Senate Study Bill 1179 - IntroducedA Bill ForAn Act 1relating to bonding requirements for certain public
2entities and public fund investment requirements.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  Section 12.8, subsection 1, Code 2023, is amended
2to read as follows:
   31.  The treasurer of state shall invest or deposit, subject
4to chapters 12F, 12H, and 12J, and 12K and as provided by law,
5any of the public funds not currently needed for operating
6expenses and shall do so upon receipt of monthly notice from
7the director of the department of administrative services of
8the amount not so needed. In the event of loss on redemption
9or sale of securities invested as prescribed by law, and if
10the transaction is reported to the executive council, neither
11the treasurer nor director of the department of administrative
12services is personally liable but the loss shall be charged
13against the funds which would have received the profits or
14interest of the investment and there is appropriated from the
15funds the amount so required.
16   Sec. 2.  NEW SECTION.  12.30A  Bonding requirements.
   171.  As used in this section, unless the context otherwise
18requires:
   19a.  “Issuing authority” means an authority as defined in
20section 12.30, the state board of regents, and the Iowa finance
21authority.
   22b.  “Obligations” means notes, bonds, including refunding
23bonds, and other evidences of indebtedness of an issuing
24authority.
   252.  The documents or instruments necessary to effectuate
26issuance of an obligation by an issuing authority shall not
27include any of the following provisions:
   28a.  A provision that would require or forbid the state of
29the issuing authority to enact, adopt, execute, or implement
30any policy, whether by law, rule, order, or other action
31except with respect to a policy directly affecting the
32creditworthiness of the state or issuing authority.
   33b.  A provision obliging, promoting, forbidding, or impeding
34any action by the issuing authority except where such action
35would have a direct and material effect on the financial risk
-1-1to a lender of a loan to the issuing authority, or the return
2to the lender on any such loan.
3   Sec. 3.  NEW SECTION.  12K.1  Definition.
   4As used in this chapter, unless the context otherwise
5requires, “public fund” means the treasurer of state, the state
6board of regents, the public safety peace officers’ retirement
7system created in chapter 97A, the Iowa public employees’
8retirement system created in chapter 97B, the statewide fire
9and police retirement system created in chapter 411, or the
10judicial retirement system created in chapter 602.
11   Sec. 4.  NEW SECTION.  12K.2  Public fund investment
12requirements.
   131.  A public fund shall exercise any voting rights of
14securities held in any separate account, or in any collective,
15common, or pooled fund, of the public fund. Each public fund
16casting such a vote shall file a written report, quarterly,
17with the governor and the treasurer of state stating, for all
18votes cast in the preceding quarter, the substance of the
19question voted on, the vote cast, the date of the vote, and
20number of shares voted.
   212.  An investment manager for a public fund shall not
22undertake any transaction on behalf of such public fund for
23any reason other than to maximize investment return, unless
24the investment manager provides written notice of the proposed
25action, including the reasons therefor, to the public fund and
26has received written authorization from the public fund for
27the proposed transaction. This subsection does not apply to
28a transaction taken in conformity with the requirements of
29chapters 12F, 12H, or 12J.
30   Sec. 5.  Section 35A.13, subsection 4, paragraph a, Code
312023, is amended to read as follows:
   32a.  Notwithstanding subsection 5, moneys in the fund, except
33so much of the fund as may be necessary to be kept on hand
34for the making of disbursements under this section, shall
35be invested by the treasurer of state, in consultation with
-2-1the commission and the public retirement systems committee
2established by section 97D.4, in any investments authorized for
3the Iowa public employees’ retirement system in section 97B.7A,
4including common stock, and subject to the requirements of
5chapters 12F, 12H, and 12J, and 12K, and the earnings therefrom
6shall be credited to the fund. The treasurer of state may
7execute contracts and agreements with investment advisors,
8consultants, and investment management and benefit consultant
9firms in the administration of investments of moneys in the
10fund.
11   Sec. 6.  Section 97A.7, subsection 1, Code 2023, is amended
12to read as follows:
   131.  The board of trustees shall be the trustees of the
14retirement fund created by this chapter as provided in section
1597A.8 and shall have full power to invest and reinvest funds
16subject to the terms, conditions, limitations, and restrictions
17imposed by subsection 2 and chapters 12F, 12H, and 12J, and
1812K
and subject to like terms, conditions, limitations, and
19restrictions said trustees shall have full power to hold,
20purchase, sell, assign, transfer, or dispose of any of the
21securities and investments of the retirement fund which have
22been invested, as well as of the proceeds of said investments
23and any moneys belonging to the retirement fund. The board
24of trustees may authorize the treasurer of state to exercise
25any of the duties of this section. When so authorized the
26treasurer of state shall report any transactions to the board
27of trustees at its next monthly meeting.
28   Sec. 7.  Section 97B.4, subsection 5, Code 2023, is amended
29to read as follows:
   305.  Investments.  The system, through the chief investment
31officer, shall invest, subject to chapters 12F, 12H, and 12J,
32and 12K
and in accordance with the investment policy and
33goal statement established by the board, the portion of the
34retirement fund which, in the judgment of the system, is not
35needed for current payment of benefits under this chapter
-3-1subject to the requirements of section 97B.7A.
2   Sec. 8.  Section 262.14, unnumbered paragraph 1, Code 2023,
3is amended to read as follows:
   4The board may invest funds belonging to the institutions,
5subject to chapters 12F, 12H, and 12J, and 12K and the
6following regulations:
7   Sec. 9.  Section 411.7, subsection 1, Code 2023, is amended
8to read as follows:
   91.  The board of trustees is the trustee of the fire
10and police retirement fund created in section 411.8 and
11shall annually establish an investment policy to govern the
12investment and reinvestment of the moneys in the fund, subject
13to the terms, conditions, limitations, and restrictions
14imposed by subsection 2 and chapters 12F, 12H, and 12J, and
1512K
. Subject to like terms, conditions, limitations, and
16restrictions the system has full power to hold, purchase, sell,
17assign, transfer, or dispose of any of the securities and
18investments in which the fund has been invested, as well as of
19the proceeds of the investments and any moneys belonging to the
20fund.
21   Sec. 10.  Section 602.9111, subsection 1, Code 2023, is
22amended to read as follows:
   231.  So much of the judicial retirement fund as may not be
24necessary to be kept on hand for the making of disbursements
25under this article shall be invested by the treasurer of
26state in any investments authorized for the Iowa public
27employees’ retirement system in section 97B.7A and subject to
28the requirements of chapters 12F, 12H, and 12J, and 12K, and
29the earnings therefrom shall be credited to the fund. The
30treasurer of state may execute contracts and agreements with
31investment advisors, consultants, and investment management and
32benefit consultant firms in the administration of the judicial
33retirement fund.
34EXPLANATION
35The inclusion of this explanation does not constitute agreement with
-4-1the explanation’s substance by the members of the general assembly.
   2This bill concerns bonding requirements for certain public
3entities and public fund investment requirements.
   4New Code section 12.30A requires an authority, as defined in
5Code section 12.30, the state board of regents, and the Iowa
6finance authority, to not include in any document or instrument
7necessary to effectuate issuance of a debt obligation by
8the issuer any provision requiring any action by the state
9or issuing entity except an action directly affecting the
10creditworthiness of the state or authority or an action that
11would have a direct and material effect on the financial risk
12or return to a lender.
   13The bill also creates new Code chapter 12K, which imposes
14certain investment restrictions on public funds, defined as
15the treasurer of state, the state board of regents, the Iowa
16public employees’ retirement system (IPERS), the public safety
17peace officers’ retirement system, the statewide fire and
18police retirement system, and the judicial retirement system.
19The bill requires public funds to exercise any voting rights
20of securities held by the public fund and to file a written
21report, quarterly, with the governor and the treasurer of
22state concerning each vote taken, to include the substance of
23the question voted on, the vote cast, the date of the vote,
24and number of shares voted. The bill also provides that an
25investment manager for a public fund shall not undertake any
26transaction on behalf of such public fund for any reason other
27than to maximize investment return, unless the investment
28manager provides written notice of the proposed transaction and
29receives written authorization from the public fund for the
30proposed transaction. The bill provides that this restriction
31does not apply to transactions taken in conformity with the
32divestment and other requirements of Code chapter 12F, 12H, or
3312J. The bill makes conforming changes to Code sections 12.8,
3435A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111.
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