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Introduced Version Senate Bill 675 History

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Key: Green = existing Code. Red = new code to be enacted


Senate Bill No. 675

(By Senator Craigo, Plymale, Unger, Bowman, Prezioso, McCabe, Sharpe, Ross, Chafin, Helmick, Anderson and Love)

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[Introduced February 18, 2002; referred to the Committee

on Pensions; and then to the Committee on Finance.]

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A BILL to repeal section twelve-a, article one, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to repeal sections eight, nine-e, ten and thirteen, article six of said chapter; to amend and reenact sections two, seven, twelve and thirteen, article one of said chapter; to amend and reenact section seven, article one-a of said chapter; to amend and reenact section three, article two of said chapter; to amend and reenact section one, article three of said chapter; to amend and reenact sections four and six, article three-a of said chapter; to amend and reenact sections one-a, two, five and twelve, article six of said chapter; and to further amend said chapter by adding thereto a new article, designated article six-c, all relating to the handling of state funds; creating the West Virginia board of treasury investments; and altering duties of the treasurer and auditor.

Be it enacted by the Legislature of West Virginia:
That section twelve-a, article one, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that sections eight, nine-e, ten and thirteen, article six of said chapter be repealed; that sections two, seven, twelve and thirteen, article one of said chapter be amended and reenacted; that section seven, article one-a of said chapter be amended and reenacted; that section three, article two of said chapter be amended and reenacted; that section one, article three of said chapter be amended and reenacted; that sections four and six, article three-a of said chapter be amended and reenacted; that sections one-a, two, five and twelve, article six of said chapter be amended and reenacted; and that said chapter be further amended by adding thereto a new article, designated article six-c, all to read as follows:
ARTICLE 1. STATE DEPOSITORIES.

§12-1-2. Depositories for demand deposits; categories of demand deposits; competitive bidding for disbursement accounts; maintenance of deposits by state treasurer.

(a) The state treasurer shall designate the state and national banks in this state which shall serve as depositories for all state funds placed in demand deposits. Any such The state or national bank shall, upon request to the treasurer, be designated as a state depository for such the deposits, if such the bank meets the requirements set forth in this chapter.
(b) Demand deposit accounts shall consist of receipt and disbursement. Receipt accounts shall be are those accounts in which are deposited moneys belonging to or due the state of West Virginia or any official, department, board, commission or agency thereof of the state.
(c) Disbursement accounts shall be are those accounts from which are paid moneys due from the state of West Virginia or any official, department, board, commission, political subdivision or agency thereof to any political subdivision, person, firm or corporation, except moneys paid from investment accounts.
(d) Investment accounts shall be are
those accounts established by the West Virginia investment management board, the West Virginia board of treasury investments or the state treasurer for the buying and selling of securities for investment for the state of West Virginia.
(e) The state treasurer shall promulgate propose rules for legislative approval, in accordance with the provisions of article three, chapter twenty-nine-a of this code, concerning depositories for receipt accounts prescribing the selection criteria, procedures, compensation and such other contractual terms as it considers to be in the best interests of the state giving due consideration to:
(1) The activity of the various accounts maintained therein;

(2) The reasonable value of the banking services rendered or to be rendered the state by such depositories; and
(3) The value and importance of such deposits to the economy of the communities and the various areas of the state affected thereby.
(f) The state treasurer shall select depositories for disbursement accounts through competitive bidding by eligible banks in this state. However, if none of the eligible banks in this state are able to provide any of the needed services, then the treasurer may include eligible banks outside this state. The treasurer shall promulgate propose rules for legislative approval, in accordance with the provisions of article three, chapter twenty-nine-a of this code, prescribing the procedures and criteria for the bidding and selection. The treasurer shall, in the invitations for bids, specify the approximate amounts of deposits, the duration of contracts to be awarded and such other contractual terms as it considers to be in the best interests of the state, consistent with obtaining the most efficient service at the lowest cost.
(g) The amount of money needed for current operation purposes of the state government, as determined by the state treasurer, shall be maintained at all times in the state treasury, in cash, in short term investments not to exceed five days, or in disbursement accounts with banks designated as depositories in accordance with the provisions of this section. No state officer or employee shall may make or cause to be made any deposits of state funds in banks not so designated.
§12-1-7. Rules of banking contracts and agreements; depositors, agreements.

In addition to rules specially authorized in this article, the West Virginia investment management board, the board of treasury investments and the state treasurer are generally authorized to promulgate any propose rules for legislative approval necessary to protect the interests of the state, its depositories and taxpayers. All rules promulgated shall be proposed are subject to the provisions of article three, chapter twenty-nine-a of this code. Any rules previously established by the board of public works, the board of investments, the investment management board or the state treasurer pursuant to this article shall remain in effect until amended, superseded or rescinded.
Only the treasurer may enter into contracts or agreements with
financial institutions for banking goods or services. If a state spending unit requires banking goods or services, it shall contact the treasurer and request him or her to provide them. If the treasurer enters into a contract or agreement solely for the required goods or services spending units using the contract or agreement shall either pay the vendor directly or reimburse the treasurer for his or her payments to the vendor.

The treasurer is also authorized to enter into any depositors' agreements for the purpose of reorganizing or rehabilitating any depository in which state funds are deposited, and for the purpose of transferring the assets, in whole or in part, of any depository to any other lawful depository when, in the judgment of the treasurer, the interests of the state will be are promoted thereby, and upon condition that no right of the state to preferred payment be is waived.
§12-1-12. When treasurer shall make funds available to the West Virginia board of treasury investments; depositories outside the state.

When the funds in the treasury exceed the amount needed for current operational purposes, as determined by the treasurer, the treasurer shall make all of such the excess available for investment by the investment management board of treasury investments which shall invest the excess for the benefit of the general revenue fund. Provided, That the state treasurer, after reviewing the cash flow needs of the state, may withhold and invest amounts not to exceed one hundred twenty-five million dollars of the operating funds needed to meet current operational purposes. Investments made by the state treasurer under this section shall be made in short term investments not to exceed five days. Operating funds means the consolidated fund established in section eight, article six of this chapter, including all cash and investments of the fund.
Whenever the funds in the treasury exceed the amount for which depositories within the state have qualified, or the depositories within the state which have qualified are unwilling to receive larger deposits the treasurer may designate depositories outside the state, disbursement accounts being bid for in the same manner as required by depositories within the state, and when such the depositories outside the state have qualified by giving the bond prescribed in section four of this article, the state treasurer shall deposit funds therein in like in the same manner as funds are deposited in depositories within the state under this article.
The state treasurer may transfer funds to banks financial institutions outside the state to meet obligations to paying agents outside the state and any such transfer which financial institutions must meet the same bond collateral requirements as set forth in this article.
§12-1-13. Payment of banking services and litigation costs for prior investment losses.
(a) The treasurer is authorized to pay for banking services, and services ancillary thereto, by either a compensating balance in a noninterest-bearing account maintained at the financial institution providing the services or with a state warrant as described in section one, article five of this chapter.
(b) The investment management board is authorized to pay for the investigation and pursuit of claims against third parties for the investment losses incurred during the period beginning on the first day of August, one thousand nine hundred eighty-four, and ending on the thirty-first day of August, one thousand nine hundred eighty-nine. The payment may be in the form of a state warrant.
(c) If payment is made by a state warrant, the investment management board of treasury investments at the request of the treasurer is authorized to establish within the consolidated fund an investment pool which will generate sufficient income to pay for all banking services provided to the state and to pay for the investigation and pursuit of the prior investment loss claims. All income earned by the investment pool shall be paid into a special account of the treasurer to be known as the banking services account and shall be used solely for the purpose of paying for all banking services and services ancillary to the banking services provided to the state, for the investigation and pursuit of the prior investment loss claims, amortize the balance in the investment imbalance fund.
ARTICLE 1A. WEST VIRGINIA SMALL BUSINESS LINKED DEPOSIT PROGRAM.
§12-1A-7. Liability of state.
The state, the treasurer and the small business development center are not liable to any eligible lending institution in any manner for payment of the principal or interest on the loan to an eligible small business. Any delay in payment or default on the part of an eligible small business does not in any manner affect the deposit agreement between the eligible lending institution and the board treasurer.
ARTICLE 2. PAYMENT AND DEPOSIT OF TAXES AND OTHER AMOUNTS DUE THE STATE OR ANY POLITICAL SUBDIVISION.

§12-2-3. Deposit of moneys not due the state.
(a) All officials and employees of the state authorized to accept moneys that the state treasurer determines or that this code specifies are not funds due the state pursuant to the provisions of section two of this article shall deposit the moneys, as soon as practicable, in the manner and in the depository specified by the treasurer. The treasurer shall prescribe the forms and procedures for depositing the moneys.
(b)
Notwithstanding any provision of this code, a spending unit shall comply with the state treasurer?s procedures for the receipt and disbursement of funds not due the state and obtain written authorization from the state treasurer before depositing the any funds in an account outside the treasury. Upon the treasurer's written revocation of the authorization, the spending unit shall deposit funds deposited in an account outside the treasury in the treasury in the manner and in the depository specified by the treasurer. The treasurer is the final determining authority as to whether these funds are funds due or not due the state pursuant to section two of this article. The treasurer shall on a quarterly basis provide the legislative auditor with a report of all accounts approved by him or her.
ARTICLE 3. APPROPRIATIONS, EXPENDITURES AND DEDUCTIONS.

§12-3-1. Manner of payment from treasury; form of checks.
Every person claiming to receive money from the treasury of the state shall apply to the auditor for a warrant for same. The auditor shall thereupon examine the claim, and the vouchers, certificates and evidence, if any, offered in support thereof of the claim, and for so much thereof of the claim as he or she finds to be justly due from the state, if payment thereof of the claim is authorized by law, and if there is an appropriation not exhausted or expired out of which it is properly payable, the auditor shall issue his or her warrant on the treasurer, specifying to whom and on what account the money mentioned therein is to be paid, and to what appropriation it is to be charged. The auditor shall present to the treasurer daily reports on the number of warrants issued, the amounts of the warrants and the dates on the warrants for the purpose of effectuating the investment policy policies of the investment management board
of treasury investments. On the presentation of the warrant to the treasurer, the treasurer shall ascertain whether there are sufficient funds in the treasury to pay that warrant, and if he or she finds it to be so, he or she shall in that case, but not otherwise, endorse his or her check upon the warrant, directed to some depository, which check shall be payable to the order of the person who is to receive the money therein specified.
If the a check is not presented for payment within six months after it is drawn, it shall then be is the duty of the treasurer to credit it to the depository on which it was drawn, to credit the unclaimed property fund pursuant to the provisions of article eight, chapter thirty-six of this code, and immediately notify the auditor to make corresponding entries on the auditor's books.
However, any check containing federal funds that has been deposited to the credit of the unclaimed property fund, the federal funds portion of the check shall be identified by the spending unit within six months after receipt of the notification by the treasurer. The amount identified by the spending unit shall be returned to the spending unit originally requesting issuance of the check and shall be credited to the account from which it was disbursed. No state depository may pay a check unless it is presented within six months after it is drawn and every check shall bear upon its face the words "Void, unless presented for payment within six months." Any information or records maintained by the treasurer concerning any check which has not been presented for payment within six months of the date of issuance may only be disclosed to the state agency specified on the check, or to the payee, his or her personal representative, next of kin or attorney-at-law and is otherwise confidential and exempt from disclosure under the provisions of article one, chapter twenty-nine-b of this code. All claims required by law to be allowed by any court, and payable out of the state treasury, shall have the seal of the court allowing or authorizing the payment of the claim affixed by the clerk of the court to his or her certificate of its allowance. No claim may be audited and paid by the auditor unless the seal of the court is thereto attached as aforesaid. No tax or fee may be charged by the clerk for affixing his or her seal to the certificate, referred to in this section. The treasurer shall propose rules in accordance with the provisions of article three, chapter twenty-nine-a of this code governing the procedure for such payments from the treasury.
ARTICLE 3A. FINANCIAL ELECTRONIC COMMERCE.
§12-3A-4. Payment by the West Virginia check card.
The state auditor treasurer may establish a state debit card known as the "West Virginia Check Card" for recipients of employee payroll or of benefits or entitlement programs processed by the auditor who are considered unbanked and who do not possess a federally insured depository institution account. The state auditor treasurer shall use every reasonable effort to make a federally insured depository account available to a recipient, and to encourage all recipients to obtain a federally insured depository account. Prior to issuing the West Virginia check card, the state auditor treasurer shall first make a determination that a recipient has shown good cause that an alternative method to direct deposit is necessary. The state auditor and the state treasurer shall jointly issue a request for proposals in accordance with section three of this article to aid the auditor in the administration of the program and to aid the treasurer in the establishment of state owned bank accounts and accommodate accessible locations for use of the West Virginia check card. In carrying out the purposes of this article, the state auditor and state treasurer shall may not compete with banks or other federally insured financial institutions, or for profit.
§12-3A-6. Receipting of electronic commerce purchases.
The treasurer may establish a system for acceptance of credit card and other payment methods for electronic commerce purchases from spending units. Each spending unit utilizing WEB commerce, electronic commerce or other method that offers products or services for sale shall utilize the treasurer's system for acceptance of payments. The treasurer may authorize any spending unit to assess a user fee to recover the cost associated with accepting credit cards or other payment methods electronically.
ARTICLE 6. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD.
§12-6-1a. Legislative findings.
(a) The Legislature hereby finds and declares that all the public employees covered by the public employees retirement system, the teachers retirement system, the West Virginia state police retirement system, the death, disability and retirement fund of the division of public safety, the judges' retirement system and the deputy sheriff's retirement system should benefit from a prudent and conscientious staff of financial professionals dedicated to the administration, investment and management of those employees' and employers' financial contributions and that an independent board and staff should be immune to changing political climates and should provide a stable and continuous source of professional financial investment and management.
(b) The Legislature finds and declares that teachers and other public employees throughout the state are experiencing economic difficulty and that in order to reduce this economic hardship on these dedicated public employees and to help foster sound financial practices, the West Virginia investment management board is given the authority to develop, implement and maintain an efficient and modern system for the investment and management of the state's money except those funds managed by the West Virginia board of treasury investments under the provisions of article six-c, chapter twelve of this code. The Legislature further finds that in order to implement these sound fiscal policies, the West Virginia investment management board shall operate as an independent board with its own full-time staff of financial professionals, immune to changing political climates, in order to provide a stable and continuous source of professional financial management.
(c) The Legislature hereby finds and declares further that experience has demonstrated that prudent investment provides diversification and beneficial return not only for public employees but for all citizens of the state and that in order to have access to this sound fiscal policy, public employee and employer contributions to the 401(a) plans are declared to be made to an irrevocable trust on behalf of each plan, available for no use or purpose other than for the benefit of those public employees.
(d) The Legislature hereby finds and declares further that the workers' compensation funds and coal-workers' pneumoconiosis fund are trust funds to be used exclusively for those workers, miners and their beneficiaries who have sacrificed their health in the performance of their jobs and further finds that the assets available to pay awarded benefits should be prudently invested so that awards may be paid.
(e) The Legislature hereby finds and declares further that an independent public body corporate with appropriate governance shall be the best means of assuring prudent financial management of these funds under rapidly changing market conditions and regulations.
(f) The Legislature hereby finds and declares further that in accomplishing this purpose, the West Virginia investment management board, created and established by this article, is acting in all respects for the benefit of the state's public employees and ultimately the citizens of the state and the West Virginia investment management board is empowered by this article to act as trustee of the irrevocable trusts created by this article and to manage and invest other state funds except those funds managed by the West Virginia board of treasury investments under the provisions of article six-c, chapter twelve of this code.
(g) The Legislature hereby finds and declares further that the standard of care and prudence applied to trustees, the conduct of the affairs of the irrevocable trusts created by this article and the investment of other state funds is intended to be that applied to the investment of funds as described in the "uniform prudent investor act" codified as article six-c, chapter forty-four of this code and as described in section eleven of this article.
(h) The Legislature further finds and declares that the West Virginia supreme court of appeals declared the "West Virginia Trust Fund Act" unconstitutional in its decision rendered on the twenty-eighth day of March, one thousand nine hundred ninety-seven, to the extent that it authorized investments in corporate stock, but the court also recognized that there were other permissible constitutional purposes of the "West Virginia Trust Fund Act" and that it is the role of the Legislature to determine those purposes consistent with the court's decision and the constitution of West Virginia.
(i) The Legislature hereby further finds and declares that it is in the best interests of the state and its citizens to create a new investment management board in order to:
(1) Be in full compliance with the provisions of the constitution of West Virginia; and
(2) Protect all existing legal and equitable rights of persons who have entered into contractual relationships with the West Virginia board of investments and the West Virginia trust fund.
§12-6-2. Definitions.
As used in this article, unless a different meaning clearly appears from the context:
(1) "Beneficiaries" means those individuals entitled to benefits from the participant plans;
(2) "Board" means the governing body for the West Virginia investment management board and any reference elsewhere in this code to board of investments or West Virginia trust fund means the board as defined in this subdivision;
(3) "Consolidated fund" means the investment fund managed by the board and established pursuant to subsection (a), section eight of this article the West Virginia board of treasury investments established under the provisions of article six-c, chapter twelve of this code;
(4) "401(a) plan" means a plan which is described in section 401(a) of the Internal Revenue Code of 1986, as amended, and with respect to which the board has been designated to hold assets of the plan in trust pursuant to the provisions of section nine-a of this article;
(5) "Local government funds" means the moneys of a political subdivision, including policemen's pension and relief funds, firemen's pension and relief funds and volunteer fire departments, transferred to the board for deposit;
(6) (5) "Participant plan" means any plan or fund subject now or hereafter to subsection (a), section nine-a, article six of this chapter;
(7) "Political subdivision" means and includes a county, municipality or any agency, authority, board, county board of education, commission or instrumentality of a county or municipality and regional councils created pursuant to the provisions of section five, article twenty-five, chapter eight of this code;
(8) (6) "Trustee" means any member serving on the West Virginia investment management board: Provided, That in section nine-a of this article in which the terms of the trusts are set forth, "trustee" means the West Virginia investment management board; and
(9) (7) "Securities" means all bonds, notes, debentures or other evidences of indebtedness and other lawful investment instruments. and
(10) "State funds" means all moneys of the state which may be lawfully invested except the "school fund" established by section four, article XII of the state constitution.
§12-6-5. Powers of the board.
The board may exercise all powers necessary or appropriate to carry out and effectuate its corporate purposes. The board may:
(1) Adopt and use a common seal and alter it at pleasure;
(2) Sue and be sued;
(3) Enter into contracts and execute and deliver instruments;
(4) Acquire (by purchase, gift or otherwise), hold, use and dispose of real and personal property, deeds, mortgages and other instruments;
(5) Promulgate and enforce bylaws and rules for the management and conduct of its affairs;
(6) Notwithstanding any other provision of law, retain and employ legal, accounting, financial and investment advisors and consultants;
(7) Acquire (by purchase, gift or otherwise), hold, exchange, pledge, lend and sell or otherwise dispose of securities and invest funds in interest earning deposits and in any other lawful investments;
(8) Maintain accounts with banks, securities dealers and financial institutions both within and outside this state;
(9) Engage in financial transactions whereby securities are purchased by the board under an agreement providing for the resale of the securities to the original seller at a stated price;
(10) Engage in financial transactions whereby securities held by the board are sold under an agreement providing for the repurchase of the securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other assets of the other funds and accounts of the state and the moneys of political subdivisions which may be made available to it under the provisions of this article except those funds managed by the West Virginia board of treasury investments under the provisions of article six-c, chapter twelve of the code;
(12) Enter into agreements with political subdivisions of the state whereby moneys of the political subdivisions are invested on their behalf by the board;
(13) Charge and collect administrative fees from political subdivisions for its services;
(14) (12) Exercise all powers generally granted to and exercised by the holders of investment securities with respect to management of the investment securities;
(15) (13) Contract with one or more banking institutions in or outside the state for the custody, safekeeping and management of securities held by the board;
(16) (14) Make and, from time to time, amend and repeal bylaws, regulations and procedures not inconsistent with the provisions of this article;
(17) (15) Hire its own employees, consultants, managers and advisors as it considers necessary and fix their compensation and prescribe their duties;
(18) (16) Develop, implement and maintain its own banking accounts and investments;
(19) (17) Do all things necessary to implement and operate the board and carry out the intent of this article;
(20) Require the state auditor and treasurer to transmit state funds on a daily basis for investment: Provided, That money held for meeting the daily obligations of state government need not be transferred;
(21) (18) Upon request of the treasurer, transmit funds for deposit in the state treasury to meet the daily obligations of state government;
(22) (19) Establish one or more investment funds for the purpose of investing the funds for which it is trustee, custodian or otherwise authorized to invest pursuant to this article. Interests in each fund shall be designated as units and the board shall adopt industry standard accounting procedures to determine each fund's unit value. The securities in each investment fund are the property of the board and each fund shall be considered an investment pool or fund and may not be considered a trust nor may the securities of the various investment funds be considered held in trust. However, units in an investment fund established by or sold by the board and the proceeds from the sale or redemption of any unit may be held by the board in its role as trustee of the participant plans; and
(23) (20) Notwithstanding any other provision of the code to the contrary, conduct investment transactions, including purchases, sales, redemptions and income collections, which shall not be treated by the auditor as recordable transactions on the state's accounting system.
§12-6-12. Investment restrictions.
(a) The board shall hold in equity investments no more than sixty percent of the assets managed by the board and no more than sixty percent of the assets of any individual participant plan. or the consolidated fund
(b) The board shall hold in international securities no more than twenty percent of the assets managed by the board and no more than twenty percent of the assets of any individual participant plan. or the consolidated fund.
(c) The board may not at the time of purchase hold more than five percent of the assets managed by the board in the equity securities of any single company or association: Provided, That if a company or association has a market weighting of greater than five percent in the Standard & Poor's 500 index of companies, the board may hold securities of that equity equal to its market weighting.
(d) The board shall at all times limit its asset allocation and types of securities to the following:
(1) The board may not hold more than twenty percent of the aggregate participant plan assets in commercial paper. Any commercial paper at the time of its acquisition shall be in one of the two highest rating categories by an agency nationally known for rating commercial paper;
(2) At no time shall may the board hold more than seventy-five percent of the assets managed by the board in corporate debt. Any corporate debt security at the time of its acquisition shall be rated in one of the six highest rating categories by a nationally recognized rating agency; and
(3) No security may be purchased by the board unless the type of security is on a list approved by the board. The board may modify the securities list at any time and shall give notice of that action pursuant to subsection (g), section three of this article and shall review the list at its annual meeting.
(e) Notwithstanding the investment limitations set forth in this section, it is recognized that the assets managed by the board, or the assets of the consolidated fund or participant plans, whether considered in the aggregate or individually, may temporarily exceed the investment limitations in this section due to market appreciation, depreciation and rebalancing limitations. Accordingly, the limitations on investments set forth in this section shall not be considered to have been are not violated if the board rebalances the assets it manages or the assets of the consolidated fund or participant plans, whichever is applicable, to comply with the limitations set forth in this section at least once every six months based upon the latest available market information and any other reliable market data that the board considers advisable to take into consideration.
(f) The board, at the annual meeting provided for in subsection (h), section three of this article, shall review, establish and modify, if necessary, the investment objectives of the individual participant plans as incorporated in the investment policy statements of the respective trusts so as to provide for the financial security of the trust funds giving consideration to the following:
(1) Preservation of capital;
(2) Diversification;
(3) Risk tolerance;
(4) Rate of return;
(5) Stability;
(6) Turnover;
(7) Liquidity; and
(8) Reasonable cost of fees.
ARTICLE 6C.WEST VIRGINIA BOARD OF TREASURY INVESTMENTS.
§12-6C-1. Purposes and objects; how article cited.
This article, may be cited as the "West Virginia Treasury Investments Act," and is enacted to provide investment and management services for the consolidated fund which includes the operating funds of the state and of its political subdivisions for the purposes of making moneys in the consolidated fund more accessible to state government, enabling investment managers to focus on the consolidated fund and allowing the investment management board to focus on long-term investment of the trust estates it manages pursuant to article six of this chapter.
§12-6C-2. Legislative findings.
(a) The Legislature finds and declares that the consolidated fund should benefit from a prudent and conscientious staff of financial professionals within state government dedicated to and focused on the sound administration, investment and management of the fund.
(b) The Legislature finds and declares that the state treasurer already enters into agreements on behalf of the West Virginia investment management board and provides reporting services for participants in the consolidated fund.
(c) The Legislature finds and declares that transferring the consolidated fund to the West Virginia board of treasury investments will allow for management of the fund within state government and more accountability and better cash management of all state moneys.
(d) The Legislature finds and declares that a public body corporate within state government with appropriate governance is the best means of assuring reasonable access to and prudent management and investment of the consolidated fund under rapidly changing market conditions, laws and regulations.
(e) The Legislature finds and declares that in accomplishing these purposes, the West Virginia board of treasury investments, created and established by this article, is acting in all respects for the benefit of the citizens of the state in managing and investing the consolidated fund.
(f) The Legislature finds and declares that the standard of care and prudence applied to directors and the investment of the consolidated fund is intended to be that applied to the investment of funds as described in the "uniform prudent investor act" codified in article six-c, chapter forty-four of this code.
(g) The Legislature further finds and declares that it is in the best interests of the state and its citizens to create the West Virginia board of treasury investments to manage and invest the consolidated fund to:
(1) Provide focused investment services for the operating funds of the state and of its political subdivisions;
(2) Provide better management of all state funds within state government;
(3) Protect all existing legal and equitable rights of persons who have entered into contractual relationships with the West Virginia investment management board; and
(4) Allow the West Virginia investment management board to focus on the long-term investment of the trust estates it manages pursuant to section nine-a, article six of this chapter.
§12-6C-3. Definitions.
As used in this article, unless a different meaning clearly appears from the context:
(1) "Board" means the governing body for the West Virginia board of treasury investments and any reference elsewhere in this code to the West Virginia board of investments or the West Virginia trust fund for investing in the consolidated fund means the board as defined in this subdivision;
(2) "Consolidated fund" means the investment fund managed by the board and established pursuant to section nine of this article;
(3) "Local government funds" means the moneys of a political subdivision, including policemen?s pension and relief funds, firemen?s pension and relief funds and volunteer fire departments,
transferred to the board for deposit;
(4) "Participant" means any state government spending unit or political subdivision which transfers moneys to the board for investment;
(5) "Political subdivision" means and includes a county, municipality or any agency, authority, board, county board of education, commission or instrumentality of a county or municipality and regional councils created pursuant to the provisions of section five, article twenty-five, chapter eight of this code;
(6) "Director" means any member serving on the West Virginia board of treasury investments;
(7) "Securities" means all bonds, notes, debentures or other evidences of indebtedness and other lawful investment instruments; and
(8) "State funds" means all moneys of the state which may be lawfully invested except the "school fund" established by section four, article XII of the state constitution.
§12-6C-4. West Virginia board of treasury investments created; body corporate; trust fund board; directors; nomination and appointment of directors, qualifications and terms of appointment, advice and consent; annual and other meetings; board meetings with committees regarding investment policy statement required; open meetings, qualifications.

(a) There is created the West Virginia board of treasury investments. The board is created as a public body corporate and established to provide prudent fiscal administration, investment and management for the moneys in the consolidated fund.
(b) The board consists of five directors, as follows:
(1) The state treasurer, the state auditor and the secretary of administration or their designees. They serve by virtue of their offices and are not entitled to compensation under the provisions of this article. The treasurer, the auditor and the secretary of administration or their designees are subject to all duties, responsibilities and requirements of the provisions of this article; and
(2) The president of the Senate shall recommend a nominee to the governor and the speaker of the House of Delegates shall recommend a nominee to the governor. From the nominees submitted by the president of the Senate and the speaker of the House of Delegates the governor shall make his or her appointments to the board. Any appointment is effective immediately upon appointment by the governor with respect to voting, constituting a quorum, receiving expenses and all other rights and privileges of the director position. All appointees shall have experience in finance, management and investing.
(c) Each director serves a four-year term ending on the thirty-first day of December in the fourth year following the year of his or her appointment. The governor may reappoint or appoint a successor after receiving the list of nominees from the president of the Senate and the speaker of the House of Delegates. Except, of the initial appointees, one has a two-year term and one has a four-year term as determined by the governor.
(d) In the event of a vacancy among the directors, the governor shall appoint a successor after receiving the list of nominees from the president of the Senate and the speaker of the House of Delegates to fill the unexpired term.
(e) The governor may remove any director, other than directors who serve by virtue of their elective office, in case of gross negligence or misfeasance and may declare that position vacant and may appoint a person for the vacancy as provided in subsection (d) of this section.
(f) All directors are entitled to receive reasonable and necessary expenses actually incurred in discharging director duties pursuant to this article.
(g) The board shall hold an annual meeting and quarterly meetings, and may include in the bylaws procedures for the calling and holding of additional meetings. Representatives of participants and the public may attend any meeting held by the board, except during those meetings or part of meetings closed by the board as permitted by law.
(h) The board shall hold an annual meeting which may also serve as a quarterly meeting. The board shall receive written statements or questions from attendees or others prior to the beginning of the meeting and oral statements or questions from attendees during the meeting in accordance with the policy established by the board. Attendees shall observe standards of decorum established by the board. At the annual meeting the board shall adopt a fee schedule and a budget reflecting fee structures for the year.
(i) The board chairman may appoint committees as needed, including an investment policies committee to discuss the board?s
drafting, reviewing or modifying a written investment policy. The board may meet with any or all committees during any of its meetings.
(j) Any meeting of the board may be closed upon adoption of a motion by any director when necessary to preserve the attorney-client privilege, to protect the privacy interests of individuals, to review personnel matters or to maintain confidentiality when confidentiality is in the best interest of the participants.
§12-6C-5. Management and control of fund; officers; staff; fiduciary or surety bonds for directors; liability of directors.

(a) The management and control of the board shall be vested solely in the directors in accordance with the provisions of this article.
(b) The treasurer is the chairperson of the board and the directors shall elect a vice chairperson who may not be a constitutional officer or his or her designee to serve for a term of two years. Effective with any vacancy in the position of vice chairperson, the board shall elect a vice chairman to complete the incomplete term. Annually, the directors shall elect a secretary, who need not be a member of the board, to keep a record of the proceedings of the board.
(c) The board may use the staff of the West Virginia state treasurer, employ personnel and contract with any person or entity needed to perform the tasks related to operating the consolidated fund.
(d) The board shall retain an internal auditor to report directly to the board and shall fix his or her compensation. The internal auditor shall be a certified public accountant with at least three years experience as an auditor. The internal auditor shall develop an internal audit plan, with board approval, for the testing of procedures and the security of transactions.
(e) Each director shall give a separate fiduciary or surety bond from a surety company qualified to do business within this state in a penalty amount of one million dollars for the faithful performance of his or her duties as a director. The board shall purchase a blanket bond for the faithful performance of its duties in the amount of twenty million dollars or in an amount equivalent to one percent of the assets under management, whichever is greater. The amount of the blanket bond is in addition to the one million dollar individual bond required of each director by the provisions of this section. The board may require a fiduciary or surety bond from a surety company qualified to do business in this state for any person who has charge of, or access to, any securities, funds or other moneys held by the board and the amount of the fiduciary or surety bond shall be fixed by the board. The premiums payable on all fiduciary or surety bonds are expenses of the board.
(f) The directors and employees of the board are not liable personally, either jointly or severally, for any debt or obligation created by the board. Except the directors and employees of the board are liable for acts of misfeasance or gross negligence.
(g) The board is exempt from the provisions of sections seven and eleven, article three, chapter twelve of this code and article three, chapter five-a of this code. Except the directors and employees of the board are subject to purchasing policies and practices of the treasurer?s office.
§12-6C-6. Powers of the board.
The board may exercise all powers necessary or appropriate to carry out and effectuate its corporate purposes. The board may:
(1) Adopt and use a common seal and alter it at pleasure;
(2) Sue and be sued;
(3) Enter into contracts and execute and deliver instruments using the policies and procedures of the state treasurer;
(4) Acquire, by purchase, gift or otherwise, hold, use and dispose of real and personal property, deeds, mortgages and other instruments;
(5) Promulgate and enforce bylaws and rules for the management and conduct of its affairs;
(6) Notwithstanding any other provision of law, specifically article two, chapter five of this code, retain and contract with legal, accounting, financial and investment advisors, managers and consultants;
(7) Acquire, by purchase, gift or otherwise, hold, exchange, pledge, lend and sell or otherwise dispose of securities and invest funds in interest earning deposits and in any other lawful investments;
(8) Maintain accounts with banks, securities dealers and financial institutions both in and out of this state;
(9) Engage in financial transactions whereby securities are purchased by the board under an agreement providing for the resale of the securities to the original seller at a stated price;
(10) Engage in financial transactions whereby securities held by the board are sold under an agreement providing for the repurchase of the securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other assets of the consolidated fund and accounts of the state and the moneys of political subdivisions which may be made available to it under the provisions of this article;
(12) Enter into agreements with political subdivisions of the state whereby moneys of the political subdivisions are invested on their behalf by the board;
(13) Charge and collect administrative fees from participants, including political subdivisions, for its services;
(14) Exercise all powers generally granted to and exercised by the holders of investment securities with respect to management of the investment securities;
(15) Use any contract or agreement of the treasurer?s office, and enter into its own contract or agreement, including without limitation entering into a contract or agreement with one or more banking institutions in or outside the state for the custody, safekeeping and management of securities held by the board and with any investment manager and investment advisor needed;
(16) Make and, from time to time, amend and repeal bylaws, rules and procedures not inconsistent with the provisions of this article;
(17) Hire its own employees, consultants, managers and advisors as it considers necessary and fix their compensation and prescribe their duties;
(18) Develop, implement and maintain its own banking accounts and investments;
(19) Do all things necessary to implement and operate the board and carry out the intent of this article, which may include holding training seminars for political subdivisions and creating a local government investment pool;
(20) Require the state treasurer to transmit state funds on a daily basis for investment;
(21) Upon request of the treasurer, transmit funds for deposit in the state treasury to meet the daily obligations of state government;
(22) Establish one or more investment funds or pools for the purpose of investing the moneys and assets for which it is director, custodian or otherwise authorized to invest pursuant to this article. Interests in each fund or poo1 shall be designated as units and the board shall adopt industry standard accounting procedures to determine the unit value of each fund or pool. The securities in each investment fund or pool are the property of the board, and each fund or pool shall be considered an investment pool or fund and may be considered a trust and the securities of the various investment funds held in trust; and
(23) Notwithstanding any other provision of the code to the contrary, conduct investment transactions, including purchases, sales, redemptions and income collections, which may not be treated by the auditor as recordable transactions on the state?s accounting system.
§12-6C-7.Annual audits: reports and information.
(a) The board shall have an annual financial and compliance audit of the assets managed by the board made by a certified public accounting firm which has a minimum staff of ten certified public accountants and which is a member of the American institute of certified public accountants and if doing business in West Virginia, a member of the West Virginia society of certified public accountants. The financial and compliance audit shall be made of the board?s books, accounts and records with respect to its receipts, disbursements, investments, contracts and all other matters relating to its financial operations. Copies of the audit report shall be furnished to the governor, state treasurer, state auditor, president of the Senate, speaker of the House of Delegates, council of finance and administration and as requested,
by any person.
(b) The board shall produce monthly financial statements for the assets managed by the board and cause them to be delivered to each director and as reasonably requested by any person.
(c) Each quarter the board shall deliver a report for the prior quarter to the council of finance and administration.
(d) The board shall cause an annual audit of the reported returns of the assets managed by the board to be made by an investment consulting or a certified public accounting firm meeting the criteria set out in subsection (a) of this section. The board shall furnish copies of the audit report to the governor, state treasurer, state auditor, president of the Senate, speaker of the House of Delegates, council of finance and administration and pursuant to any reasonable request by any person.
(e) The board shall provide any other information requested
in writing by the council of finance and administration or any member of the Legislature.
(f) All statements, reports and plans required in this section shall be available for inspection upon reasonable request by any person.
§12-6C-8. Legal status of agencies and boards continued.
Except as otherwise provided in this article, every state agency or board shall continue to have all of the powers and shall exercise all of the functions and duties vested in or imposed upon it by law, as to any fund or account, and shall continue to be constituted as provided by existing law.
§12-6C-9. Consolidated fund continued; management of fund.
(a) The special investment fund managed by the West Virginia investment management board and designated as the "consolidated fund" is transferred to the board.
(b) Each board, commission, department, official or agency charged with the administration of state funds may make moneys available to the board for investment.
(c) Each political subdivision of this state through its treasurer or equivalent financial officer may enter into agreements with the board for the investment of moneys of the political subdivision. Any political subdivision may enter into an agreement with any state agency from which it receives funds to allow the funds to be transferred to their investment account with the board.
(d) Moneys held in the various funds and accounts administered
by the board shall be invested as permitted by this article and subject to the restrictions contained in this article.
(e) For the consolidated fund, the board shall maintain records of the deposits and withdrawals of each participant and the performance of the various funds and accounts. The board shall on a monthly basis provide to each state agency and any other entity investing moneys in the consolidated fund an itemized statement of the agency?s or the entity?s account in the consolidated fund. The statement shall include the beginning balance, contributions, withdrawals, income distributed, change in value and ending balance. The board shall report the earnings on the various funds under management to the treasurer at the times determined by the board. The board shall also establish rules for the administration of the various funds, pools and accounts established by this section as it considers necessary for administrative purposes, including the specification of amounts which may be deposited in any fund or account and minimum periods of time for which deposits will be retained.
§12-6C-10. Fees for service.
The board may charge fees, which may be subtracted from the total return, for the reasonable and necessary expenses incurred by the board in rendering services. All fees which are dedicated or identified or readily identifiable to an entity, fund or pool shall be charged to that entity, fund or pool and all other fees shall be charged as a percentage of assets under management. At its annual meeting, the board shall adopt a fee schedule and a budget reflecting fee structures.
§12-6C-l1. Administration of fund.
(a) In the administration of the consolidated fund continued by this article, the board has the following powers:
(1) To purchase, retain, hold, transfer and exchange and to sell at public or private sale, the whole or any part of the fund or pools upon terms and conditions it considers advisable;
(2) To invest and reinvest the fund and pools or any part of the fund or pools in fixed income securities as provided in this article;
(3) To carry the securities and other property held in trust either in the name of the board or in the name of its nominee;
(4) To vote, in person or by proxy, all securities held; to join in or to dissent from and oppose the reorganization, recapitalization, consolidation, merger, liquidation or sale of corporations or property; to exchange securities for other securities issued in connection with or resulting from any transaction; to pay any assessment or expense which the board considers advisable for the protection of its interest as holder of the securities; to exercise any option appurtenant to any securities for the conversion of any securities into other securities; and to exercise or sell any rights issued upon or with respect to the securities of any corporation, all upon terms the director considers advisable;
(5) To prosecute, defend, compromise, arbitrate or otherwise adjust or settle claims in favor of or against the board or a director;
(6) To employ and pay from the fund any investment advisers, brokers, counsel, managers and any other assistants and agents the board considers advisable; and
(7) To develop, implement and modify an asset allocation plan for each fund or pool.
(b) All income and earnings are free from anticipation, alienation, assignment or pledge by, and free from attachment, execution, appropriation or control by or on behalf of any and all creditors of any beneficiary by any proceeding at law, in equity, in bankruptcy or insolvency.
(c) The board shall render an annual accounting to the governor not more than one hundred twenty days following the close of the fiscal year.
§12-6C-l2. Authorization of additional investments.
Notwithstanding the restrictions which may otherwise be provided by law with respect to the investment of funds, the board, all administrators, custodians, each political subdivision of this state and each county board of education is authorized to invest funds in the securities of or any other interest in any investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. §80a, the portfolio of which is limited: (i) To obligations issued by or guaranteed as to the payment of both principal and interest by the United States of America or its agencies or instrumentalities; and (ii) to repurchase agreements fully collateralized by obligations of the United States government or its agencies or instrumentalities: Provided, That the investment company or investment trust takes delivery of the collateral either directly or through an authorized custodian and: Provided, however, That the investment company or investment trust is rated within one of the top two rating categories of any nationally recognized rating service such as Moody's or Standard and Poor's.
§12-6C-l3. Legislative findings; loans for industrial development; availability of funds and interest rates.

(a) The Legislature finds and declares that the citizens of the state benefit from the creation of jobs and businesses within the state; that a business and industrial development loan program provides for economic growth and stimulation within the state; that loans from pools established in the consolidated fund will assist in providing the needed capital to assist business and industrial development; and that time constraints relating to business and industrial development projects prohibit duplicative review by both the board and West Virginia economic development authority board. This section is enacted in view of these findings.
(b) (1) The board shall make available, subject to cash availability, in the form of a revolving loan, up to one hundred fifty million dollars from the consolidated fund to loan the West Virginia economic development authority for business or industrial development projects authorized by section seven, article fifteen, chapter thirty-one of this code and to consolidate existing loans authorized to be made to the West Virginia economic development authority pursuant to this section and pursuant to section twenty, article fifteen, chapter thirty-one of this code which authorizes a one hundred fifty million dollar revolving loan and article eighteen-b, chapter thirty-one of this code which authorizes a fifty million dollar investment pool. Except the West Virginia economic development authority may not loan more than fifteen million dollars for any one business or industrial development project. The revolving loan authorized by this subsection shall be secured by one note at a variable interest rate equal to the twelve-month average of the board?s yield on its cash liquidity pool. The rate shall be set on the first day of July and the rate shall be adjusted annually on the same date. The maximum annual adjustment may not exceed one percent. Monthly payments made by the West Virginia economic development authority to the board shall be calculated on a one hundred twenty-month amortization. The revolving loan shall be secured by a security interest that pledges and assigns the cash proceeds of collateral from all loans under this revolving loan pool. The West Virginia economic development authority may also pledge as collateral certain revenue streams from other revolving loan pools which source of funds does not originate from federal sources or from the board.
(2) The outstanding principal balance of the revolving loan from the board to the West Virginia economic development authority may at no time exceed one hundred three percent of the aggregate outstanding principal balance of the business and industrial loans from the West Virginia economic development authority to economic development projects funded from this revolving loan pool. This provision shall be certified annually by an independent audit of theWest Virginia economic development authority financial records.
(c) The interest rates and maturity dates on the loans made by the West Virginia economic development authority for business and industrial development projects authorized by section seven, article fifteen, chapter thirty-one of this code shall be at competitive rates and maturities as determined by the West Virginia economic development authority board.
(d) Any and all outstanding loans made by the board, or any predecessor entity to the West Virginia economic development authority shall be refunded by proceeds of the revolving loan contained in this section and no loans may be made by the board to the West Virginia economic development authority pursuant to section twenty, article fifteen, chapter thirty-one of this code or article eighteen-b of chapter thirty-one.
(e) The directors of the board shall bear no fiduciary responsibility as provided in section sixteen of this article with specific regard to the revolving loan contemplated in this section.
§12-6C-l4. Securities handling.
In financial transactions where securities are purchased by the board under an agreement providing for the resale of the securities to the original seller at a stated price, the board shall take physical possession of the securities, directly, by its custodian bank or through a neutral third party. Except, an agreement with a neutral third party may not waive liability for the handling of the securities and when the board is unable to take possessions directly, by its custodian bank or through a mutual third party, the board may leave securities in a segregated account with the original seller, if the amount of the securities with any one seller does not exceed one hundred fifty million dollars.
§12-6C-15. Restrictions on investments.
Notwithstanding any other provision in this code, moneys on deposit in the consolidated fund shall be invested as permitted by section sixteen of this article subject to the restrictions and conditions contained in this section:
(1) At no time may more than seventy-five percent of the consolidated fund be invested in any bond, note, debenture, commercial paper or other evidence of indebtedness of any private corporation or association;
(2) At no time may more than five percent of the consolidated fund be invested in securities issued by a single private corporation or association; and
(3) At no time may less than fifteen percent of the consolidated fund be invested in any direct obligation of or obligation guaranteed as to the payment of both principal and interest by the United States of America.
§12-6C-16. Standard of care.
Any investments made under this article shall be made in accordance with the provisions of the "Uniform Prudent Investor Act" codified as article six-c, chapter forty-four of this code and are further subject to the following requirements:
(1) Directors shall discharge their duties with respect to the consolidated fund;
(2) Directors shall diversify fund investment so as to minimize the risk of large losses unless, under the circumstances, it is clearly prudent not to do so;
(3) Directors shall defray reasonable expenses of investing and managing the consolidated fund;
(4) Directors shall discharge their duties in accordance with the documents and instruments governing the moneys under management insofar as the documents and instruments are consistent with the provisions of this article; and
(5) The duties of the board apply only with respect to those assets deposited with or otherwise held by it.
§12-6C-17. Board as sole agency for investment in the consolidated fund; exceptions.

All duties vested by law in the state treasurer and the West Virginia investment management fund relating to the consolidated fund are transferred to the board, including without limitation the investment of moneys, and the acquisition, sale, exchange or disposal of securities or any other investment. Neither this section nor any other section of this article applies to the "board of the school fund" and the "school fund" established by section 4, article XII of the state constitution. The funds under the control of the municipal bond commission may, in the discretion of the commission, be made available to the board for investment to be invested by the commission as provided in article three, chapter thirteen of this code.
§12-6C-18. Reports of board.
The board shall prepare annually, or more frequently if considered necessary by the board, a report of its operations and the performance of the various funds administered by it. A copy of the report shall be furnished to each participant upon request, the president of the Senate, speaker of the House of Delegates, the legislative auditor, and upon request to any legislative committee, any legislator, any banking institution or state or federal savings and loan association in this state, and any member of the news media. The report shall be kept available for inspection by any citizen of this state.
§12-6C-19. Existing investments.
The board is vested with ownership of all securities or other investments lawfully held by the investment management board in the consolidated fund as of the effective date of this article. All obligations and assets of the investment management board are vested in the board as of the effective date of this article.
§12-6C-20. Authorization for loans by the board.
Any loans made by a predecessor of the board remain in existence and in accordance with the terms and conditions of the loan.
§12-6C-21. Termination of board.
Pursuant to the provisions of article ten, chapter four of this code, the West Virginia board of treasury investments shall continue to exist until the first day of July, two thousand eight.
NOTE: The purpose of this bill is to create the "West Virginia Treasury Investments Act," and create the West Virginia Board of Treasury Investments. The Board is to provide investment and management services for the consolidated fund which includes the operating funds of the state and of its political subdivisions for the purposes of making moneys in the consolidated fund more accessible to state government, enabling investment managers to focus on the consolidated fund and allowing the investment management board to focus on long-term investment of the trust estates it manages.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Article 6C, chapter 12 is new; therefore, strike-throughs and underscoring have been omitted.
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