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House Engrossed |
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State of Arizona House of Representatives Fifty-fourth Legislature Second Regular Session 2020
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HOUSE BILL 2717 |
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AN ACT
amending section 35-311, Arizona Revised Statutes; amending title 35, chapter 2, article 2, Arizona Revised Statutes, by adding section 35‑314.04; relating to public funds.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 35-311, Arizona Revised Statutes, is amended to read:
35-311. State board of investment; membership; powers and duties
A. The state board of investment is established consisting of the state treasurer, the director of the department of administration or the director of the department of administration's designee, the director of the department of insurance and financial institutions or the director of the department of insurance and financial institutions' designee and two individuals appointed by the state treasurer, one of whom has verifiable expertise in investment management and one of whom represents a public entity with current deposits in a local government investment pool. The state treasurer is chairman chairperson of the board. The board shall keep an accurate record of its proceedings. A certified copy of the record is prima facie evidence of the matters appearing in the record in any court. A meeting of the board may be called at any time by the chairman chairperson or a majority of the board members.
B. The state board of investment shall:
1. Hold regular monthly meetings.
2. Review investments of treasury monies.
3. Serve as trustees of the permanent state land funds and provide management of the assets of the funds consistent with the requirements of article X, section 7, Constitution of Arizona.
4. Serve as trustees of any endowments established pursuant to section 35‑314.03.
5. Serve as trustees of any pension prefunding plan investment accounts established pursuant to section 35‑314.04.
C. The state treasurer shall furnish to the board of investment at its regular monthly meeting a report of the performance of current investments and a report of the current investments as of the close of business of the preceding month. The state treasurer shall make these reports available for inspection by the public during normal working hours at the office of the state treasurer for a period of time of not less than two years after the date of the report.
D. The board of investment may order the state treasurer to sell any of the securities, and any order shall specifically describe the securities and fix the time period during which they are to be sold. Securities so ordered to be sold shall be sold for cash by the state treasurer at the current market price. The state treasurer and the members of the board are not accountable for any loss occasioned by sales of securities at prices lower than their book value. Any loss shall be charged against earnings received from interest or capital gains on the applicable treasury monies.
E. The board may establish standards in addition to those established by section 35‑317, subsection A for the qualification of agents acting pursuant to section 35‑317, subsection B.
Sec. 2. Title 35, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 35-314.04, to read:
35-314.04. Pension prefunding plan investment accounts; state treasurer; investment authority; definitions
A. In addition to the investment authority pursuant to section 35‑313, the state treasurer may invest and reinvest pension prefunding plan monies in equity securities pursuant to section 35‑314 for pension prefunding plan investment accounts.
B. All pension prefunding plan monies shall be accounted for separately from all other funds. Monies may not be taken from one investment account for deposit in any other investment account.
C. All monies in pension prefunding plan investment accounts shall be invested in safe interest‑bearing securities and prudent equity securities consistent with the requirements of section 35‑314.
D. The earnings, interest, dividends and realized capital gains and losses from the investment of each investment account shall be credited to that investment account.
E. Pension prefunding plan monies are for the purpose of allowing employers that provide a defined benefit pension plan to their employees to prefund the employer's required defined benefit pension payments.
F. Pension prefunding plan monies are an integral part of this state and of the political subdivisions of this state and perform an essential governmental function. Investments of pension prefunding plan monies are intended to be structured and administered in a manner that results in the tax‑exempt status of the pension prefunding plan's income. The state board of investment may adopt rules, policies and procedures as the board deems necessary to ensure that the prefunding plan's income is not subject to federal income tax.
G. The governing body of an employer may authorize and request the state treasurer to invest pension prefunding plan monies in a pension prefunding plan investment account and set forth the terms of the distributions from such investment account for the employer pursuant to this section.
H. For the purposes of this section:
1. "Defined benefit pension" means:
(a) The Arizona state retirement system established by title 38, chapter 5, articles 2 and 2.1.
(b) The elected officials' retirement plan established by title 38, chapter 5, article 3.
(c) The public safety personnel retirement system established by title 38, chapter 5, article 4.
(d) The corrections officer retirement plan established by title 38, chapter 5, article 6.
(e) Any defined benefit pension plan established by the governing body of any political subdivision of this state for its employees.
2. "Employer" means an employer as defined in section 38‑711, 38‑801, 38‑842 or 38‑881 or any governing body of a political subdivision of this state that has established a defined benefit pension plan for its employees.
3. "Tax-exempt status of pension prefunding plan's income" means that the prefunding plan's income is excluded from gross income for the purposes of the assessment of federal income tax under section 115 of the internal revenue code, intergovernmental immunity or similar grounds.