2019 -- H 5589

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LC001663

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO PUBLIC FINANCE - STATE INVESTMENT COMMISSION

     

     Introduced By: Representatives Filippi, Price, Roberts, Place, and Newberry

     Date Introduced: February 27, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 35-10-1 of the General Laws in Chapter 35-10 entitled "State

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Investment Commission" is hereby amended to read as follows:

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     35-10-1. Establishment -- Membership -- Officers -- Quorum -- Investment votes --

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Fund managers.

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     (a) There is hereby authorized, created and established in the office of the general

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treasurer a state investment commission, the membership of which shall consist of the general

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treasurer, ex officio, or a deputy general treasurer as his or her designee, who shall act as

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chairperson, the director of administration, ex officio, or any assistant director of administration

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as his or her designee, who shall act as secretary, an active or retired teacher, state, or municipal

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employee member of the retirement system or official from the teacher, state, or municipal

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employee unions to be appointed by the general treasurer for a term of three (3) years, the

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executive director of the state retirement board, who shall be a nonvoting member, three (3)

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members of the general public to be appointed by the general treasurer, one of whom shall serve

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for an initial term of one year, and one of whom shall serve for an initial term of two (2) years

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and until his or her successor is appointed and qualified and three (3) members of the general

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public to be appointed by the governor, one of whom shall serve for an initial term of three (3)

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years, one of whom shall serve for an initial term of two (2) years, and one of whom shall serve

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for an initial term of one year and until his or her successor is appointed and qualified. Thereafter,

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the general public members shall serve for three (3) year terms and until his or her successor is

 

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appointed and qualified. The members of the general public appointed by the governor and the

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general treasurer shall be qualified by training or experience in the field of investment or finance.

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     The commission may elect from among its own members such other officers as they

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deem necessary. All general treasurer and gubernatorial appointments made under this section

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after the effective date of this act [July 4, 2006] shall be subject to the advice and consent of the

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senate. No one shall be eligible for appointment unless he or she is a resident of this state.

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     Public members of the board shall be removable by the chair for cause only, and removal

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solely for partisan or personal reasons unrelated to capacity or fitness for the office shall be

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unlawful.

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     Newly appointed and qualified public members shall, within six (6) months of their

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appointment, attend a training course that shall be developed and provided by the office of the

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general treasurer and shall include instruction in the following areas: the provisions of chapter 10

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of title 35, chapter 46 of title 42, chapter 14 of title 36 and chapter 2 of title 38 of the Rhode

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Island general laws; and the board's rules and regulations. The director of the department of

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administration shall, within ninety (90) days of the effective date of this act [July 4, 2006],

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prepare and disseminate training materials relating to the provisions of chapter 46 of title 42,

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chapter 14 of title 36 and chapter 2 of title 38.

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     Any member of the general public who was appointed by the governor or general

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treasurer prior to the effective date of this act [July 4, 2006] shall continue to serve until such

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time as a successor is appointed and qualified.

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     (b) A member shall be eligible to succeed himself or herself. In the event of a vacancy in

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the office of an appointive member, the vacancy shall be filled by the appointing authority for the

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unexpired term.

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     (c) A majority of all the members of the commission shall be necessary to constitute a

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quorum thereof. The approval of a majority of the commission shall be required prior to the

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purchase or sale of any investment, excepting those investments made by investment managers

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engaged by the commission and invested in accordance with the commission's statement of

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investment objectives and policies, day to day cash investments by the general treasurer, and,

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because of the importance of speedy action, investments in obligations of the United States

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government or certificates of deposit maturing within one year. These investments may be made

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within the framework of a policy established by the commission without prior approval of each

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transaction. The commission shall be empowered to engage one or more fund managers and to

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delegate to the manager or managers the authority to carry out the investment of the funds within

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the commission's control, or any portion thereof, in accordance with the objectives of the

 

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commission as set forth in its statement of investment objectives and policies.

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     (d) The day-to-day administration of the commission, including the voting of proxies and

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the execution of investment acquisitions and dispositions of the commission's assets, shall be

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carried out by the office of the general treasurer; provided, that the costs and expenses incurred in

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the management of the funds within the commission's control shall remain the obligation of those

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funds and not that of the general treasurer.

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     (e)(1) Within ninety (90) days after the end of each fiscal year during which the board has

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conducted business, the commission shall submit an annual report to the governor, the speaker of

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the house of representatives, the president of the senate, and the secretary of state of its activities

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during that fiscal year. The report shall provide: an operating statement summarizing meetings or

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hearings held, meeting minutes if requested, subjects addressed, decisions rendered, rules or

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regulations promulgated, studies conducted, policies and plans developed, approved, or modified,

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and programs administered or initiated; a consolidated financial statement of all the funds

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received and expended including the source of funds, a listing of any staff supported by these

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funds, and a summary of any clerical, administrative or technical support received; a summary of

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performance during the previous fiscal year including accomplishments, shortcomings and

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remedies; a synopsis of hearings, complaints, suspensions, or other legal matters related to the

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authority of the board; a summary of any training courses held pursuant to § 35-10-1; a briefing

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on anticipated activities in the upcoming fiscal year; and findings and recommendations for

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improvements.

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     (2) The report shall include a section providing information and supporting documents

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related to the hiring of the pension fund's alternative investment consultant(s), the due diligence

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reports reviewed when investments in alternatives were considered, the performance regarding all

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alternative investments and all confidentiality agreements entered into with alternative investment

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consultant(s).

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     (3) The report These reports and supporting documents shall be posted electronically on

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the general assembly and the secretary of state's website as prescribed in § 42-20-8.2 of the

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Rhode Island general laws. The director of the department of administration shall be responsible

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for the enforcement of this provision.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC FINANCE - STATE INVESTMENT COMMISSION

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     This act would require the state investment commission to include in its annual report a

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separate section devoted to alternative pension fund investments providing information and

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supporting documents relating to the hiring of alternative investment consultant(s), alternative

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investments performance and confidentiality agreements with the consultant(s).

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     This act would take effect upon passage.

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