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:

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

Investment Commission" is hereby amended to read as follows:

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

Fund managers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

unlawful.

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

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

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

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

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

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

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

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

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

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

time as a successor is appointed and qualified.

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

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

unexpired term.

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

funds and not that of the general treasurer.

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

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

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

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

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

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

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

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

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

performance during the previous fiscal year including accomplishments, shortcomings and

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

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

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

improvements.

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

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

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

alternative investments and all confidentiality agreements entered into with alternative investment

consultant(s).

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

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

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

for the enforcement of this provision.

     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

separate section devoted to alternative pension fund investments providing information and

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

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

     This act would take effect upon passage.

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