Senate Bill No. 464
(By Senators Wagner and Bowman)
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[Introduced February 19, 1996; referred to the Committee
on Pensions; and then to the Committee on Finance.]
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A BILL to amend and reenact section four, article ten-d, chapter
five of the code of West Virginia, one thousand nine hundred
thirty-one, as amended; to amend and reenact section eleven,
article two, chapter five-a of said code; to amend and
reenact section one, article three, chapter twelve of said
code; and to amend and reenact sections five and six,
article six of said chapter, all relating to requiring the
actuary for the pension funds to provide the board of
investments with monthly projections of withdrawals and
contributions; requiring the department of administration to
provide the board of investments with monthly revenue
projections and projections of the daily revenue flows for the general revenue fund; requiring the auditor to present
daily reports to the board of investments on the warrants
issued; requiring that when the board of investments enters
into a repurchase agreement, the securities shall be held by
the board, its custodial bank or a neutral third party; and
requiring that the management service fee be based on the
actual cost investing the funds.
Be it enacted by the Legislature of West Virginia:
That section four, article ten-d, chapter five of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; that section eleven, article
two, chapter five-a of said code be amended and reenacted; that
section one, article three, chapter twelve of said code be
amended and reenacted; and that sections five and six, article
six of said chapter be amended and reenacted, all to read as
follows:
CHAPTER 5. OFFICERS, BOARDS AND COMMISSIONS.
ARTICLE 10D. CONSOLIDATED PUBLIC RETIREMENT BOARD.
§5-10D-4. Employment of an actuary; duties; compensation.
(a) The board is hereby empowered and authorized to employ
a state retirement actuary or actuarial firm with such
qualifications as the board may prescribe or to utilize an actuary already in the employ of the state. The actuary or
actuarial firm shall perform the following duties for the board:
(1) Analyze each item of state retirement legislation as to
cost, actuarial soundness and adherence to sound pension policy;
(2) Prepare an actuarial note to be attached to each item of
state retirement legislation prior to its formal introduction.
Such The actuarial note shall briefly summarize the proposed
legislation and set forth its anticipated fiscal and actuarial
impact on the affected state retirement system or systems; and
(3) On or before the first day of July, the first day of
October, the first day of January and the first day of April,
provide the board of investments with twelve-month projections of
monthly withdrawals and contributions for each pension plan.
When possible, the projections for each month shall also include
approximate dates for each month when the withdrawals and
contributions are expected to occur. The projections may be
updated between quarters if the consolidated public retirement
board or the board of investments determines that it is
necessary; and
(3) (4) Such other duties as the board or the board of
trustees of the state public retirement system may assign.
(b) The state retirement actuary or actuarial firm, if one
is employed by the board, shall be compensated in an amount to be
fixed by the board. He or she shall receive, in addition, the
necessary expenses incident to the performance of his or her
duties. In the event that the board utilizes an actuary already
employed by the state to perform duties for the board, the board
shall reimburse the department or agency which actually employs
the actuary for expenses, including the pro rata portion of
salary, that the actuary actually expends in the performance of
duties for the board.
CHAPTER 5A. DEPARTMENT OF ADMINISTRATION.
ARTICLE 2. FINANCE DIVISION.
§5A-2-11. Estimates of revenue; reports on revenue collections;
withholding department funds on noncompliance.
(a) Prior to the beginning of each fiscal year the secretary
shall estimate the revenue to be collected month by month by each
classification of tax for that fiscal year as it relates to the
official estimate of revenue for each tax for that fiscal year
and the secretary shall certify this estimate to the governor and
the legislative auditor and the board of investments by the first
day of July for that fiscal year.
The secretary shall ascertain the collection of the revenue of the state and shall determine for each month of the fiscal
year the proportion which the amount actually collected during a
month bears to the collection estimated by him or her for that
month. The secretary shall certify to the governor, and the
legislative auditor and the board of investments, as soon as
possible after the close of each month, and not later than the
fifteenth day of each month, and at such other times as the
governor, or the legislative auditor or the board of investments
may request, the condition of the state revenues and of the
several funds of the state and the proportion which the amount
actually collected during the preceding month bears to the
collection estimated by him or her for that month. The secretary
shall include in this certification the same information
previously certified for prior months in each fiscal year. For
the purposes of this section, the secretary shall have the
authority to require all necessary estimates and reports from any
spending unit of the state government.
If the secretary fails to certify to the governor, and the
legislative auditor and the board of investments the information
required by this section subsection within the time specified
herein, the legislative auditor shall notify the auditor and treasurer of such the failure, and thereafter no funds
appropriated to the department of administration shall may be
expended until the secretary has certified the information
required by this section subsection.
(b) Prior to the first day of July of each fiscal year, the
secretary shall estimate daily revenue flows for the general
revenue fund for the next fiscal year as it relates to the
official estimate of revenue. Subsequent to the end of each
fiscal year, the secretary shall compare the projected daily
revenue flows with the actual daily revenue flows from the
previous year. The secretary may for any month or months, at his
or her discretion, revise the annual projections of the daily
revenue flows. The secretary shall certify to the governor, the
legislative auditor and the board of investments, as soon as
possible after the close of each month, and not later than the
fifteenth day of each month, and at such other times as the
governor, the legislative auditor or the board of investments may
request, the condition of the general revenue fund and the
comparison of the projected daily revenue flows with the actual
daily revenue flows. If the secretary fails to certify to the
governor, the legislative auditor and the board of investments the information required by this subsection within the time
specified herein, the legislative auditor shall notify the
auditor and treasurer of the failure, and thereafter no funds
appropriated to the department of administration may be expended
until the secretary has certified the information required by
this subsection.
CHAPTER 12. PUBLIC MONEYS AND SECURITIES.
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,
and for so much thereof as he shall find or she finds to be
justly due from the state, if payment thereof be is authorized by
law, and if there be is an appropriation not exhausted or expired
out of which it is properly payable, he 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 the same it is to be charged. The auditor
shall present to the board of investments 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 of the board of investments. On the
presentation of such the warrant to the treasurer, he the
treasurer shall ascertain whether the same warrant has been drawn
in pursuance of an appropriation made by law, 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 such 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; or he the treasurer may issue a bank wire in payment
of such the warrant. If such check shall not be the check is not
presented for payment within six months after it is drawn, it
shall then be the duty of the treasurer to credit it to the
depository on which it was drawn, to credit the state fund with
the amount, and immediately notify the auditor to make
corresponding entries on his the auditor's books. No state
depository shall 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". 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 same claim
affixed by the clerk of such the court to his or her certificate
of its allowance; and no such claim shall may be audited and paid
by the auditor unless the seal of such court be the court is
thereto attached as aforesaid. No tax or fee shall may be
charged by the clerk for affixing his or her seal to the
certificate, referred to in this section. The treasurer and the
board of investments shall jointly promulgate rules and
regulations in accordance with the provisions of chapter
twenty-nine-a of this code governing the procedure for such
payments from the treasury.
ARTICLE 6. WEST VIRGINIA STATE BOARD OF INVESTMENTS.
§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 the same 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) 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;
(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 such securities to the original seller at a stated
price: Provided, That the board take physical possession of the
securities, directly, by its custodian bank or through a neutral
third party: Provided, however, That an agreement with a neutral
third party may not waive liability for the handling of the
securities;
(10) Engage in financial transactions whereby securities
held by the board are sold under an agreement providing for the
repurchase of such securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other
assets of the pension funds and 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;
(12) Enter into agreements with political subdivisions of
the state whereby moneys of such the political subdivisions are
invested on their behalf by the board;
(13) Charge and collect administrative fees from political
subdivisions for its services;
(14) Exercise all powers generally granted to and exercised
by the holders of investment securities with respect to
management thereof;
(15) Contract with one or more banking institutions in or
outside the state for the custody, safekeeping and management of
securities held by the board; and
(16) Develop and implement a centralized receipts processing
center.
§12-6-6. Costs and expenses; fees for services; special revenue account; costs of determining third parties'
liability; recoupment of investment losses.
(a) The board shall make a charge against the earnings of
the various funds managed by the board for all necessary expenses
of the board. The charge shall be on a pro rata basis of actual
earnings of the various funds managed by the board reflect each
fund's share of the actual costs incurred to manage the funds
based on actual cost allocations or cost estimations. The charge
shall be deposited to the credit of the general revenue fund.
(b) There is hereby created in the state treasury a special
revenue account to be known as the "loss expenses account." The
purpose of this account is to provide funds to the board of
investments to pay costs, fees and expenses incurred, or to be
incurred, for the following: (1) Investigation and pursuit of
claims against third parties for the investment losses incurred
during the period beginning the first day of August, one thousand
nine hundred eighty-four, and ending on the thirty-first day of
January, one thousand nine hundred eighty-nine; (2) consulting
services regarding the restructuring of the office of the
treasurer following said losses; and (3) implementation of the
recommendations made as a result of the consultations regarding restructuring. That special revenue account shall be funded by
depositing income derived by the board from securities lending
and recoveries from third parties. The board is authorized to
deposit into the special revenue account, and to expend in
accordance with the provisions of this section, those funds
received from such recoveries and not more than two million
dollars annually from income derived by the board from securities
lending. Funds in the loss expense account in excess of
reasonably estimated costs, fees and expenses for any fiscal year
and any funds remaining in such special revenue account at the
end of each fiscal year after expenditures, for the purposes
specified above, may be transferred by the board to its
"liquidity investment pool," to be used, in such manner as the
board determines, to eliminate the present imbalance in the state
accounts caused by the investment losses described above in this
subsection: Provided, That amounts collected which are found
from time to time to exceed the funds needed for the purposes set
forth in this section may be transferred to other accounts or
funds and redesignated for other purposes by appropriation of the
Legislature. The authority for this special revenue account
expires on the thirtieth day of June, one thousand nine hundred ninety-five.
NOTE: The purpose of this bill is to require the actuary
for the pension funds to provide the board of investments with
monthly projections of withdrawals and contributions; require the
department of administration to provide the board of investments
with monthly revenue projections and projections of the daily
revenue flows for the general revenue fund; require the auditor
to make daily reports to the board of investments on the warrants
issued; require that when the board of investments enters into a
repurchase agreement, the securities shall be held by the board,
its custodial bank or a neutral third party; and to require the
management service fee be based on the actual cost investing the
funds.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.