATEMENT TO MEMBERS. The division shall 6 33 prepare and distribute to the members, at the expense of the 6 34 retirement fund, an annual statement of the member's account 6 35 and, in such a manner as the division deems appropriate, other 7 1 information concerning the system. 7 2 c. ACTUARIAL INVESTIGATION. During calendar year 2002, 7 3 and every four years thereafter, the division shall cause an 7 4 actuarial investigation to be made of all experience under the 7 5 retirement system. Pursuant to such an investigation, the 7 6 division shall, from time to time, determine upon an actuarial 7 7 basis the condition of the system and shall report to the 7 8 general assembly its findings and recommendations. 7 9 d. ANNUAL VALUATION OF ASSETS. The division shall cause 7 10 an annual actuarial valuation to be made of the assets and 7 11 liabilities of the system and shall prepare an annual 7 12 statement of the amounts to be contributed under this chapter, 7 13 and shall publish annually such valuation of the assets and 7 14 liabilities and the statement of receipts and disbursements of 7 15 the system. Based upon the actuarial methods and assumptions 7 16 adopted by the board for the annual valuation, the division 7 17 shall certify to the governor the contribution rates 7 18 determined thereby as the rates necessary and sufficient for 7 19 members and employers to fully fund the benefits and 7 20 retirement allowances being credited. 7 21 5. INVESTMENTS. The division, through the chief 7 22 investment officer, shall invest, in accordance with the 7 23 investment policy and goal statement established by the board, 7 24 the portion of the retirement fund which, in the judgment of 7 25 the division, is not needed for current payment of benefits 7 26 under this chapter subject to the requirements of section 7 27 97B.7A. 7 28 6. OLD RECORDS. The division may destroy or dispose of 7 29 such original reports or records as have been properly 7 30 recorded or summarized in the permanent records of the 7 31 division and are deemed by the chief executive officer to be 7 32 no longer necessary to the proper administration of this 7 33 chapter. The destruction or disposition shall be made only by 7 34 order of the chief executive officer. Records of deceased 7 35 members of the system may be destroyed ten years after the 8 1 later of the final payment made to a third party on behalf of 8 2 the member or the death of the member. Any moneys received 8 3 from the disposition of these records shall be deposited to 8 4 the credit of the retirement fund subject to rules adopted by 8 5 the division. 8 6 7. IMMUNITY. The division, employees of the division, the 8 7 board, the members of the board, and the treasurer of state 8 8 are not personally liable for actions or omissions under this 8 9 chapter that do not involve malicious or wanton misconduct 8 10 even if those actions or omissions violate the standards 8 11 established in section 97B.7A. 8 12 Sec. 10. Section 97B.7, Code 2001, is amended by striking 8 13 the section and inserting in lieu thereof the following: 8 14 97B.7 FUND CREATED – EXCLUSIVE BENEFIT – STANDING 8 15 APPROPRIATIONS. 8 16 1. There is hereby created as a special fund, separate and 8 17 apart from all other public moneys or funds of this state, the 8 18 "Iowa Public Employees' Retirement Fund", hereafter called the 8 19 "retirement fund". The retirement fund shall consist of all 8 20 moneys collected under this chapter, together with all 8 21 interest, dividends, and rents thereon, and shall also include 8 22 all securities or investment income and other assets acquired 8 23 by and through the use of the moneys belonging to the 8 24 retirement fund and any other moneys that have been paid into 8 25 the retirement fund. 8 26 2. The treasurer of the state of Iowa is hereby made the 8 27 custodian of the retirement fund and shall hold and disburse 8 28 the retirement fund in accordance with the requirements of 8 29 this chapter. As custodian, the treasurer shall be authorized 8 30 to disburse moneys in the retirement fund upon warrants drawn 8 31 by the director of revenue and finance pursuant to the order 8 32 of the division. The selection by the treasurer of any bank 8 33 or other third party for the purposes of investment asset 8 34 safekeeping, other custody, or settlement services shall be 8 35 subject to approval by the board. 9 1 3. All moneys which are paid or deposited into the fund 9 2 are appropriated and made available to the division to be used 9 3 for the exclusive benefit of the members and their 9 4 beneficiaries or contingent annuitants as provided in this 9 5 chapter: 9 6 a. To be used by the division for the payment of claims 9 7 for benefits under this chapter. 9 8 b. To be used by the division to pay refunds provided for 9 9 in this chapter. 9 10 c. To be used for the costs of administering the system, 9 11 including the expenses of the benefits advisory committee. If 9 12 as a result of action under section 8.31, the governor has 9 13 reduced the moneys appropriated from the retirement fund to 9 14 the division for salaries, support, maintenance, and other 9 15 operational purposes to pay the costs of the system for a 9 16 fiscal year, it is the intent of the general assembly that the 9 17 amount by which the appropriation has been reduced should be 9 18 transferred from the retirement fund to the division for 9 19 salaries, support, maintenance, and other operational purposes 9 20 to pay the costs of the system for that fiscal year. 9 21 d. To be used to pay for investment management expenses 9 22 incurred in the management of the retirement fund. Expenses 9 23 incurred pursuant to this paragraph shall be charged to the 9 24 investment income of the retirement fund. However, the amount 9 25 appropriated for a fiscal year under this paragraph shall not 9 26 exceed four-tenths of one percent of the market value of the 9 27 retirement fund. 9 28 Sec. 11. NEW SECTION. 97B.7A INVESTMENT AND MANAGEMENT 9 29 OF RETIREMENT FUND – STANDARDS – IMMUNITY. 9 30 1. INVESTMENT AND INVESTMENT POLICY STANDARDS. In 9 31 establishing the investment policy of the retirement fund and 9 32 providing for the investment of the retirement fund, the 9 33 division and board shall do the following: 9 34 a. Exercise the judgment and care, under the circumstances 9 35 then prevailing, which persons of prudence, discretion, and 10 1 intelligence exercise in the management of their own affairs, 10 2 not for the purpose of speculation, but with regard to the 10 3 permanent disposition of the funds, considering the probable 10 4 income, as well as the probable safety, of their capital. 10 5 b. Give appropriate consideration to those facts and 10 6 circumstances that the division and board know or should know 10 7 are relevant to the particular investment or investment policy 10 8 involved, including the role the investment plays in the total 10 9 value of the retirement fund. 10 10 c. For the purposes of this subsection, appropriate 10 11 consideration includes, but is not limited to, a determination 10 12 that the particular investment or investment policy is 10 13 reasonably designed to further the purposes of the system, 10 14 taking into consideration the risk of loss and the opportunity 10 15 for gain or income associated with the investment or 10 16 investment policy and consideration of the following factors 10 17 as they relate to the retirement fund: 10 18 (1) The composition of the retirement fund with regard to 10 19 diversification. 10 20 (2) The liquidity and current return of the investments in 10 21 the retirement fund relative to the anticipated cash flow 10 22 requirements of the system. 10 23 (3) The projected return of the investments relative to 10 24 the funding objectives of the retirement system. 10 25 2. INVESTMENT ACQUISITIONS. Within the limitations of the 10 26 investment standards prescribed in this section, the system 10 27 may acquire and retain every kind of property and every kind 10 28 of investment which persons of prudence, discretion, and 10 29 intelligence acquire or retain for their own account. 10 30 Consistent with this section, investments shall be made in a 10 31 manner that will enhance the economy of this state, and in 10 32 particular, will result in increased employment of the 10 33 residents of this state. Investments of moneys in the 10 34 retirement fund are not subject to sections 73.15 through 10 35 73.21. 11 1 3. LIABILITY – REIMBURSEMENT. Except as provided in 11 2 section 97B.4, subsection 7, if there is loss to the 11 3 retirement fund, the treasurer of state, the division, the 11 4 employees of the division, the members of the board severally, 11 5 and the board are not personally liable, and the loss shall be 11 6 charged against the retirement fund. There is appropriated 11 7 from the retirement fund, the amount required to cover a loss. 11 8 4. INVESTMENT PROCEDURES. In managing the investment of 11 9 the retirement fund, the division, in accordance with the 11 10 investment policy established by the board, is authorized to 11 11 do the following: 11 12 a. To sell any securities or other property in the 11 13 retirement fund and reinvest the proceeds when such action may 11 14 be deemed advisable by the division for the protection of the 11 15 retirement fund or the preservation of the value of the 11 16 investment. Such sale of securities or other property of the 11 17 retirement fund and reinvestment shall only be made in 11 18 accordance with policies of the board in the manner and to the 11 19 extent provided in this chapter. 11 20 b. To subscribe for the purchase of securities for future 11 21 delivery in anticipation of future income. The securities 11 22 shall be paid for by anticipated income or from funds from the 11 23 sale of securities or other property held by the retirement 11 24 fund. 11 25 c. To pay for securities directed to be purchased upon the 11 26 receipt of the purchasing bank's paid statement or paid 11 27 confirmation of purchase. 11 28 5. TRAVEL. In the administration of the investment of 11 29 moneys in the retirement fund, employees of the division and 11 30 members of the board may travel outside the state for the 11 31 purpose of meeting with investment firms and consultants and 11 32 attending conferences and meetings to fulfill their fiduciary 11 33 responsibilities. This travel is not subject to section 11 34 421.38, subsection 2. 11 35 Sec. 12. NEW SECTION. 97B.8A INVESTMENT BOARD. 12 1 1. BOARD ESTABLISHED. A board is established to be known 12 2 as the "Investment Board of the Iowa Public Employees' 12 3 Retirement System", referred to in this chapter as the 12 4 "board". The duties of the board are to establish policy, and 12 5 review its implementation, in matters relating to the 12 6 investment of the retirement fund. The board shall be the 12 7 trustee of the retirement fund. 12 8 2. INVESTMENT REVIEW. a. At least annually the board 12 9 shall review the investment policies and procedures used by 12 10 the board and division, and shall hold a public meeting on the 12 11 investment policies and investment performance of the 12 12 retirement fund. Following its review and the public meeting, 12 13 the board shall, pursuant to the requirements of section 12 14 97B.7A, and in consultation with the chief investment officer 12 15 and other relevant personnel of the division, establish an 12 16 investment policy and goal statement that shall direct the 12 17 investment activities concerning the retirement fund. 12 18 b. The board shall review and approve, prior to the 12 19 execution of a contract with the division, the hiring of each 12 20 investment manager and investment consultant outside of state 12 21 government. 12 22 3. ACTUARIAL RESPONSIBILITIES. 12 23 a. The board shall select the actuary to be employed by 12 24 the system as provided in section 97B.4. 12 25 b. The board shall, in consultation with the chief 12 26 executive officer, the actuary, and other relevant personnel 12 27 of the division, adopt from time to time mortality tables and 12 28 all other necessary factors for use in actuarial calculations 12 29 required in connection with the system. The board shall also 12 30 adopt the actuarial methods and assumptions to be used by the 12 31 actuary for the annual valuation of assets as required by 12 32 section 97B.4. 12 33 4. MEMBERSHIP. 12 34 a. The board shall consist of nine voting members. The 12 35 voting members shall be as follows: 13 1 (1) Three public members, appointed by the governor, who 13 2 are not members of the system and who each have substantial 13 3 institutional investment experience or substantial 13 4 institutional financial experience. 13 5 (2) Three members, appointed by the governor from a slate 13 6 of at least two nominees per position submitted by the 13 7 benefits advisory committee established in section 97B.8B, who 13 8 are members of the system. Of the three members appointed, 13 9 one shall be an active member who is an employee of a school 13 10 district, area education agency, or merged area; one shall be 13 11 an active member who is not an employee of a school district, 13 12 area education agency, or merged area; and one shall be a 13 13 retired member of the system. 13 14 (3) The treasurer of state. 13 15 (4) One state representative, appointed by the speaker of 13 16 the house of representatives, and one state senator, appointed 13 17 by the president of the senate, after consultation with the 13 18 majority leader and the minority leader of the senate. 13 19 b. Five voting members of the board shall constitute a 13 20 quorum. 13 21 c. The three members who have substantial institutional 13 22 investment experience or substantial institutional financial 13 23 experience, and the member who is a retired member of the 13 24 system, shall be paid their actual expenses incurred in the 13 25 performance of their duties and shall receive a per diem as 13 26 specified in section 7E.6 for each day of service not 13 27 exceeding forty days per year. Legislative members shall be 13 28 paid the per diem and expenses specified in section 2.10, for 13 29 each day of service. The per diem and expenses of the 13 30 legislative members shall be paid from funds appropriated 13 31 under section 2.12. The members who are active members of the 13 32 system and the treasurer of state shall be paid their actual 13 33 expenses incurred in the performance of their duties as 13 34 members of the board and the performance of their duties as 13 35 members of the board shall not affect their salaries, 14 1 vacations, or leaves of absence for sickness or injury. 14 2 d. The appointive terms of the members appointed by the 14 3 governor are for a period of six years beginning and ending as 14 4 provided in section 69.19. If there is a vacancy in the 14 5 membership of the board for one of the members appointed by 14 6 the governor, the governor has the power of appointment. 14 7 Gubernatorial appointees to this board are subject to 14 8 confirmation by the senate. 14 9 5. CLOSED SESSIONS. In addition to the reasons provided 14 10 in section 21.5, subsection 1, the board may hold a closed 14 11 session pursuant to the requirements of section 21.5 of that 14 12 portion of a board meeting in which financial or commercial 14 13 information is provided to or discussed by the board if the 14 14 board determines that disclosure of such information could 14 15 result in a loss to the system or to the provider of the 14 16 information. 14 17 Sec. 13. NEW SECTION. 97B.8B BENEFITS ADVISORY 14 18 COMMITTEE. 14 19 1. COMMITTEE ESTABLISHED. A benefits advisory committee 14 20 shall be established whose duty is to consider and make 14 21 recommendations to the division and the general assembly 14 22 concerning the provision of benefits to members of the system. 14 23 2. MEMBERSHIP. The benefits advisory committee shall be 14 24 comprised of representatives of constituent groups concerned 14 25 with the system, and shall include representatives of 14 26 employers, active members, and retired members. In addition, 14 27 the director of the department of personnel and a member of 14 28 the public selected by the voting members of the committee 14 29 shall serve as members of the committee. The division shall 14 30 adopt rules under chapter 17A to provide for the selection of 14 31 members to the committee and the election of the voting 14 32 members of the committee. 14 33 3. VOTING MEMBERS. Of the members who comprise the 14 34 committee, nine members shall be voting members. Except as 14 35 otherwise provided by this subsection, the voting members 15 1 shall be elected by the members of the committee from the 15 2 membership of the committee. Of the nine voting members of 15 3 the committee, four shall represent covered employers, and 15 4 four shall represent the members of the system. Of the four 15 5 voting members representing employers, one shall be the 15 6 director of the department of personnel, one shall be a member 15 7 of a constituent group that represents cities, one shall be a 15 8 member of a constituent group that represents counties, and 15 9 one shall be a member of a constituent group that represents 15 10 local school districts. Of the four voting members who 15 11 represent members of the system, one shall be a member of a 15 12 constituent group that represents teachers. The ninth voting 15 13 member of the committee shall be a citizen who is not a member 15 14 of the system and who is elected by the other voting members 15 15 of the committee. 15 16 4. DUTIES. 15 17 a. At least every two years, the benefits advisory 15 18 committee shall review the benefits and services provided to 15 19 members under this chapter, and the voting members of the 15 20 committee shall make recommendations to the division and the 15 21 general assembly concerning the benefits, benefits policy, and 15 22 benefit goals, provided under this chapter. 15 23 b. Upon the expiration of the term of office of or a 15 24 vacancy concerning one of the three members of the investment 15 25 board described in section 97B.8A, subsection 4, paragraph 15 26 "a", subparagraph (2), the voting members of the committee 15 27 shall submit to the governor the names of at least two 15 28 nominees who meet the requirements specified in that 15 29 subparagraph. The governor shall appoint the member from the 15 30 list submitted by the committee. 15 31 5. TERMS OF VOTING MEMBERS. Except for the director of 15 32 the department of personnel and as otherwise provided in the 15 33 rules for the initial selection of voting members of the 15 34 committee, each member selected to be a voting member shall 15 35 serve as a voting member for three years. Terms for voting 16 1 members begin on May 1 in the year of selection and expire on 16 2 April 30 in the year of expiration. Vacancies shall be filled 16 3 in the same manner as the original selections. A vacancy 16 4 shall be filled for the unexpired term. 16 5 6. EXPENSES. The members who are not active members of 16 6 the system shall be paid their actual expenses incurred in the 16 7 performance of their duties and shall receive a per diem as 16 8 specified in section 7E.6 for each day of service not 16 9 exceeding forty days per year. The members who are active 16 10 members of the system and the director of the department of 16 11 personnel shall be paid their actual expenses incurred in the 16 12 performance of their duties as members of the committee and 16 13 the performance of their duties as members of the committee 16 14 shall not affect their salaries, vacations, or leaves of 16 15 absence for sickness or injury. 16 16 Sec. 14. Section 97B.20A, Code 2001, is amended to read as 16 17 follows: 16 18 97B.20A APPEAL PROCEDURE. 16 19 Members and third-party payees may appeal any decision made 16 20 by thedepartmentdivision that affects their rights under 16 21 this chapter. The appeal shall be filed with thedepartment16 22 division within thirty days after the notification of the 16 23 decision was mailed to the party's last known mailing address, 16 24 or the decision of thedepartmentdivision is final. If the 16 25 party appeals the decision of thedepartmentdivision, the 16 26departmentdivision shall conduct an internal review of the 16 27 decision and the chiefbenefitsexecutive officer shall notify 16 28 the individual who has filed the appeal in writing of the 16 29department'sdivision's decision. The individual who has 16 30 filed the appeal may file an appeal of thedepartment's16 31 division's final decision with thedepartmentdivision under 16 32 chapter 17A by notifying thedepartmentdivision of the appeal 16 33 in writing within thirty days after the notification of its 16 34 final decision was mailed to the party's last known mailing 16 35 address. Once notified, thedepartmentdivision shall forward 17 1 the appeal to the department of inspections and appeals. 17 2 Sec. 15. Section 97B.25, Code 2001, is amended to read as 17 3 follows: 17 4 97B.25 APPLICATIONS FOR BENEFITS. 17 5 A representative designated by the chiefbenefitsexecutive 17 6 officer and referred to in this chapter as a retirement 17 7 benefits officer shall promptly examine applications for 17 8 retirement benefits and on the basis of facts found shall 17 9 determine whether or not the claim is valid. If the claim is 17 10 valid, the retirement benefits officer shall send a 17 11 notification to the member stating the option the member has 17 12 selected pursuant to section 97B.51, the month with respect to 17 13 which benefits shall commence, and the monthly benefit amount 17 14 payable. If the claim is invalid, the retirement benefits 17 15 officer shall promptly notify the applicant and any other 17 16 interested party of the decision and the reasons. A 17 17 retirement application shall not be amended or revoked by the 17 18 member once the first retirement allowance is paid. A 17 19 member's death during the first month of entitlement shall not 17 20 invalidate an approved application. 17 21 Sec. 16. Section 257B.20, subsection 4, Code 2001, is 17 22 amended to read as follows: 17 23 4. In any investments authorized for the Iowa public 17 24 employees' retirement system in section97B.7, subsection 2,17 25paragraph "b"97B.7A, except that investment in common stocks 17 26 shall not be permitted. 17 27 Sec. 17. Section 411.7, subsection 2, Code 2001, is 17 28 amended to read as follows: 17 29 2. The secretary of the board of trustees shall invest, in 17 30 accordance with the investment policy established by the board 17 31 of trustees, the portion of the fund established in section 17 32 411.8 which in the judgment of the board is not needed for 17 33 current payment of benefits under this chapter in investments 17 34 authorized in section97B.7, subsection 2, paragraph "b"17 35 97B.7A, for moneys in the Iowa public employees' retirement 18 1 fund. 18 2 Sec. 18. Section 602.9111, subsection 1, Code 2001, is 18 3 amended to read as follows: 18 4 1. So much of the judicial retirement fund as may not be 18 5 necessary to be kept on hand for the making of disbursements 18 6 under this article shall be invested by the treasurer of state 18 7 in any investments authorized for the Iowa public employees' 18 8 retirement system in section97B.7, subsection 2, paragraph18 9"b"97B.7A, and the earnings therefrom shall be credited to 18 10 the fund. The treasurer of state may execute contracts and 18 11 agreements with investment advisors, consultants, and 18 12 investment management and benefit consultant firms in the 18 13 administration of the judicial retirement fund. 18 14 Sec. 19. INVESTMENT BOARD TRANSITION. 18 15 1. Notwithstanding provisions of section 97B.8A, as 18 16 enacted in this Act, to the contrary, the new investment board 18 17 of the Iowa public employees' retirement system shall, on 18 18 January 1, 2002, consist of the following members, who shall 18 19 serve the following terms: 18 20 a. The members of the investment board established under 18 21 section 97B.8, Code 2001, who are an active member who is an 18 22 employee of a school district, area education agency, or 18 23 merged area; an active member who is not an employee of a 18 24 school district, area education agency, or merged area; and a 18 25 retired member, shall cease membership on the investment board 18 26 and commence membership on the new investment board 18 27 established under section 97B.8A on January 1, 2002. The 18 28 terms of these members on the investment board established 18 29 under section 97B.8A shall expire on the same date as their 18 30 terms would have expired on the investment board in accordance 18 31 with section 97B.8, Code 2001. 18 32 b. The members of the investment board established under 18 33 section 97B.8, Code 2001, who are an executive of a domestic 18 34 life insurance company, an executive of a state or national 18 35 bank, and an executive of an industrial corporation located 19 1 within the state of Iowa, shall cease membership on the 19 2 investment board and commence membership on the new investment 19 3 board established under section 97B.8A on January 1, 2002. 19 4 The terms of these members on the new investment board 19 5 established under section 97B.8A shall expire on the same date 19 6 as their terms would have expired on the investment board in 19 7 accordance with section 97B.8, Code 2001. Upon expiration of 19 8 each of these member's term of office, the governor shall 19 9 appoint a member to the board consistent with the requirements 19 10 of section 97B.8A, subsection 4, paragraph "a", subparagraph 19 11 (1). 19 12 c. The members of the investment board established under 19 13 section 97B.8, Code 2001, who are legislative members shall 19 14 cease membership on the investment board and commence 19 15 membership on the new investment board established under 19 16 section 97B.8A on January 1, 2002. The terms of these members 19 17 shall expire at the pleasure of the appointing authorities as 19 18 provided in section 97B.8A, as enacted in this Act. 19 19 d. The director of the department of personnel shall cease 19 20 membership on the investment board established under section 19 21 97B.8, Code 2001, on January 1, 2002. The treasurer of state 19 22 shall commence membership on the new investment board 19 23 established under section 97B.8A, and shall serve on the board 19 24 as provided in section 97B.8A, as enacted in this Act. 19 25 2. Initial appointments by the governor under this section 19 26 are subject to confirmation by the senate. If a vacancy 19 27 occurs as to a member of the investment board established 19 28 under section 97B.8A who is appointed by the governor prior to 19 29 the expiration of a term as provided in this section, the 19 30 governor shall appoint a member to serve the remainder of the 19 31 term so that the membership requirements of section 97B.8A, as 19 32 enacted in this Act, are fulfilled, and the appointment shall 19 33 be subject to confirmation by the senate. Upon the expiration 19 34 of a term established in this section, a member shall be 19 35 appointed in the manner and for a term of service as specified 20 1 in section 97B.8A, as enacted in this Act. Except as 20 2 otherwise provided in this section, the investment board 20 3 established under this section shall be subject to the 20 4 requirements of section 97B.8A, as enacted in this Act. 20 5 Sec. 20. BENEFITS ADVISORY COMMITTEE TRANSITION. 20 6 1. Effective July 1, 2001, and notwithstanding provisions 20 7 of section 97B.8B, as enacted in this Act, to the contrary, a 20 8 transition benefits advisory committee shall be created and 20 9 shall consist of the following voting members: 20 10 a. A member representing the Iowa state education 20 11 association. 20 12 b. A member representing the Iowa association of community 20 13 college trustees. 20 14 c. A member representing the school administrators of 20 15 Iowa. 20 16 d. A member representing the Iowa association of school 20 17 boards. 20 18 e. A member representing the retired school personnel 20 19 association. 20 20 f. A member representing the state police officers 20 21 council. 20 22 g. The director of the department of personnel. 20 23 h. A member representing the IPERS' improvement 20 24 association. 20 25 i. A member representing the American federation of state, 20 26 county, and municipal employees. 20 27 j. A member representing the Iowa state sheriffs' and 20 28 deputies' association. 20 29 k. A member representing the Iowa state association of 20 30 counties. 20 31 l. A member representing the Iowa league of cities. 20 32 m. A member representing the Iowa association of chiefs of 20 33 police and peace officers. 20 34 n. A member of the public with substantial pension 20 35 benefits experience as selected by the chief benefits officer 21 1 of the Iowa public employees' retirement system. 21 2 o. A member representing the department of management. 21 3 2. By January 1, 2002, the transition benefits advisory 21 4 committee shall issue a report to the Iowa public employees' 21 5 retirement system division concerning the rules to be adopted 21 6 by the division governing the benefits advisory committee as 21 7 provided in section 97B.8B, as enacted in this Act. The rules 21 8 should include provisions governing the selection of members 21 9 of the committee, the selection of voting members of the 21 10 committee, and any other provisions deemed necessary for 21 11 establishing the benefits advisory committee consistent with 21 12 the requirements of section 97B.8B. 21 13 3. The transition benefits advisory committee shall be 21 14 dissolved by January 31, 2002. 21 15 Sec. 21. AMENDMENTS CHANGING TERMINOLOGY – DIRECTIVES TO 21 16 CODE EDITOR. Except as otherwise provided in this Act, the 21 17 Iowa Code editor is directed to strike the words "department", 21 18 "department of personnel", and "department's" and insert the 21 19 words "division" and "division's" wherever the word 21 20 "department", "department of personnel", or "department's" 21 21 appears in chapter 97B of the Iowa Code and the reference to 21 22 "department", "department of personnel", or "department's" 21 23 means the department of personnel unless a contrary intent is 21 24 clearly evident. 21 25 Sec. 22. ADMINISTRATIVE RULES. To the extent not 21 26 inconsistent with this Act, the administrative rules 21 27 promulgated and adopted by the department of personnel 21 28 concerning the Iowa public employees' retirement system prior 21 29 to January 1, 2002, shall be the rules of the Iowa public 21 30 employees' retirement system division and shall remain in 21 31 effect on and after January 1, 2002, subject to the authority 21 32 of the division to modify or change the rules pursuant to Iowa 21 33 Code chapter 17A. 21 34 Sec. 23. Sections 97B.5, 97B.6, 97B.8, 97B.57, 97B.59, 21 35 97B.60, 97B.61, Code 2001, are repealed. 22 1 Sec. 24. EFFECTIVE DATE. This Act takes effect January 1, 22 2 2002. However, section 21 of this Act, establishing a 22 3 benefits advisory committee transition, takes effect July 1, 22 4 2001. 22 5 EXPLANATION 22 6 This bill modifies the governance and structure of the Iowa 22 7 public employees' retirement system (IPERS). Under current 22 8 law, IPERS is administered by the department of personnel 22 9 through the chief benefits officer and the chief investment 22 10 officer, both of whom are selected by the department. The 22 11 treasurer of state is the trustee of the IPERS retirement 22 12 fund, and the IPERS investment board is statutorily required 22 13 to advise the department in the formulation of the investment 22 14 policy for the fund. 22 15 Under the bill, IPERS remains within the department of 22 16 personnel. However, the management of IPERS is made the 22 17 direct responsibility of the newly created IPERS division 22 18 within the department, and all powers and duties currently 22 19 given to the department of personnel to manage and operate 22 20 IPERS are given to the division. A chief executive officer, 22 21 who shall manage the division, shall be appointed by the 22 22 governor and be subject to confirmation by the senate. The 22 23 chief executive officer will be appointed for a six year term 22 24 and can only be removed from office by the governor for 22 25 malfeasance or any other cause that renders the chief 22 26 executive officer ineligible, incapable, or unfit to discharge 22 27 the duties of the office. The bill requires that the chief 22 28 executive officer have demonstrated knowledge of all aspects 22 29 of public pension fund administration to be appointed and be 22 30 nonpartisan. The bill also requires the chief executive 22 31 officer to employ a chief investment officer who shall be 22 32 selected following consultation with the investment board and 22 33 a chief benefits officer who shall be selected following 22 34 consultation with the benefits advisory committee. 22 35 The current IPERS investment board is modified under the 23 1 bill in both structure and duties. 23 2 Under the bill, the investment board is made the trustee of 23 3 the IPERS retirement fund. The board is given the explicit 23 4 authority, in consultation with the chief investment officer 23 5 and other personnel of the division, to develop the investment 23 6 policy and goal statement that will direct the investment 23 7 activities concerning the fund. The actual investment of the 23 8 fund remains the responsibility of the division subject to the 23 9 investment policy established by the board. In addition, the 23 10 investment board is given the authority to hire and fire the 23 11 actuary to be used as the technical advisor of the system. 23 12 The board is also given the responsibility of adopting the 23 13 actuarial assumptions to be used by the actuary in determining 23 14 the condition of the retirement fund. The board is required 23 15 to consult with the chief executive officer, the actuary, and 23 16 other relevant division personnel in the development of the 23 17 actuarial assumptions. 23 18 The membership of the board is also modified under the 23 19 bill. Under the bill, the director of the department of 23 20 personnel is replaced with the treasurer of state, and the 23 21 treasurer is made a voting member of the board. In addition, 23 22 the three current members who must be an executive of a 23 23 domestic life insurance company, an executive of a state or 23 24 national bank operating within the state of Iowa, and an 23 25 executive of an industrial corporation located within the 23 26 state of Iowa, are replaced with three members who must have 23 27 substantial institutional investment experience or financial 23 28 experience. In addition, while the three current members of 23 29 the board who are members of the system remain, the manner of 23 30 their selection is changed. The bill provides that the 23 31 governor shall appoint these members from a slate of at least 23 32 two nominees submitted by the newly created benefits advisory 23 33 committee. The bill also establishes a mechanism for 23 34 transitioning from the current board membership to the new 23 35 board membership. 24 1 The bill also establishes a new benefits advisory 24 2 committee. The duties of the committee are to submit nominees 24 3 to the governor to fill the positions on the investment board 24 4 for members of the system and to review and make 24 5 recommendations to the division and the general assembly 24 6 concerning the provision of benefits to members of the system. 24 7 The bill provides that the members of this board shall be 24 8 comprised of representatives of constituent groups concerned 24 9 with the system, including representatives of employers, 24 10 active members, and retired members. The election of these 24 11 members shall be done pursuant to rules adopted by the 24 12 division. The director of the department of personnel and a 24 13 person to be selected by the voting members of the committee 24 14 are also specifically included as voting members of the 24 15 committee. The bill provides that of the members of the 24 16 committee, nine shall be voting members who shall serve as 24 17 voting members for three-year terms. Of the nine voting 24 18 members, four shall represent employers, and four shall 24 19 represent employees. The ninth member shall be a member of 24 20 the public and shall be chosen by the other eight voting 24 21 members of the committee. Of the employer representatives, 24 22 one shall be the director of the department of personnel, one 24 23 shall represent a constituent group that represents the cities 24 24 or counties, and one shall represent local school districts. 24 25 Of the employee representatives, one shall be from a group 24 26 that represents teachers. Expenses for members of the 24 27 committee shall be paid in the same manner and amount as they 24 28 are paid for the current members of the investment board. The 24 29 bill also provides for the establishment of a transition 24 30 benefits advisory committee on July 1, 2001. The bill 24 31 establishes the exact membership of this transition committee 24 32 and provides that it shall be dissolved by January 31, 2002. 24 33 The transition committee is given the task of making 24 34 recommendations in a report to the IPERS division no later 24 35 than January 1, 2002, concerning the rules to adopt in 25 1 governing the new benefits advisory committee. The proposed 25 2 rules in the report shall include, at a minimum, provisions 25 3 governing the selection of members to the committee and the 25 4 selection of voting members of the committee. 25 5 The bill provides that the administrative rules adopted by 25 6 the department of personnel concerning IPERS shall, consistent 25 7 with this bill, remain in effect after the effective date of 25 8 this bill. 25 9 Except for the section of the bill concerning the benefits 25 10 advisory committee transition which takes effect July 1, 2001, 25 11 the bill takes effect January 1, 2002. 25 12 LSB 1946SS 79 25 13 ec/cf/24.1
Text: SF00395 Text: SF00397 Text: SF00300 - SF00399 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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