Senate Bill No. 451
(By Senators Plymale, Edgell, Prezioso, McCabe and Jackson)
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[Originating in the Committee on Pensions;
reported March 8, 2001.]
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A BILL to repeal section ten, article six, chapter twelve of the
code of West Virginia, one thousand nine hundred thirty-one,
as amended; to amend and reenact section eight, article one of
said chapter; and to amend and reenact sections one-a, two,
three, four, five, six, eight, nine, nine-a, nine-e, eleven,
twelve and nineteen, article six of said chapter, all relating
to the West Virginia investment management board and its
investment management and loans for business and industrial
development and availability of funds and interest rates;
correcting and clarifying inconsistencies; deleting outdated
provisions regarding conflict of interest provision regarding
board members and state depositories; providing for the common investment of pension, workers' compensation and other assets
in board-created vehicles; changing date of annual meeting;
providing for staggered terms of board members; conforming
statutory trust language to trust indenture; providing for
appropriate fees to be assessed against all assets invested
and managed by the board; eliminating, amending and clarifying
certain restrictions on investments; requiring the board to
make certain loans to the West Virginia economic development
authority; specifying limits and conditions for same;
clarifying that board members bear no fiduciary responsibility
for such loans made to the economic development authority; and
replacing certain references to the state building commission
with the secretary of the department of administration.
Be it enacted by the Legislature of West Virginia:
That section ten, article six, chapter twelve of the code of
West Virginia, one thousand nine hundred thirty-one, as amended, be
repealed; that section eight, article one of said chapter be
amended and reenacted; and that sections one-a, two, three, four,
five, six, eight, nine, nine-a, nine-e, eleven, twelve and
nineteen, article six of said chapter be amended and reenacted, all
to read as follows:
ARTICLE 1. STATE DEPOSITORIES.
§12-1-8. Conflict of interest.
No depository in this state may serve or be eligible
for designation as a state depository if any member of the West
Virginia investment management board, or employee of the
treasurer's office, or a spouse or minor child of that member or
employee, is an officer, director or employee thereof, or owns
greater than two percent of the depository either in his or their
own name or beneficially, or an interest in such depository. A
member of the board or An employee of the treasurer's office shall
disclose the circumstance, if any, in the sworn statement required
under the provisions of section one, article one, chapter six-b of
this code.
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, and 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 employer's 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. 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 consolidated pension plan 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 for an of the irrevocable trust trusts created by this article, and to manage and invest other state funds.
(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 trust 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 of this chapter
forty-four 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 consolidated pension plan 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 herein;
(3) "Consolidated fund" means the investment fund managed by
the board and established pursuant to subsection (a), section eight
of this article;
(4) "Consolidated pension plan" means the public employees
retirement system established in article ten, chapter five of this
code, the teachers retirement system established in article
seven-a, chapter eighteen of this code, the West Virginia state
police retirement system established in article two-a, chapter
fifteen of this code, the death, disability and retirement fund of the state police established in article two, chapter fifteen of
this code, the judges' retirement system established in article
nine, chapter fifty-one of this code, the workers' compensation
fund established in article three, chapter twenty-three of this
code, the wildlife endowment fund established in article two-b,
chapter twenty of this code, and the coal-workers' pneumoconiosis
plan established in article four-b, chapter twenty-three of this
code "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
such 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) "Participant plan" means any component system, plan or
fund of the consolidated pension plan within the definition set
forth in subdivision (4) of this section 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) "Trustee" means any member serving on the West Virginia
investment management board: Provided, That in section nine-a of
this article wherein the terms of the trust indenture trusts are
set forth, "trustee" means the West Virginia investment management
board;
(9) "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.
§12-6-3. West Virginia investment management board created; body
corporate; board created; trustees; nomination and appointment
of trustees, qualifications and terms of appointment, advice
and consent; annual and other meetings; designation of
representatives and committees; board meetings with committees
regarding investment policy statement required; open meetings,
qualifications.
(a) There is hereby created the West Virginia investment
management board. The board is created as a public body corporate
and established to provide prudent fiscal administration,
investment and management for the pension funds, workers'
compensation and coal-workers' pneumoconiosis funds and other state
funds funds of the participant plans and any other funds managed by
the board.
(b) The board shall be governed by a board of trustees,
consisting of thirteen members:
(1) Nominations made to the West Virginia trust fund board and
the West Virginia board of investments shall remain in effect and
are hereby specifically reauthorized and those members shall be
members of the investment management board and shall serve out the
remainder of their respective terms subject to the advice and
consent of the Senate: Provided, That prior appointments which
have been confirmed by the Senate are hereby specifically
reauthorized without further action of the Senate.
(2) Any appointment is effective immediately upon appointment
by the governor with respect to voting, constituting a quorum,
receiving compensation and expenses, and all other rights and
privileges of the trustee position. All appointees must have
experience in pension management, institutional management or financial markets, and one trustee must be an attorney experienced
in finance and investment matters, and one trustee must be a
certified public accountant.
(3) The governor, the state auditor and the state treasurer or
their designees shall serve as members of the board. They shall
serve by virtue of their office and are not entitled to
compensation under the provisions of this article. The governor,
the auditor and the treasurer or their designees shall be subject
to all duties, responsibilities and requirements of the provisions
of this article, including, but not limited to, the provisions of
subsections (e) and (f), section four of this article.
(c)At the end of each trustee's term, the governor may
reappoint or appoint a successor who shall serve for six-year terms
a term ending on the thirty-first day of January in the sixth year
following the year of his or her appointment: Provided, That for
all terms ending in the year two thousand one, two appointments
shall be for a two-year term; two appointments shall be for a
three-year term; one shall be for a four-year term; and two shall
be for a six-year term. Except for vacancy appointments made
pursuant to subsection (d) of this section, all subsequent
appointments shall be for terms ending in the thirty-first day of
January in the sixth year following the year of appointment. No more than six of the ten appointed trustees may belong to the same
political party.
(d) In the event of a vacancy among the trustees, an
appointment shall be made by the governor to fill the unexpired
term.
(e) The governor may remove any trustee, other than trustees
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) Each trustee, other than those enumerated in subsection
(b), subdivision (3) of this section, shall be entitled to receive,
and, at the trustee's option, the board shall pay to the trustee,
compensation in the amount of five thousand dollars per year and
additional compensation in the amount of five hundred dollars per
meeting attended by the trustee in excess of the four quarterly
meetings required by this section. In addition, all trustees shall
receive reasonable and necessary expenses actually incurred in
discharging trustee duties pursuant to this article.
(g) The board shall meet quarterly and may include in its
bylaws procedures for the calling and holding of additional
meetings. For any quarterly or additional meeting in which the board shall review or modify its securities list or its investment
objectives pursuant to subsection (f), section twelve of this
article, the board shall give ten days notice in writing to the
designated representative of each participant plan selected
pursuant to subdivision (1), subsection (i) of this section, and
the meeting shall be open to the members and beneficiaries of the
participant plans for that portion of the meeting in which the
board undertakes the review or modification.
(h) The board shall hold an annual meeting within forty-five
days after the issuance of the year-end financial report before the
start of the fiscal year. The annual meeting may also serve as a
quarterly meeting. The annual meeting shall be open to the public,
and the board shall receive oral and written comments from
representatives, members and beneficiaries of the participant plans
and from other citizens of the state. At the annual meeting, the
board shall adopt a fee schedule and a budget reflecting fee
structures for the year.
(i) Pursuant to subsection (j) of this section, the board
shall meet with committees representing the participant plans to
discuss the board's drafting, reviewing or modifying the written
investment policy of the trust with respect to that committee's
participant plan pursuant to section twelve of this article. Representatives and committees shall be designated as follows:
(1) The West Virginia consolidated public retirement board
shall promulgate procedural rules by which each pension system
named in paragraphs (1) through (6), inclusive, subsection (c),
section nine-a of this article 401(a) plan for which the board is
trustee, shall designate an individual representative of each said
pension system 401(a) plan, and the West Virginia workers'
compensation commission shall promulgate procedural rules by which
the pneumoconiosis fund and the workers' compensation fund shall
designate an individual representative of each said fund.
(2) On or before the first day of June of each year, the
consolidated public retirement board shall submit in writing to the
board the names of the six designated representatives of the 401(a)
plans and the workers' compensation commission shall so submit the
names of the two representatives.
(3) Each designated representative shall provide to the board
his or her current address, updated each year on or before the
first day of July, to which address the board shall provide notice
of meetings of the board pursuant to subsection (g) of this
section.
(4) Each designated representative shall submit in writing to
the board on or before the first day of July of each year, the names of no more than three persons comprising a committee
representing the beneficiaries of that representative's participant
plan.
(j) At its annual meeting, the board shall meet with each of
the seven committees, formed pursuant to subdivision (1),
subsection (i) of this section, for the purpose of receiving input
from the committees regarding the board's drafting, reviewing or
modifying its written investment policy statement for investment of
the consolidated pension plan funds funds of the participant plans.
In developing the investment policy statement, the trustees shall
receive each committee's stated objectives and policies regarding
the risk tolerances and return expectations of each participant
plan, with attention to the factors enumerated in subsection (g),
section twelve of this article, in order to provide for the
continuing financial security of the trust trusts and it's the
participant plans. The board may meet with the committees or any
of them at its quarterly and additional meetings for the same
purpose.
(k) All meetings of the board shall be open to the
representatives of the participant plans as appointed pursuant
to subdivision (1), subsection (i) of this section. The
representatives shall be subject to any rules, bylaws, guidelines, requirements and standards promulgated by the board. The
representatives shall observe standards of decorum established by
the board. The representatives shall be subject to the same code
of conduct applicable to the trustees and shall be subject to all
board rules and bylaws. The representatives shall also be subject
to any requirements of confidentiality applicable to the trustees.
Each representative shall be liable for any act which he or she
undertakes which violates any rule, bylaw or statute governing
ethical standards, confidentiality or other standard of conduct
imposed upon the trustees or the representatives. Any meeting of
the board may be closed, upon adoption of a motion by any trustee,
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 beneficiaries of the trust trusts.
§12-6-4. Management and control of fund; officers; staff;
fiduciary or surety bonds for trustees; liability of
trustees.
(a) The management and control of the board shall be vested
solely in the trustees in accordance with the provisions of this
article.
(b) The governor shall be the chairman of the board and the trustees shall elect a vice chairman 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 vice chairmanship,
the board shall elect a vice chairman to a new two-year term. The
vice-chairman shall preside at all meetings in the absence of the
chairman. Annually, the trustees 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 trustees shall appoint a chief executive officer of
the board and shall fix his or her duties and compensation. The
chief executive officer shall have five years experience in
investment management with public or private funds within the ten
years next preceding the date of appointment. The chief executive
officer additionally shall have academic degrees, professional
designations and other investment management or investment
oversight or institutional investment experience in such
combination as the trustees consider necessary to carry out the
responsibilities of the chief executive officer position as defined
by the trustees.
(d) The trustees shall retain an internal auditor to report
directly to the trustees 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 trustee 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 trustee. of the fund. The
board shall purchase a blanket bond for the faithful performance of
its duties, in the amount of fifty million dollars or in an amount
equivalent to one percent of the assets under management, whichever
is greater. The amount of the blanket bond shall be in addition to
the one million dollar individual bond required of each trustee 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 shall be an
expense of the board.
(f) The trustees and employees of the board are not liable
personally, either jointly or severally, for any debt or obligation
created by the board: Provided, That the trustees and employees of the board are liable for acts of misfeasance or gross negligence.
(g) The board shall be exempt from the provisions of sections
seven and eleven, article three, chapter twelve of this code and
article three, chapter five-a of said code: Provided, That the
trustees and employees of the board shall be subject to purchasing
policies and procedures which shall be promulgated by the board.
The purchasing policies and procedures may be promulgated as
emergency rules pursuant to section fifteen, article three, chapter
twenty-nine-a of this code.
(h) Any employee of the West Virginia trust fund who
previously was an employee of another state agency may return to
the public employees retirement system pursuant to section
eighteen, article ten, chapter five of this code, and may elect to
either: (1) Transfer to the public employee retirement system his
or her employee contributions, with accrued interest, and, if
vested, his or her employer contributions, with accrued interest
and retain as credited state service all time served as an employee
of the West Virginia trust fund; or (2) retain all employee
contributions with accrued interest and, if vested, his or her
employer contributions with interest, and forfeit all service
credit for the time served as an employee of the West Virginia
trust fund.
§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) 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;
(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) Exercise all powers generally granted to and exercised
by the holders of investment securities with respect to management
of the investment securities;
(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;
(16) Make, and from time to time, amend and repeal bylaws,
regulations 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;
(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) Upon request of the treasurer, transmit funds for
deposit in the state treasury to meet the daily obligations of
state government; and
(22) Establish one of 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. Interest
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 shall be 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
(22) (23) Notwithstanding any other provision of the code to
the contrary, conduct investment transactions, including purchases,
sales, redemptions and income collections which transactions shall
not be treated by the auditor as recordable transactions on the
state's accounting system.
§12-6-6. Annual audits; reports and information to constitutional
and legislative officers, council of finance and
administration, consolidated public retirement board,
workers' compensation fund and coal-workers'
pneumoconiosis fund; statements and reports open for
inspection.
(a) The board shall cause an annual financial and compliance
audit of the consolidated pension fund assets managed by the board
to be made by a certified public accounting firm having a minimum
staff of ten certified public accountants and being a member of the
American institute of certified public accountants, and, if doing business in West Virginia, being 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 consolidated public retirement board.
(b) The board shall produce monthly financial statements for
the consolidated pension fund and the consolidated fund assets
managed by the board and cause them to be delivered to each member
of the board and the executive secretary of the consolidated public
retirement board as established in sections one and two, article
ten-d, chapter five of this code and to the commissioner of the
bureau of employment programs as administrator of the workers'
compensation fund and coal-workers' pneumoconiosis fund, as
established in section one, article one, chapter twenty-three of
this code, and section one, article three of said chapter and
section seven, article four-b of said chapter.
(c) The board shall deliver in each quarter to the council of
finance and administration and the consolidated public retirement board a report detailing the investment performance of the
retirement 401(a) plans.
(d) The board shall cause an annual audit of the reported
returns of the consolidated pension fund 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 consolidated public retirement board.
(e) The board shall provide any other information requested in
writing by the council of finance and administration.
(f) All statements and reports with respect to participant
plans required in this section shall be available for inspection by
the members and beneficiaries and designated representatives of the
participant plans.
§12-6-8. Investment funds established; management thereof.
(a) There is hereby established a special investment fund to
be managed by the board and designated as the "consolidated fund".
(b) Each board, commission, department, official or agency
charged with the administration of state funds is hereby authorized
to make moneys available to the board for investment.
(c) Each political subdivision of this state through its treasurer or equivalent financial officer is hereby authorized to
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 investment management board.
(d) Moneys held in the various funds and accounts administered
by the board shall be invested as permitted in section twelve of by
this article and subject to the restrictions contained in that
section herein. For the consolidated fund, the treasurer shall
maintain records of the deposits and withdrawals of each
participant and the performance of the various funds and accounts.
The board shall report the earnings on the various funds under
management to the treasurer at such times as determined by the
treasurer. The board shall also establish rules for the
administration of the various funds and accounts established by
this section as it considers necessary for the administration of
the funds and accounts, including, but not limited to: (1) The
specification of minimum amounts which may be deposited in any fund
or account and minimum periods of time for which deposits will be
retained; and (2) creation of reserves for losses: Provided, That
in the event any moneys made available to the board may not
lawfully be combined for investment or deposited in the
consolidated funds established by this section, the board may
create special accounts and may administer and invest those moneys
in accordance with the restrictions specially applicable to those
moneys.: Provided, however, That the consolidated fund and the
moneys of the consolidated pension plan shall not be combined or
deposited to a single account or fund.
§12-6-9. Fees for service.
The board shall is hereby authorized to charge fees, as
adopted at the annual meeting, which may be subtracted from the
total return, for the reasonable and necessary expenses incurred by
the investment management board in rendering services. to the
participant plans and the consolidated fund. The fees shall be
subtracted from the total return of the board, and the net return
shall be credited to each of the participant plans and the
consolidated fund. All fees which are dedicated or identified or
readily identifiable to an individual participant plan or the
consolidated fund entity, plan or fund shall be charged against
that plan or fund to that entity, plan or fund, 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.
§12-6-9a. Trust indenture.
On the effective date of this section, all assets of the
irrevocable trust entered into by the governor on the first day of
July, one thousand nine hundred ninety-six, with the West Virginia
trust fund, inc., acting as the trustee shall constitute the corpus
of an irrevocable trust with the board as its trustee: Provided,
That the trust shall continue to be subject to the following
provisions:
The provisions of the trust indenture entered into by the
governor on the first day of July, one thousand nine hundred ninety
six, with the West Virginia Trust Fund, Inc., acting as the
trustee, are superceded by the following provisions:
(a) The Board shall continue to hold each of the participant
plans specified by this article in a separate irrevocable trust as trustee pursuant to the terms and provisions set forth in this
section and with the earnings and losses accounted for and charged
individually to each participant plan and trust: Provided: That the
board shall be authorized to invest the assets held in each
participant plan in any investment fund even though the board may
also invest non-401(a) moneys in such investment fund. Participant
plans, each declared by this section to be held in a separate
irrevocable trust, include, but are not limited to, the following
and such other plans as may be added to this section or otherwise
designated by the Legislature from time to time:
(1) The public employees retirement system;
(2) The teachers retirement system;
(3) The West Virginia state police retirement system;
(4) The death, disability and retirement fund of the
department of public safety;
(5) The judges retirement system;
(6) The deputy sheriffs retirement system;
(7) The pneumoconiosis fund;
(8) The worker's compensation fund; and
(9) The wildlife endowment fund.
(a) (b) The Legislature hereby reserves the following rights
and powers:
(1) The right by supplemental agreement to amend, modify or
alter the terms of this trust the trusts established by this
section without consent of the trustee, or any beneficiary except
that no amendment to a trust which holds any 401(a) plan moneys may
be made which allows at any time for any part of the corpus or
income (other than such part as is required to pay taxes and
administration expenses) to be used for, or diverted to, purposes other than for the exclusive benefit of the employees or their
beneficiaries in accordance with the requirements of section
401(a)(2) of the Internal Revenue Code, as the same may be amended
from time to time; and
(2) The right to request and receive additional information
from the trustee at any time.
(b) The trustee shall establish a trust for the participant
plans specified by this article with the earnings and losses
accounted for and charged individually to each participant plan,
including, but not limited to, the following:
(1) The public employees retirement system;
(2) The teachers retirement system;
(3) The West Virginia state police retirement system;
(4) The death, disability and retirement fund of the
department of public safety;
(5) The judges' retirement system;
(6) The deputy sheriff retirement system;
(7) The pneumoconiosis fund; and
(8) The workers' compensation fund.
(c) In the administration of the trust trusts created by the
trust indenture this article, the trustee 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 trust
estate upon such terms and conditions as it considers advisable;
(2) To invest and reinvest the trust estate or any part
thereof, in any kind of property, real or personal, including, but
not limited to, mortgage or mortgage participations, common stocks,
preferred stocks, common trust funds, investment funds established
by the board, bonds, notes or other securities, notwithstanding the provisions of articles five and six, chapter forty-four of this
code; : Provided, That notwithstanding the provisions of this
article to the contrary, the board shall not become a stockholder
or owner of any company or association for any purpose whatsoever
unless and until the provisions of section six, article X of the
constitution of West Virginia are amended to permit those
investments;
(3) To carry the securities and other property held under the
trust indenture in trust either in the name of the trustee or in
the name of its nominee;
(4) To vote, in person or by proxy, all securities held under
the trust indenture in trust, 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 trustee considers advisable for the protection of its
interest as holder of any such securities; to deposit securities in
any voting trust or with any protective or like committee, or with
a trustee depository; 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
trustee considers advisable;
(5) To prosecute, defend, compromise, arbitrate or otherwise
adjust or settle claims in favor of or against the trustee or other
trust estate;
(6) To employ and pay from the trust estate trusts, legal and
investment counsel, brokers and such other assistants and agents as the trustee considers advisable; and
(7) To develop, implement and modify an asset allocation plan
for each participant plan. The asset allocation plans shall be
implemented within the management and investment of the trust fund
individual trusts.
(d) All trust income shall be 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.
(e) Notwithstanding any other provision of this article, in
the case of a trust which holds any 401(a) plan's money, it is
impermissible at any time for any part of the corpus or income to
be (within the taxable year or thereafter) used for, or diverted
to, purposes other than the exclusive benefit of the employees and
their beneficiaries in accordance with the requirements of section
401(a)(2) of the Internal Revenue Code, as the same may be amended
from time to time.
(e) (f) The trustee may receive any other property, real or
personal, tangible or intangible, of any kind whatsoever, that may
be granted, conveyed, assigned, transferred, devised, bequeathed or
made payable to it by the state, or by any other person or entity,
for the purposes of the trust created by the trust indenture the
applicable trust, and all such properties shall be held, managed,
invested and administered by the trustee as provided in the trust
indenture this article and in the "West Virginia Investment
Management Act".
(f) (g) The trustee shall promptly cause to be paid to the
state from the applicable trust the amounts certified by the governor as necessary for the monthly payment of benefits to the
beneficiaries of the trust.
(g) (h) The trustee shall render an annual accounting to the
governor not more than one hundred twenty days following the close
of the fiscal year of the each trust.
(h) (i) The No trust will not shall be invalid by reason of
any existing law or rule against perpetuities or against
accumulations or against restraints upon the power of alienation,
but the trust may each trust shall continue for such time as
necessary to accomplish the purposes for which it is established.
(i) (j) If any provision of the trust indenture this section
is void, invalid or unenforceable, the remaining provisions are
nevertheless valid and shall be carried into effect.
§12-6-9e. Legislative findings; loans for industrial development;
availability of funds and interest rates.
(a) The Legislature hereby finds and declares that the
citizens of the state benefit from the creation of jobs and
businesses within the state; that an a business and industrial
development loan program will does provide for economic growth and
stimulation within the state; and 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) The board may shall make available, subject to cash
availability, on a in the form of a revolving basis loan, up to
fifteen 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:
Provided, That the West Virginia economic development authority may
not loan more than two fifteen million dollars for any one business
or industrial development project. The loans shall be secured by
notes, security interests or bonds issued by the West Virginia
economic development authority evidencing the indebtedness of the
economic development authority to the board. 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 plus one-half percent.
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 will
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.
The notes, security interests or bonds issued by the economic
development authority shall be secured by security equal to or
better than one of the three highest rating grades by an agency
which is nationally known in the field of rating corporate
securities or by a letter of credit guarantee issued by a bank
having an unsecured legal lending limit greater than two million
dollars. 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
the West Virginia economic development authority financial records.
(c) The interest rates and maturity dates on the loans to 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. The board shall determine
the financial condition of pools within the consolidated fund and
shall determine if there is sufficient liquidity within the pools
to make the loans specified in this section.
(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
herein contained and no loans may be made hereafter 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 said chapter.
(e) The trustees of the board shall bear no fiduciary
responsibility as provided in section eleven of this article with
specific regard to the revolving loan herein contemplated.
§12-6-11. 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 of this chapter forty-four and shall
be further subject to the following requirements:
(a) Trustees shall discharge their duties with respect to the
consolidated pension plan 401(a) plans for the exclusive purpose of
providing benefits to participants and their beneficiaries;
(b) Trustees 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;
(c) Trustees shall defray reasonable expenses of investing and
operating the funds under management; and
(d) Trustees shall discharge their duties in accordance with
the documents and instruments governing the trust fund trusts or
other funds under management insofar as such documents and
instruments are consistent with the provisions of this article.
(e) The duties of the board shall apply only with respect to
those assets deposited with or otherwise held by it.
§12-6-12. Investment restrictions.
(a) The board shall not become a stockholder or owner of any
company or association for any purpose whatsoever unless and until
the provisions of section six, article X of the constitution of
West Virginia are amended to provide for those investments. If at
some time, after the effective date of this section, the provisions of section six, article X of the constitution of West Virginia are
amended to allow the state to become a stockholder in a
corporation, the board shall limit its asset allocation and types
of securities to the following:
(1) For the first twelve months following authorization of the
state to become a stockholder or owner of any corporation, the
board shall hold in equity investments no more than twenty percent
of its total portfolio and no more than twenty percent of the
assets of any individual participant plan or the consolidated fund;
during the thirteenth through and including the twenty-fourth month
following the authorization, the board shall hold in equity
investments no more than forty percent of its total portfolio and
no more than forty percent of the assets of any individual
participant plan or the consolidated fund; and thereafter, The
board shall hold in equity investments no more than sixty percent
of its total portfolio the assets managed by the board and no more
than sixty percent of the assets of any individual participant plan
or the consolidated fund.
(2) (b) The board shall hold in international securities no
more than twenty percent of the consolidated fund or the trust fund
assets managed by the board and no more than twenty percent of the
assets of any individual participant plan or the consolidated fund.
(3) (c) The board may not at the time of purchase hold more
than five percent of the trust fund or consolidated fund asset
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.
(b) (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
trust fund 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 the board hold more than seventy-five
percent of the trust fund or consolidated fund 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 four six
highest rating categories by a nationally recognized rating agency.
(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 must give notice of
that action pursuant to subsection (g), section three of this
article, and must 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 foregoing investment limitations due to
market appreciation, depreciation and rebalancing limitation.
Accordingly, the limitation on investments set forth in this
section shall not be considered to have been 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 above at least one time per year based
upon the latest available market information and such other reliable market date as the board shall consider advisable to take
into consideration.
(c) (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.
(8) Reasonable cost of fees.
§12-6-19. Authorization for loans by the board.
(a) The board, upon request of the state building commission
secretary of administration, shall transfer moneys as a loan to the
state building commission secretary of administration in an amount
not to exceed in the aggregate twenty-one million dollars for the
purposes of financing or refinancing the projects specified in
subsections (b) and (d), section eight, article six, chapter five
of this code. The money borrowed shall bear interest during the
term of the loan at a fixed rate not to exceed the interest rate on
treasury notes, bills or bonds of the same term as the term of the
loan the week of closing on the loan as reported by the treasury of
the United States. Loans made under this subsection shall be repaid in regular monthly or semiannual payments, or as funds are
made available by the budget office of department of
administration, and shall be paid in full not later than
twenty-five years from the date the loans are made with terms and
conditions mutually agreed upon by the state building commission
secretary of administration. and the investment management board.
(b) The state investment management board shall upon request
of the state building commission secretary of administration
transfer moneys as a loan to the state building commission
secretary of administration in an amount not to exceed in the
aggregate one hundred thirty-seven million dollars for the purposes
of financing construction of regional jails, correctional
facilities or building extensions or improvements to regional jails
and correctional facilities. Prior to the expenditure of any loan
proceeds, the regional jail and correctional facility authority
shall certify a list of projects to the state building commission
secretary of administration and the joint committee on government
and finance that shall be funded from loan proceeds. This
certified list cannot thereafter be altered or amended other than
by legislative enactment. The state building commission secretary
of administration shall borrow money as needed by the regional jail
and correctional facility authority. The investment management
board shall transfer loan proceeds to the authority for
expenditure. The money borrowed shall bear interest during the
term of the loan at a fixed rate not to exceed the interest rate on
treasury notes, bills or bonds of the same term as the term of the
loan the week of closing on the loan as reported by the treasury of
the United States.
(c) The regional jail and correctional facility authority shall expend the loan proceeds received under the provisions of
subsection (b) of this section to proceed with the projects
included in the letter submitted to the joint committee on
government and finance dated the fifteenth day of January, one
thousand nine hundred ninety-seven: Provided, That the letter
shall not be construed to prioritize any project or projects which
are included in the letter: Provided, however, That the authority
may also expend loan proceeds for any expansion to any existing
regional jail or any expansion to a regional jail under
construction upon the effective date of this section.
(d) Loans made under this section for the projects specified
in subsection (b) of this section and in subsection (d), section
eight, article six, chapter five of this code, shall be repaid in
annual payments of not less than twelve million dollars per year by
appropriation of the Legislature to the board. The amount
transferred for loans under subsection (a) or (b) of this section
shall not exceed that amount which the board determines is
reasonable given the cash flow needs of the consolidated fund. The
board shall make transfers for loans first for the project
specified in subsection (d), section eight, article six, chapter
five of this code, second for the projects specified in subsection
(b) of this section and third for projects specified in subsection
(b), section eight, article six, chapter five of this code, which
are in imminent danger of default in payment. The board shall
take the steps necessary to increase the liquidity of the
consolidated fund over a period of the next five years to allow for
the loans provided in this section without increasing the risk of
loss in the consolidated fund.