GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
SESSION LAW 2009-98
SENATE BILL 703
AN ACT concerning investments of the state treasurer.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 147-69.2 reads as rewritten:
"§ 147-69.2. Investments authorized for special funds held by State Treasurer.
(a) This section applies to funds held by the State Treasurer to the credit of each of the following:
(1) The Teachers' and State Employees' Retirement System.
(2) The Consolidated Judicial Retirement System.
(3) The Teachers'
and State Employees' Hospital and Medical Insurance Plan. The State
Health Plan for Teachers and State Employees.
(4) The General Assembly Medical and Hospital Care Plan.
(5) The Disability Salary Continuation Plan.
(6) The Firemen's and Rescue Workers' Pension Fund.
(7) The Local Governmental Employees' Retirement System.
(8) The Legislative Retirement System.
(9) The Escheat Fund.
(10) The Legislative Retirement Fund.
(11) The State Education Assistance Authority.
(12) The State Property Fire Insurance Fund.
(13) The Stock Workers' Compensation Fund.
(14) The Mutual Workers' Compensation Fund.
(15) The Public School Insurance Fund.
(16) The Liability Insurance Trust Fund.
(16a) The University of North Carolina Hospitals at Chapel Hill funds, except appropriated funds, deposited with the State Treasurer pursuant to G.S. 116-37.2.
(17) Trust funds of The University of North Carolina and its constituent institutions deposited with the State Treasurer pursuant to G.S. 116-36.1.
(17a) North Carolina Veterans Home Trust Fund.
(17b) North Carolina National Guard Pension Fund.
(17c) Retiree Health Premium Reserve Account.
(17d) The Election Fund.
(17e) The North Carolina State Lottery Fund.
(17f) Funds deposited with the State Treasurer by public hospitals pursuant to G.S. 159-39(g).
(17g) The Local Government Other Post-Employment Benefits Fund.
(17h) The Local Government Law Enforcement Special Separation Allowance Fund.
(17i) The North Carolina Conservation Easement Endowment Fund.
(17j) The Conservation Grant Fund.
(18) Any other special fund created by or pursuant to law for purposes other than meeting appropriations made pursuant to the Executive Budget Act.
(19) The Swain County Settlement Trust Fund.
(b) It shall be the duty of the State Treasurer to invest the cash of the funds enumerated in subsection (a) of this section in excess of the amount required to meet the current needs and demands on such funds, selecting from among the following:
(1) Any of the investments authorized by G.S. 147-69.1(c)(1)-(7).
(2) General obligations of other states of the United States.
(3) General obligations of cities, counties and special districts in North Carolina.
(4) Obligations of
any company, other organization or legal entity incorporated or otherwise
created or located within or outside the United States States,
including obligations that are convertible into equity securities, if the
obligations bear one of the four highest ratings of at least one nationally
recognized rating service and do not bear a rating below the four
highest by any nationally recognized rating service which rates the particular
security. when acquired.
(5) Repealed by Session Laws 2001-444, s. 2, effective October 1, 2001.
(6) Asset-backed
securities (whether considered debt or equity) provided they bear ratings by
nationally recognized rating services as provided in G.S. 147-69.2(b)(4)
and that they do not bear a rating below the four highest by any nationally
recognized rating service that rates the particular securities.G.S. 147-69.2(b)(4).
(6a) In addition to the limitations and requirements with respect to the investments of the Retirement Systems set forth in this subsection, the State Treasurer shall select investments of the assets of the Retirement Systems such that investments made pursuant to subdivisions (b)(1) through (6) of this section shall at all times equal or exceed twenty percent (20%) of the market value of all invested assets of the Retirement Systems.
(6b) Investments pursuant to subdivisions (b)(1) through (6) of this section may be made directly by the State Treasurer or through contractual arrangements in which the investment manager has full and complete discretion and authority to invest assets specified in such arrangements in investments authorized by subdivisions (b)(1) through (6) of this section, provided for each indirect investment, the investment manager has assets under management of at least one hundred million dollars ($100,000,000).
(6c) With respect to Retirement Systems' assets referred to in subdivision (b)(8), they may be invested in obligations and other debt securities, including debt securities convertible into other securities, that do not meet the requirements of any of subdivisions (b)(1) through (6) of this section nor subdivision (b)(7) of this section, provided such investments are made through investment companies registered under the Investment Company Act of 1940, individual, common collective trust funds of banks and trust companies, group trusts and limited partnerships, limited liability companies or other limited liability investment vehicles that invest primarily in investments authorized by this subdivision and through contractual arrangements in which the investment manager has full and complete discretion and authority to invest assets specified in such arrangements in investments authorized by this subdivision, provided the investment manager for each investment pursuant to this subdivision has assets under management of at least one hundred million dollars ($100,000,000) and provided that the investments authorized under this subdivision shall not exceed five percent (5%) of the market value of all invested assets of the Retirement Systems.
(7) With respect to
Retirement Systems' assets referred to in G.S. 147-69.2(b)(8),subdivision
(8) of this subsection, (i) insurance contracts that provide for
participation in individual or pooled separate accounts of insurance companies,
(ii) group trusts, (iii) individual, common, or collective trust funds of banks
and trust companies, (iv) real estate investment trusts, and (v) investment
companies registered under the Investment Company Act of 1940, and (vi)
limited partnerships, whether described as limited liability partnerships
companies, or other limited liability companies;investment
vehicles; provided the investment manager has assets under management of at
least one hundred million dollars ($100,000,000); provided such investment
assets are managed primarily for the purpose of investing in or owning real estate
or related debt financing located within or outside the United States; and
provided that the investment investments authorized by this
subsection subdivision shall not exceed ten percent (10%) of the
market value of all invested assets of the Retirement Systems.
(8) With respect to
assets of the Teachers' and State Employees' Retirement System, the
Consolidated Judicial Retirement System, the Firemen's and Rescue Workers'
Pension Fund, the Local Governmental Employees' Retirement System, the Legislative
Retirement System, the North Carolina National Guard Pension Fund (hereinafter
referred to collectively as the Retirement Systems), and assets invested
pursuant to subdivision (b2) of this section, they may be invested in preferred
or common stocksequity securities traded on a public securities exchange
or market organized and regulated pursuant to the laws of the jurisdiction of
such exchange or market and issued by any company incorporated or otherwise
created or located within or outside the United States States;
provided the investments meet the conditions of this subdivision.
The investments authorized for the
Retirement Systems under this subdivision cannot exceed sixty-five percent
(65%) of the market value of all invested assets of the Retirement Systems. Up
to five percent (5%) of the amount that may be invested under this subdivision
may be invested in the stocks or shares of a diversified investment company
registered under the "Investment Company Act of 1940" that has total So
long as each investment manager has assets under management of at
least fifty million dollars ($50,000,000).one hundred million dollars
($100,000,000), the The assets authorized under this subdivision can
be invested through (i) investment companies registered under the
Investment Company Act of 1940; (ii) individual, common, or collective
trust funds of banks, banks and trust companies, and
group trust funds of investment advisory companies so long as the investment
manager has assets under management of at least one hundred million dollars
($100,000,000).(iii) group trusts, and (iv) contractual arrangements in
which investment managers have full and complete discretion and authority to
invest assets specified in such contractual arrangements.
The assets authorized under this
subdivision can also be invested directly, if all of the following
conditions are met:
a. The
common stock or preferred stock of such corporation is registered on a national
securities exchange as provided in the Federal Securities Exchange Act or
quoted through the National Association of Securities Dealers' Automated
Quotations (NASDAQ) system.
b. The
corporation has paid a cash dividend on its common stock in each year of the 5-year
period next preceding the date of investment and the aggregate net earnings
available for dividends on the common stock of the corporation for the whole of
that period have been at least equal to the amount of the dividends paid.
c. In
applying the dividend and earnings test under this section to any issuing,
assuming, or guaranteeing corporation, if the corporation acquired its property
or any substantial part thereof within a five-year period immediately preceding
the date of investment by consolidation, merger, or by the purchase of all or a
substantial portion of the property of any other corporation or corporations,
or acquired the assets of any unincorporated business enterprise by purchase or
otherwise, the dividends and net earnings of the several predecessor or
constituent corporations or enterprises shall be consolidated and adjusted so
as to ascertain whether or not the applicable requirements of this subdivision
have been complied with.
by the State Treasurer in any equity securities represented in the S&P 500 Index or that have been publicly announced to be included in the S&P 500 Index. No more than one and one-half percent (1 1/2%) of the market value of the Retirement Systems' assets that may be invested directly under this subdivision can be invested in the stock of a single corporation, and the total number of shares in that single corporation cannot exceed eight percent (8%) of the issued and outstanding stock of that corporation.
d. to f. Repealed by Session Laws 2001-444, s. 2, effective October 1, 2001.
g. That
investments may be made in securities convertible into common stocks issued by
any such company, if such securities bear one of the four highest ratings of at
least one nationally recognized rating service and do not bear a rating below
the four highest by any nationally recognized rating service which may then
rate the particular security.
(9) With respect to
Retirement Systems' assets, as defined in subdivision (b)(8) of this
subsection, they may be invested in limited partnership interests in a
partnership or in interests in a limited liability companyinterests in
limited partnerships, limited liability companies, or other limited liability
investment vehicles that are not publicly traded if the primary purpose of
the partnership or limited liability companylimited partnership,
limited liability company, or other limited liability investment vehicle is
to invest in public or private debt, public or private equity, or
corporate buyout transactions, within or outside the United States. The amount
invested under this subdivision shall not exceed five percent (5%) of the
market value of all invested assets of the Retirement Systems.
(9a) With respect to Retirement Systems' assets, as defined in subdivision (b)(8) of this subsection, they may be invested in inflation-linked bonds, timberlands, commodities, and other assets that are acquired for the primary purpose of providing protection against risks associated with inflation, provided such investments are made through investment companies registered under the Investment Company Act of 1940, individual, common or collective trust funds of banks and trust companies, group trusts and limited partnerships, limited liability companies or other limited liability investment vehicles that invest primarily in investments authorized by this subdivision and through contractual arrangements in which the investment manager has full and complete discretion and authority to invest assets specified in such arrangements in investments authorized by this subdivision, provided the investment manager for each investment pursuant to this subdivision has assets under management of at least one hundred million dollars ($100,000,000) and provided that the investments authorized under this subdivision shall not exceed five percent (5%) of the market value of all invested assets of the Retirement Systems. Notwithstanding anything in this subsection to the contrary, the investments authorized by this subdivision shall not be included in any subdivision other than this subdivision for purposes of the percentage investment limitations therein or otherwise.
(10) Recodified as part of subdivision (b)(9) by Session Laws 2000-160, s. 2.
(11) With respect to assets of the Escheat Fund, obligations of the North Carolina Global TransPark Authority authorized by G.S. 63A-4(a)(22), not to exceed twenty-five million dollars ($25,000,000), that have a final maturity not later than October 1, 2009. The obligations shall bear interest at the rate set by the State Treasurer. No commitment to purchase obligations may be made pursuant to this subdivision after September 1, 1993, and no obligations may be purchased after September 1, 1994. In the event of a loss to the Escheat Fund by reason of an investment made pursuant to this subdivision, it is the intention of the General Assembly to hold the Escheat Fund harmless from the loss by appropriating to the Escheat Fund funds equivalent to the loss.
If any part of the property owned by the North Carolina Global TransPark Authority now or in the future is divested, proceeds of the divestment shall be used to fulfill any unmet obligations on an investment made pursuant to this subdivision.
(12) With respect to assets of
the Escheat Fund, in addition to those investments authorized by subdivisions
(1) through (6) of this subsection, up to twenty percent (20%) of such
assets may be invested in the investments authorized under subdivisions (7)
through (9) of this subsection, notwithstanding the percentage
limitations imposed on the retirement fundsRetirement Systems'
investments under those subdivisions.
(b1) With respect to
investments authorized by subsections subdivisions (b)(8) and
(b)(9) of this section, the State Treasurer shall appoint an Investment
Advisory Committee, which shall consist of five members: the State Treasurer,
who shall be chairman ex officio; two members selected from among the members
of the boards of trustees of the Retirement Systems; and two members selected
from the general public. The two public members must have experience in one or
more of the following areas: investment management, real estate investment
trusts, real estate development, venture capital investment, or absolute return
strategies. The State Treasurer shall also appoint a Secretary of the
Investment Advisory Committee who need not be a member of the committee.
Members of the committee shall receive for their services the same per diem and
allowances granted to members of the State boards and commissions generally.
The committee shall have advisory powers only and membership shall not be
deemed a public office within the meaning of Article VI, Section 9 of the
Constitution of North Carolina or G.S. 128-1.1.
(b2) The State Treasurer may
invest funds deposited pursuant to subdivision (a)(17f) of this section in any
of the investments authorized under subdivisions (b)(1) through (6)(6),
subdivision (b)(6c), and subdivision (8) of subsection (b) (b)8)
of this section.section, notwithstanding the percentage limitations
imposed on the Retirement Systems' investments therein. The State Treasurer
may require a minimum deposit, up to one hundred thousand dollars ($100,000),
and may assess a reasonable fee,fees, not to exceed 15
basis points,points per annum, as a condition of participation
pursuant to this subsection. Funds deposited pursuant to this subsection by a
hospital shall remain the funds of that hospital, and interest or other
investment income earned thereon shall be prorated and credited to the
contributing hospital on the basis of the amounts thereof contributed, figured
according to sound accounting principles. Fees assessed by the State
Treasurer may be used to defray the cost of administering investments pursuant
to this subsection.
(b3) The State Treasurer may
invest funds deposited pursuant to subdivision (a)(16a) of this section in any
of the investments authorized under subdivisions (1) through (6)(6),
subdivision (6c) and subdivision (8) of subsection (b) subdivision
(b)(8) of this section.section, notwithstanding the percentage
limitations imposed on the Retirement Systems' investments therein. The
State Treasurer may require a minimum deposit, up to one hundred thousand
dollars ($100,000), and may assess a reasonable feefees,
not to exceed 15 basis points,points per annum, as a condition of
participation pursuant to this subsection. Funds deposited pursuant to this
subsection by the University of North Carolina Hospitals at Chapel Hill shall
remain the funds of the University of North Carolina Hospitals at Chapel Hill,
and interest or other investment income earned thereon shall be prorated and
credited to the University of North Carolina Hospitals at Chapel Hill on the
basis of the amounts thereof contributed, figured according to sound accounting
principles. Fees assessed by the State Treasurer may be used to defray the
cost of administering investments pursuant to this subsection.
(b4) In addition to the
investments authorized under subdivisions (b)(1) through (b)(6) of this
section, the State Treasurer may invest funds deposited in the Local Government
Other Post-Employment Benefits Fund in any of the investments authorized
under subdivision subdivisions (b)(6c) and (b)(8) of this section.section,
notwithstanding the percentage limitations imposed on the Retirement Systems'
investments therein. For investments from that Fund made under subdivision
subdivisions (b)(6c) and (b)(8) of this section, the State Treasurer
may require a minimum deposit of up to one hundred thousand dollars ($100,000)
and may assess a feefees of up to 15 basis points per annum
as a condition of making the investment. The fee may be used to defray the
costs of administering the Fund.
(b5) In addition to the
investments authorized under subdivisions (b)(1) through (b)(6) of this
section, the State Treasurer may invest funds deposited in the Local Government
Law Enforcement Special Separation Allowance Fund in any of the
investments authorized under subdivision subdivisions (b)(6c) and
(b)(8) of this section.section, notwithstanding the percentage
limitations imposed on the Retirement Systems' investments therein. For
investments from that Fund made under subdivision subdivisions
(b)(6c) and (b)(8) of this section, the State Treasurer may require a
minimum deposit of up to one hundred thousand dollars ($100,000) and may assess
a feefees of up to 15 basis points per annum as a
condition of making the investment. The fee may be used to defray the costs of
administering the Fund.
(c) Repealed by Session Laws 1995, c. 501, s. 2.
(d) The State Treasurer may invest funds deposited pursuant to subdivision (a)(17i) of this section in any of the investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) of this section. The State Treasurer may require a minimum deposit, up to one hundred thousand dollars ($100,000), and may assess a reasonable fee, not to exceed 15 basis points, as a condition of participation pursuant to this subsection. Funds deposited pursuant to this subsection shall remain the funds of the North Carolina Conservation Easement Endowment Fund, and interest or other investment income earned thereon shall be prorated and credited to the North Carolina Conservation Easement Endowment Fund on the basis of the amounts thereof contributed, figured according to sound accounting principles."
SECTION 2. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 3rd day of June, 2009.
s/ Walter H. Dalton
President of the Senate
s/ Joe Hackney
Speaker of the House of Representatives
s/ Beverly E. Perdue
Governor
Approved 4:47 p.m. this 11th day of June, 2009