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House File 653 - IntroducedA Bill ForAn Act 1concerning public contracts by public funds with
2companies that boycott certain companies or that engage in
3nonpecuniary social investment policies.
4BE 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. 12K.1 Legislative findings and intent.
17The general assembly intends to ensure that state funds and
18funds administered by the state, including public employee
19retirement funds, are protected from political influence
20detrimental to the financial health of the state and its
21citizens and promote the general assembly’s goal of protecting
22free enterprise.
23 Sec. 3. NEW SECTION. 12K.2 Definitions.
24As used in this chapter, unless the context otherwise
25requires:
261. “Boycott of certain companies” means, except as otherwise
27provided in chapters 12F, 12H, and 12J or without a reasonable
28business purpose, refusal to invest in a company, termination
29of business activities with a company, or another action that
30is intended to penalize, inflict economic harm on, or limit
31commercial relations with a company because the company does
32any of the following:
33a. Engages in, or does business with a company that engages
34in, the exploration, production, utilization, transportation,
35or sale of fossil fuel-based energy, timber, mining, or
-1-1production agriculture.
2b. Engages in, or does business with a company that engages
3in, the manufacturing, distribution, sale, import, export, or
4lawful use of firearms, firearm parts, firearm accessories, or
5ammunition.
62. “Company” means any business or business entity, bank,
7national banking association, nonbank financial institution,
8financial services company, investment company, bank and trust
9company, trust company, savings and loan association, building
10and loan association, mutual savings bank, credit union, or
11savings bank, including a wholly owned subsidiary, majority-
12owned subsidiary, parent company, or affiliate of such business
13or business entity, that exists for the purpose of making a
14profit.
153. “Nonpecuniary social investment” means, except as
16otherwise provided in this chapter and chapters 12F, 12H,
17and 12J, investment or commitment of public funds to further
18environmental, social, governance, political, or ideological
19interests and for the purpose of obtaining an effect other than
20a maximized return to the public fund without a reasonable
21business purpose.
224. “Public fund” means the treasurer of state, the state
23board of regents, the public safety peace officers’ retirement
24system created in chapter 97A, the Iowa public employees’
25retirement system created in chapter 97B, the statewide fire
26and police retirement system created in chapter 411, or the
27judicial retirement system created in chapter 602.
285. “Reasonable business purpose” means includes any purpose
29directly related to any of the following:
30a. Promoting the financial success or stability of a
31company.
32b. Mitigating risk to a company.
33c. Complying with legal or regulatory requirements.
34d. Limiting liability of a company.
356. “Scrutinized company” means any company that engages in
-2-1nonpecuniary social investment on behalf of a public fund or a
2boycott of certain companies on behalf of a public fund.
3 Sec. 4. NEW SECTION. 12K.3 Public funds — contract and
4investment requirements.
51. A public fund shall not enter into a contract with a
6company to provide investment or management of securities
7services to the public fund so long as such company engages
8in nonpecuniary social investment or a boycott of certain
9companies on behalf of the public fund.
102. In accordance with sound investment criteria and
11consistent with fiduciary obligations, a public fund shall
12terminate a contract to provide investment or management of
13securities services with a company that begins to engage
14in nonpecuniary social investment or a boycott of certain
15companies on behalf of the public fund. The contract will be
16terminated within six months of a written notice to terminate
17sent to the company.
183. This section does not apply to a public fund acting on
19behalf of a participant directing investments in a retirement
20account in which the participant has the authority to make such
21a decision independently from the public fund.
22 Sec. 5. NEW SECTION. 12K.4 Annual report.
23On October 1, 2024, and each October 1 thereafter, each
24public fund shall make available to the public, and file with
25the general assembly, an annual report covering the prior
26fiscal year that includes all contracts terminated as provided
27in section 12K.3 during the fiscal year.
28 Sec. 6. NEW SECTION. 12K.5 Public funds — legal
29obligations.
301. With respect to actions taken in compliance with this
31chapter, including all good-faith determinations regarding
32companies as required by this chapter, the public fund shall
33be immune from any liability and exempt from any conflicting
34statutory or common law obligations, including any such
35obligations in respect to choice of asset managers, investment
-3-1funds, or investments for the public fund’s securities
2portfolios.
32. This chapter shall not limit the ability of a public fund
4to terminate the contract of an investment manager or other
5vendor at any time and for any reason in the exercise of the
6public fund’s fiduciary duties.
7 Sec. 7. Section 35A.13, subsection 4, paragraph a, Code
82023, is amended to read as follows:
9a. Notwithstanding subsection 5, moneys in the fund, except
10so much of the fund as may be necessary to be kept on hand
11for the making of disbursements under this section, shall
12be invested by the treasurer of state, in consultation with
13the commission and the public retirement systems committee
14established by section 97D.4, in any investments authorized for
15the Iowa public employees’ retirement system in section 97B.7A,
16including common stock, and subject to the requirements of
17chapters 12F, 12H, and 12J, and 12K, and the earnings therefrom
18shall be credited to the fund. The treasurer of state may
19execute contracts and agreements with investment advisors,
20consultants, and investment management and benefit consultant
21firms in the administration of investments of moneys in the
22fund.
23 Sec. 8. Section 97A.7, subsection 1, Code 2023, is amended
24to read as follows:
251. The board of trustees shall be the trustees of the
26retirement fund created by this chapter as provided in section
2797A.8 and shall have full power to invest and reinvest funds
28subject to the terms, conditions, limitations, and restrictions
29imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3012K and subject to like terms, conditions, limitations, and
31restrictions said trustees shall have full power to hold,
32purchase, sell, assign, transfer, or dispose of any of the
33securities and investments of the retirement fund which have
34been invested, as well as of the proceeds of said investments
35and any moneys belonging to the retirement fund. The board
-4-1of trustees may authorize the treasurer of state to exercise
2any of the duties of this section. When so authorized the
3treasurer of state shall report any transactions to the board
4of trustees at its next monthly meeting.
5 Sec. 9. Section 97B.4, subsection 5, Code 2023, is amended
6to read as follows:
75. Investments. The system, through the chief investment
8officer, shall invest, subject to chapters 12F, 12H, and 12J,
9and 12K and in accordance with the investment policy and
10goal statement established by the board, the portion of the
11retirement fund which, in the judgment of the system, is not
12needed for current payment of benefits under this chapter
13subject to the requirements of section 97B.7A.
14 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2023,
15is amended to read as follows:
16The board may invest funds belonging to the institutions,
17subject to chapters 12F, 12H, and 12J, and 12K and the
18following regulations:
19 Sec. 11. Section 411.7, subsection 1, Code 2023, is amended
20to read as follows:
211. The board of trustees is the trustee of the fire
22and police retirement fund created in section 411.8 and
23shall annually establish an investment policy to govern the
24investment and reinvestment of the moneys in the fund, subject
25to the terms, conditions, limitations, and restrictions
26imposed by subsection 2 and chapters 12F, 12H, and 12J, and
2712K. Subject to like terms, conditions, limitations, and
28restrictions the system has full power to hold, purchase, sell,
29assign, transfer, or dispose of any of the securities and
30investments in which the fund has been invested, as well as of
31the proceeds of the investments and any moneys belonging to the
32fund.
33 Sec. 12. Section 602.9111, subsection 1, Code 2023, is
34amended to read as follows:
351. So much of the judicial retirement fund as may not be
-5-1necessary to be kept on hand for the making of disbursements
2under this article shall be invested by the treasurer of
3state in any investments authorized for the Iowa public
4employees’ retirement system in section 97B.7A and subject to
5the requirements of chapters 12F, 12H, and 12J, and 12K, and
6the earnings therefrom shall be credited to the fund. The
7treasurer of state may execute contracts and agreements with
8investment advisors, consultants, and investment management and
9benefit consultant firms in the administration of the judicial
10retirement fund.
11EXPLANATION
12The inclusion of this explanation does not constitute agreement with
13the explanation’s substance by the members of the general assembly.
14This bill creates new Code chapter 12K, which restricts
15public funds, defined as the treasurer of state, the state
16board of regents, the Iowa public employees’ retirement
17system (IPERS), the public safety peace officers’ retirement
18system, the statewide fire and police retirement system, and
19the judicial retirement system from generally entering into a
20contract with certain companies engaged in nonpecuniary social
21investment or a boycott of certain companies.
22The bill defines “boycott of certain companies” as, without
23a reasonable business purpose or as otherwise required under
24Code chapters 12F, 12H, and 12J, to take any adverse action to
25penalize or limit business opportunities for companies engaging
26or doing business with fossil fuel-based energy, timber,
27mining, production agriculture, firearms, firearm parts,
28firearm accessories, or ammunition companies. “Nonpecuniary
29social investment” is defined to mean, except as otherwise
30provided in new Code chapter 12K in the bill and Code chapters
3112F, 12H, and 12J, investment or commitment of public funds
32to further environmental, social, governance, political, or
33ideological interests without a reasonable business purpose.
34The bill also defines “scrutinized company” as any company that
35engages in nonpecuniary social investment on behalf of a public
-6-1entity or a boycott of certain companies on behalf of a public
2entity.
3New Code section 12K.3 requires that a public fund shall not
4enter into a contract with a company to provide investment or
5management of securities services to the public fund so long
6as such company engages in nonpecuniary social investment or a
7boycott of certain companies on behalf of the public fund. If
8the public fund has a contract for investment services with a
9company subject to termination, the public fund shall proceed
10to terminate the contract with that company in six months,
11as applicable, so long as the company remains a scrutinized
12company. The bill provides that this requirement on public
13funds does not apply to a public fund acting on behalf of a
14participant directing investments in a retirement account.
15The bill further requires each public fund to prepare
16and make available to the public, and file with the general
17assembly, an annual report, beginning October 1, 2024,
18concerning actions taken by the public fund relative to the
19requirements of new Code chapter 12K in the previous fiscal
20year.
21The bill further provides that with respect to actions
22taken in compliance with the bill, including all good-faith
23determinations regarding companies as required, the public
24fund shall be immune from any liability and exempt from any
25conflicting statutory or common law obligations, including
26any such obligations in respect to choice of asset managers,
27investment funds, or investments for the public fund. In
28addition, the bill provides that the requirements of the bill
29shall not limit the ability of a public fund to terminate
30any contract of an investment manager or other vendor in the
31exercise of the public fund’s fiduciary duties.
32The bill makes conforming changes to Code sections 12.8,
3335A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111.
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2companies that boycott certain companies or that engage in
3nonpecuniary social investment policies.
4BE 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. 12K.1 Legislative findings and intent.
17The general assembly intends to ensure that state funds and
18funds administered by the state, including public employee
19retirement funds, are protected from political influence
20detrimental to the financial health of the state and its
21citizens and promote the general assembly’s goal of protecting
22free enterprise.
23 Sec. 3. NEW SECTION. 12K.2 Definitions.
24As used in this chapter, unless the context otherwise
25requires:
261. “Boycott of certain companies” means, except as otherwise
27provided in chapters 12F, 12H, and 12J or without a reasonable
28business purpose, refusal to invest in a company, termination
29of business activities with a company, or another action that
30is intended to penalize, inflict economic harm on, or limit
31commercial relations with a company because the company does
32any of the following:
33a. Engages in, or does business with a company that engages
34in, the exploration, production, utilization, transportation,
35or sale of fossil fuel-based energy, timber, mining, or
-1-1production agriculture.
2b. Engages in, or does business with a company that engages
3in, the manufacturing, distribution, sale, import, export, or
4lawful use of firearms, firearm parts, firearm accessories, or
5ammunition.
62. “Company” means any business or business entity, bank,
7national banking association, nonbank financial institution,
8financial services company, investment company, bank and trust
9company, trust company, savings and loan association, building
10and loan association, mutual savings bank, credit union, or
11savings bank, including a wholly owned subsidiary, majority-
12owned subsidiary, parent company, or affiliate of such business
13or business entity, that exists for the purpose of making a
14profit.
153. “Nonpecuniary social investment” means, except as
16otherwise provided in this chapter and chapters 12F, 12H,
17and 12J, investment or commitment of public funds to further
18environmental, social, governance, political, or ideological
19interests and for the purpose of obtaining an effect other than
20a maximized return to the public fund without a reasonable
21business purpose.
224. “Public fund” means the treasurer of state, the state
23board of regents, the public safety peace officers’ retirement
24system created in chapter 97A, the Iowa public employees’
25retirement system created in chapter 97B, the statewide fire
26and police retirement system created in chapter 411, or the
27judicial retirement system created in chapter 602.
285. “Reasonable business purpose” means includes any purpose
29directly related to any of the following:
30a. Promoting the financial success or stability of a
31company.
32b. Mitigating risk to a company.
33c. Complying with legal or regulatory requirements.
34d. Limiting liability of a company.
356. “Scrutinized company” means any company that engages in
-2-1nonpecuniary social investment on behalf of a public fund or a
2boycott of certain companies on behalf of a public fund.
3 Sec. 4. NEW SECTION. 12K.3 Public funds — contract and
4investment requirements.
51. A public fund shall not enter into a contract with a
6company to provide investment or management of securities
7services to the public fund so long as such company engages
8in nonpecuniary social investment or a boycott of certain
9companies on behalf of the public fund.
102. In accordance with sound investment criteria and
11consistent with fiduciary obligations, a public fund shall
12terminate a contract to provide investment or management of
13securities services with a company that begins to engage
14in nonpecuniary social investment or a boycott of certain
15companies on behalf of the public fund. The contract will be
16terminated within six months of a written notice to terminate
17sent to the company.
183. This section does not apply to a public fund acting on
19behalf of a participant directing investments in a retirement
20account in which the participant has the authority to make such
21a decision independently from the public fund.
22 Sec. 5. NEW SECTION. 12K.4 Annual report.
23On October 1, 2024, and each October 1 thereafter, each
24public fund shall make available to the public, and file with
25the general assembly, an annual report covering the prior
26fiscal year that includes all contracts terminated as provided
27in section 12K.3 during the fiscal year.
28 Sec. 6. NEW SECTION. 12K.5 Public funds — legal
29obligations.
301. With respect to actions taken in compliance with this
31chapter, including all good-faith determinations regarding
32companies as required by this chapter, the public fund shall
33be immune from any liability and exempt from any conflicting
34statutory or common law obligations, including any such
35obligations in respect to choice of asset managers, investment
-3-1funds, or investments for the public fund’s securities
2portfolios.
32. This chapter shall not limit the ability of a public fund
4to terminate the contract of an investment manager or other
5vendor at any time and for any reason in the exercise of the
6public fund’s fiduciary duties.
7 Sec. 7. Section 35A.13, subsection 4, paragraph a, Code
82023, is amended to read as follows:
9a. Notwithstanding subsection 5, moneys in the fund, except
10so much of the fund as may be necessary to be kept on hand
11for the making of disbursements under this section, shall
12be invested by the treasurer of state, in consultation with
13the commission and the public retirement systems committee
14established by section 97D.4, in any investments authorized for
15the Iowa public employees’ retirement system in section 97B.7A,
16including common stock, and subject to the requirements of
17chapters 12F, 12H, and 12J, and 12K, and the earnings therefrom
18shall be credited to the fund. The treasurer of state may
19execute contracts and agreements with investment advisors,
20consultants, and investment management and benefit consultant
21firms in the administration of investments of moneys in the
22fund.
23 Sec. 8. Section 97A.7, subsection 1, Code 2023, is amended
24to read as follows:
251. The board of trustees shall be the trustees of the
26retirement fund created by this chapter as provided in section
2797A.8 and shall have full power to invest and reinvest funds
28subject to the terms, conditions, limitations, and restrictions
29imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3012K and subject to like terms, conditions, limitations, and
31restrictions said trustees shall have full power to hold,
32purchase, sell, assign, transfer, or dispose of any of the
33securities and investments of the retirement fund which have
34been invested, as well as of the proceeds of said investments
35and any moneys belonging to the retirement fund. The board
-4-1of trustees may authorize the treasurer of state to exercise
2any of the duties of this section. When so authorized the
3treasurer of state shall report any transactions to the board
4of trustees at its next monthly meeting.
5 Sec. 9. Section 97B.4, subsection 5, Code 2023, is amended
6to read as follows:
75. Investments. The system, through the chief investment
8officer, shall invest, subject to chapters 12F, 12H, and 12J,
9and 12K and in accordance with the investment policy and
10goal statement established by the board, the portion of the
11retirement fund which, in the judgment of the system, is not
12needed for current payment of benefits under this chapter
13subject to the requirements of section 97B.7A.
14 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2023,
15is amended to read as follows:
16The board may invest funds belonging to the institutions,
17subject to chapters 12F, 12H, and 12J, and 12K and the
18following regulations:
19 Sec. 11. Section 411.7, subsection 1, Code 2023, is amended
20to read as follows:
211. The board of trustees is the trustee of the fire
22and police retirement fund created in section 411.8 and
23shall annually establish an investment policy to govern the
24investment and reinvestment of the moneys in the fund, subject
25to the terms, conditions, limitations, and restrictions
26imposed by subsection 2 and chapters 12F, 12H, and 12J, and
2712K. Subject to like terms, conditions, limitations, and
28restrictions the system has full power to hold, purchase, sell,
29assign, transfer, or dispose of any of the securities and
30investments in which the fund has been invested, as well as of
31the proceeds of the investments and any moneys belonging to the
32fund.
33 Sec. 12. Section 602.9111, subsection 1, Code 2023, is
34amended to read as follows:
351. So much of the judicial retirement fund as may not be
-5-1necessary to be kept on hand for the making of disbursements
2under this article shall be invested by the treasurer of
3state in any investments authorized for the Iowa public
4employees’ retirement system in section 97B.7A and subject to
5the requirements of chapters 12F, 12H, and 12J, and 12K, and
6the earnings therefrom shall be credited to the fund. The
7treasurer of state may execute contracts and agreements with
8investment advisors, consultants, and investment management and
9benefit consultant firms in the administration of the judicial
10retirement fund.
11EXPLANATION
12The inclusion of this explanation does not constitute agreement with
13the explanation’s substance by the members of the general assembly.
14This bill creates new Code chapter 12K, which restricts
15public funds, defined as the treasurer of state, the state
16board of regents, the Iowa public employees’ retirement
17system (IPERS), the public safety peace officers’ retirement
18system, the statewide fire and police retirement system, and
19the judicial retirement system from generally entering into a
20contract with certain companies engaged in nonpecuniary social
21investment or a boycott of certain companies.
22The bill defines “boycott of certain companies” as, without
23a reasonable business purpose or as otherwise required under
24Code chapters 12F, 12H, and 12J, to take any adverse action to
25penalize or limit business opportunities for companies engaging
26or doing business with fossil fuel-based energy, timber,
27mining, production agriculture, firearms, firearm parts,
28firearm accessories, or ammunition companies. “Nonpecuniary
29social investment” is defined to mean, except as otherwise
30provided in new Code chapter 12K in the bill and Code chapters
3112F, 12H, and 12J, investment or commitment of public funds
32to further environmental, social, governance, political, or
33ideological interests without a reasonable business purpose.
34The bill also defines “scrutinized company” as any company that
35engages in nonpecuniary social investment on behalf of a public
-6-1entity or a boycott of certain companies on behalf of a public
2entity.
3New Code section 12K.3 requires that a public fund shall not
4enter into a contract with a company to provide investment or
5management of securities services to the public fund so long
6as such company engages in nonpecuniary social investment or a
7boycott of certain companies on behalf of the public fund. If
8the public fund has a contract for investment services with a
9company subject to termination, the public fund shall proceed
10to terminate the contract with that company in six months,
11as applicable, so long as the company remains a scrutinized
12company. The bill provides that this requirement on public
13funds does not apply to a public fund acting on behalf of a
14participant directing investments in a retirement account.
15The bill further requires each public fund to prepare
16and make available to the public, and file with the general
17assembly, an annual report, beginning October 1, 2024,
18concerning actions taken by the public fund relative to the
19requirements of new Code chapter 12K in the previous fiscal
20year.
21The bill further provides that with respect to actions
22taken in compliance with the bill, including all good-faith
23determinations regarding companies as required, the public
24fund shall be immune from any liability and exempt from any
25conflicting statutory or common law obligations, including
26any such obligations in respect to choice of asset managers,
27investment funds, or investments for the public fund. In
28addition, the bill provides that the requirements of the bill
29shall not limit the ability of a public fund to terminate
30any contract of an investment manager or other vendor in the
31exercise of the public fund’s fiduciary duties.
32The bill makes conforming changes to Code sections 12.8,
3335A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111.
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