ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 451
(Senators Plymale, Edgell, Prezioso, McCabe and Jackson, original
sponsors)
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[Passed April 14, 2001; in effect from passage.]
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AN ACT to amend and reenact section eight, article one, chapter
twelve of the code of West Virginia, one thousand nine hundred
thirty-one, as amended; and to amend and reenact sections one-
a, two, three, four, five, six, eight, nine, nine-a, nine-e,
ten, eleven and twelve, 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outdated provisions regarding conflict of interest provision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; 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 rebalancing of assets when investment
limitations exceeded.
Be it enacted by the Legislature of West Virginia:
That section eight, article one, chapter twelve of the code of
West Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted; and that sections one-a, two, three, four,
five, six, eight, nine, nine-a, nine-e, ten, eleven and twelve,
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 employee of the
treasurer's office, or a spouse or minor child of that employee, is
an officer, director or employee of the depository or owns greater
than two percent of the depository either in his or her own name or
beneficially or an interest in the depository. 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, 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. 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.
(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;
(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) "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) "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;
(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 continued; body
corporate; trust fund board; 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 continued 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 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 shall have
experience in pension management, institutional management or financial markets and one trustee shall be an attorney experienced
in finance and investment matters and one trustee shall 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 are 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 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 two-
year terms; two appointments shall be for three-year terms; one
shall be for a four-year term; and two shall be for six-year terms.
Except for vacancy appointments made pursuant to subsection (d) of
this section, all subsequent appointments shall be for terms ending
on 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, is 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 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 401(a) plan for
which the board is trustee, shall designate an individual
representative of each 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 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 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 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, section twelve of this article, in order to
provide for the continuing financial security of the trusts and its
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 are 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 are subject to the same code of
conduct applicable to the trustees and are subject to all board
rules and bylaws. The representatives are also subject to any
requirements of confidentiality applicable to the trustees. Each representative is 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 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 a combination
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. 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 is 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 is 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 are 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 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;
(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;
(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. 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) 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.
§12-6-6. 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 assets managed by the board to be 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 consolidated
public retirement board.
(b) The board shall produce monthly financial statements for
the 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 401(a)
plans.
(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
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 continued 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 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
investment management 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. 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
the times 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 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.
§12-6-9. 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 investment management board in rendering services. All fees
which are dedicated or identified or readily identifiable to an entity, plan or fund shall be charged 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.
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 superseded 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 the 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 any other plans that 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 division
of public safety;
(5) The judges' retirement system;
(6) The deputy sheriffs' retirement system;
(7) The pneumoconiosis fund;
(8) The workers' compensation fund; and
(9) The wildlife endowment fund.
(b) The Legislature hereby reserves the following rights and
powers:
(1) The right by supplemental agreement to amend, modify or
alter the terms of 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 the part that 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 it may be amended from time to time; and
(2) The right to request and receive additional information
from the trustee at any time.
(c) In the administration of the trusts created by 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 of the
trust estate, 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;
(3) To carry the securities and other property held 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 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
the 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 trusts legal and investment
counsel, brokers and any other assistants and agents 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 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 it may be amended from
time to time.
(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 the applicable trust and all the properties shall
be held, managed, invested and administered by the trustee as
provided in this article.
(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.
(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 each trust.
(i) No trust 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 each trust shall
continue for the time necessary to accomplish the purposes for
which it is established.
§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 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) 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: Provided, That 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.
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 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 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 contemplated in this section.
§12-6-10. Restrictions on investments.
Notwithstanding any other provision in this code, moneys on
deposit in the consolidated fund shall be invested as permitted by
section twelve of this article subject to the restrictions and
conditions contained in this section:
(1) At no time shall 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 shall 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 shall 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.
§12-6-11. 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, chapter forty-four of this code and
is further subject to the following requirements:
(a) Trustees shall discharge their duties with respect to the
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 trusts or other funds
under management insofar as the documents and instruments are
consistent with the provisions of this article.
(e) The duties of the board apply only with respect to those
assets deposited with or otherwise held by it.
§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 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 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.