Senate Bill No. 675
(By Senator Craigo, Plymale, Unger, Bowman, Prezioso, McCabe,
Sharpe, Ross, Chafin, Helmick, Anderson and Love)
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[Introduced February 18, 2002; referred to the Committee
on Pensions; and then to the Committee on Finance.]
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A BILL to repeal section twelve-a, article one, chapter twelve of
the code of West Virginia, one thousand nine hundred
thirty-one, as amended; to repeal sections eight, nine-e, ten
and thirteen, article six of said chapter; to amend and
reenact sections two, seven, twelve and thirteen, article one
of said chapter; to amend and reenact section seven, article
one-a of said chapter; to amend and reenact section three,
article two of said chapter; to amend and reenact section one,
article three of said chapter; to amend and reenact sections
four and six, article three-a of said chapter; to amend and
reenact sections one-a, two, five and twelve, article six of
said chapter; and to further amend said chapter by adding
thereto a new article, designated article six-c, all relating
to the handling of state funds; creating the West Virginia board of treasury investments; and altering duties of the
treasurer and auditor.
Be it enacted by the Legislature of West Virginia:
That section twelve-a, article one, chapter twelve of the code
of West Virginia, one thousand nine hundred thirty-one, as amended,
be repealed; that sections eight, nine-e, ten and thirteen, article
six of said chapter be repealed; that sections two, seven, twelve
and thirteen, article one of said chapter be amended and reenacted;
that section seven, article one-a of said chapter be amended and
reenacted; that section three, article two of said chapter be
amended and reenacted; that section one, article three of said
chapter be amended and reenacted; that sections four and six,
article three-a of said chapter be amended and reenacted; that
sections one-a, two, five and twelve, article six of said chapter
be amended and reenacted; and that said chapter be further amended
by adding thereto a new article, designated article six-c, all to
read as follows:
ARTICLE 1. STATE DEPOSITORIES.
§12-1-2. Depositories for demand deposits; categories of demand
deposits; competitive bidding for disbursement
accounts; maintenance of deposits by state treasurer.
(a) The state treasurer shall designate the state and national
banks in this state which shall serve as depositories for all state
funds placed in demand deposits. Any such The state or national bank shall, upon request to the treasurer, be designated as a state
depository for such the deposits, if such the bank meets the
requirements set forth in this chapter.
(b) Demand deposit accounts shall consist of receipt and
disbursement. Receipt accounts shall be are those accounts in
which are deposited moneys belonging to or due the state of West
Virginia or any official, department, board, commission or agency
thereof of the state.
(c) Disbursement accounts shall be are those accounts from
which are paid moneys due from the state of West Virginia or any
official, department, board, commission, political subdivision or
agency thereof to any political subdivision, person, firm or
corporation, except moneys paid from investment accounts.
(d) Investment accounts shall be are
those accounts
established by the West Virginia investment management board, the
West Virginia board of treasury investments or the state treasurer
for the buying and selling of securities for investment for the
state of West Virginia.
(e) The state treasurer shall promulgate propose rules for
legislative approval, in accordance with the provisions of article
three, chapter twenty-nine-a of this code, concerning depositories
for receipt accounts prescribing the selection criteria,
procedures, compensation and such other contractual terms as it
considers to be in the best interests of the state giving due consideration to:
(1) The activity of the various accounts maintained therein;
(2) The reasonable value of the banking services rendered or
to be rendered the state by such depositories; and
(3) The value and importance of such deposits to the economy
of the communities and the various areas of the state affected
thereby.
(f) The state treasurer shall select depositories for
disbursement accounts through competitive bidding by eligible banks
in this state. However, if none of the eligible banks in this
state are able to provide any of the needed services, then the
treasurer may include eligible banks outside this state. The
treasurer shall promulgate propose rules for legislative approval,
in accordance with the provisions of article three, chapter
twenty-nine-a of this code, prescribing the procedures and criteria
for the bidding and selection. The treasurer shall, in the
invitations for bids, specify the approximate amounts of deposits,
the duration of contracts to be awarded and such other contractual
terms as it considers to be in the best interests of the state,
consistent with obtaining the most efficient service at the lowest
cost.
(g) The amount of money needed for current operation purposes
of the state government, as determined by the state treasurer,
shall be maintained at all times in the state treasury, in cash, in short term investments not to exceed five days, or in disbursement
accounts with banks designated as depositories in accordance with
the provisions of this section. No state officer or employee shall
may make or cause to be made any deposits of state funds in banks
not so designated.
§12-1-7. Rules of banking contracts and agreements; depositors,
agreements.
In addition to rules specially authorized in this article, the
West Virginia investment management board, the board of treasury
investments and the state treasurer are generally authorized to
promulgate any propose rules for legislative approval necessary to
protect the interests of the state, its depositories and taxpayers.
All rules promulgated shall be proposed are subject to the
provisions of article three, chapter twenty-nine-a of this code.
Any rules previously established by the board of public works, the
board of investments, the investment management board or the state
treasurer pursuant to this article shall remain in effect until
amended, superseded or rescinded.
Only the treasurer may enter into contracts or agreements with
financial institutions for banking goods or services. If a state
spending unit requires banking goods or services, it shall contact
the treasurer and request him or her to provide them. If the
treasurer enters into a contract or agreement solely for the
required goods or services spending units using the contract or agreement shall either pay the vendor directly or reimburse the
treasurer for his or her payments to the vendor.
The treasurer is also authorized to enter into any depositors'
agreements for the purpose of reorganizing or rehabilitating any
depository in which state funds are deposited, and for the purpose
of transferring the assets, in whole or in part, of any depository
to any other lawful depository when, in the judgment of the
treasurer, the interests of the state will be are promoted thereby,
and upon condition that no right of the state to preferred payment
be is waived.
§12-1-12. When treasurer shall make funds available to the West
Virginia board of treasury investments;
depositories outside the state.
When the funds in the treasury exceed the amount needed for
current operational purposes, as determined by the treasurer, the
treasurer shall make all of such the excess available for
investment by the investment management board of treasury
investments which shall invest the excess for the benefit of the
general revenue fund. Provided, That the state treasurer, after
reviewing the cash flow needs of the state, may withhold and invest
amounts not to exceed one hundred twenty-five million dollars of
the operating funds needed to meet current operational purposes.
Investments made by the state treasurer under this section shall be
made in short term investments not to exceed five days. Operating funds means the consolidated fund established in section eight,
article six of this chapter, including all cash and investments of
the fund.
Whenever the funds in the treasury exceed the amount for which
depositories within the state have qualified, or the depositories
within the state which have qualified are unwilling to receive
larger deposits the treasurer may designate depositories outside
the state, disbursement accounts being bid for in the same manner
as required by depositories within the state, and when such the
depositories outside the state have qualified by giving the bond
prescribed in section four of this article, the state treasurer
shall deposit funds therein in like in the same manner as funds are
deposited in depositories within the state under this article.
The state treasurer may transfer funds to banks financial
institutions outside the state to meet obligations to paying agents
outside the state and any such transfer which financial
institutions must meet the same bond collateral requirements as set
forth in this article.
§12-1-13. Payment of banking services and litigation costs for
prior investment losses.
(a) The treasurer is authorized to pay for banking services,
and services ancillary thereto, by either a compensating balance in
a noninterest-bearing account maintained at the financial
institution providing the services or with a state warrant as described in section one, article five of this chapter.
(b) The investment management board is authorized to pay for
the investigation and pursuit of claims against third parties for
the investment losses incurred during the period beginning on the
first day of August, one thousand nine hundred eighty-four, and
ending on the thirty-first day of August, one thousand nine hundred
eighty-nine. The payment may be in the form of a state warrant.
(c) If payment is made by a state warrant, the investment
management board of treasury investments at the request of the
treasurer is authorized to establish within the consolidated fund
an investment pool which will generate sufficient income to pay for
all banking services provided to the state and to pay for the
investigation and pursuit of the prior investment loss claims. All
income earned by the investment pool shall be paid into a special
account of the treasurer to be known as the banking services
account and shall be used solely for the purpose of paying for all
banking services and services ancillary to the banking services
provided to the state, for the investigation and pursuit of the
prior investment loss claims, amortize the balance in the
investment imbalance fund.
ARTICLE 1A. WEST VIRGINIA SMALL BUSINESS LINKED DEPOSIT PROGRAM.
§12-1A-7. Liability of state.
The state, the treasurer and the small business development
center are not liable to any eligible lending institution in any manner for payment of the principal or interest on the loan to an
eligible small business. Any delay in payment or default on the
part of an eligible small business does not in any manner affect
the deposit agreement between the eligible lending institution and
the board treasurer.
ARTICLE 2. PAYMENT AND DEPOSIT OF TAXES AND OTHER AMOUNTS DUE THE
STATE OR ANY POLITICAL SUBDIVISION.
§12-2-3. Deposit of moneys not due the state.
(a) All officials and employees of the state authorized to
accept moneys that the state treasurer determines or that this code
specifies are not funds due the state pursuant to the provisions of
section two of this article shall deposit the moneys, as soon as
practicable, in the manner and in the depository specified by the
treasurer. The treasurer shall prescribe the forms and procedures
for depositing the moneys.
(b)
Notwithstanding any provision of this code,
a spending
unit shall
comply with the state treasurer?s procedures for the
receipt and disbursement of funds not due the state and
obtain
written authorization from the state treasurer before depositing
the any funds in an account outside the treasury. Upon the
treasurer's written revocation of the authorization, the spending
unit shall deposit funds deposited in an account outside the
treasury in the treasury in the manner and in the depository
specified by the treasurer. The treasurer is the final determining authority as to whether these funds are funds due or not due the
state pursuant to section two of this article. The treasurer shall
on a quarterly basis provide the legislative auditor with a report
of all accounts approved by him or her.
ARTICLE 3. APPROPRIATIONS, EXPENDITURES AND DEDUCTIONS.
§12-3-1. Manner of payment from treasury; form of checks.
Every person claiming to receive money from the treasury of
the state shall apply to the auditor for a warrant for same. The
auditor shall thereupon examine the claim, and the vouchers,
certificates and evidence, if any, offered in support thereof of
the claim, and for so much thereof of the claim as he or she finds
to be justly due from the state, if payment thereof of the claim is
authorized by law, and if there is an appropriation not exhausted
or expired out of which it is properly payable, the auditor shall
issue his or her warrant on the treasurer, specifying to whom and
on what account the money mentioned therein is to be paid, and to
what appropriation it is to be charged. The auditor shall present
to the treasurer daily reports on the number of warrants issued,
the amounts of the warrants and the dates on the warrants for the
purpose of effectuating the investment policy policies of the
investment management board
of treasury investments.
On the
presentation of the warrant to the treasurer, the treasurer shall
ascertain whether there are sufficient funds in the treasury to pay
that warrant, and if he or she finds it to be so, he or she shall in that case, but not otherwise, endorse his or her check upon the
warrant, directed to some depository, which check shall be payable
to the order of the person who is to receive the money therein
specified.
If the a check is not presented for payment within six months
after it is drawn, it shall then be is the duty of the treasurer to
credit it to the depository on which it was drawn, to credit the
unclaimed property fund pursuant to the provisions of article
eight, chapter thirty-six of this code, and immediately notify the
auditor to make corresponding entries on the auditor's books.
However, any check containing federal funds that has been deposited
to the credit of the unclaimed property fund, the federal funds
portion of the check shall be identified by the spending unit
within six months after receipt of the notification by the
treasurer. The amount identified by the spending unit shall be
returned to the spending unit originally requesting issuance of the
check and shall be credited to the account from which it was
disbursed. No state depository may pay a check unless it is
presented within six months after it is drawn and every check shall
bear upon its face the words "Void, unless presented for payment
within six months." Any information or records maintained by the
treasurer concerning any check which has not been presented for
payment within six months of the date of issuance may only be
disclosed to the state agency specified on the check, or to the payee, his or her personal representative, next of kin or
attorney-at-law and is otherwise confidential and exempt from
disclosure under the provisions of article one, chapter
twenty-nine-b of this code. All claims required by law to be
allowed by any court, and payable out of the state treasury, shall
have the seal of the court allowing or authorizing the payment of
the claim affixed by the clerk of the court to his or her
certificate of its allowance. No claim may be audited and paid by
the auditor unless the seal of the court is thereto attached as
aforesaid. No tax or fee may be charged by the clerk for affixing
his or her seal to the certificate, referred to in this section.
The treasurer shall propose rules in accordance with the provisions
of article three, chapter twenty-nine-a of this code governing the
procedure for such payments from the treasury.
ARTICLE 3A. FINANCIAL ELECTRONIC COMMERCE.
§12-3A-4. Payment by the West Virginia check card.
The state auditor treasurer may establish a state debit card
known as the "West Virginia Check Card" for recipients of employee
payroll or of benefits or entitlement programs processed by the
auditor who are considered unbanked and who do not possess a
federally insured depository institution account. The state
auditor treasurer shall use every reasonable effort to make a
federally insured depository account available to a recipient, and
to encourage all recipients to obtain a federally insured depository account. Prior to issuing the West Virginia check card,
the state auditor treasurer shall first make a determination that
a recipient has shown good cause that an alternative method to
direct deposit is necessary. The state auditor and the state
treasurer shall jointly issue a request for proposals in accordance
with section three of this article to aid the auditor in the
administration of the program and to aid the treasurer in the
establishment of state owned bank accounts and accommodate
accessible locations for use of the West Virginia check card. In
carrying out the purposes of this article, the state auditor and
state treasurer shall may not compete with banks or other federally
insured financial institutions, or for profit.
§12-3A-6. Receipting of electronic commerce purchases.
The treasurer may establish a system for acceptance of credit
card and other payment methods for electronic commerce purchases
from spending units. Each spending unit utilizing WEB commerce,
electronic commerce or other method that offers products or
services for sale shall utilize the treasurer's system for
acceptance of payments. The treasurer may authorize any spending
unit to assess a user fee to recover the cost associated with
accepting credit cards or other payment methods electronically.
ARTICLE 6. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD.
§12-6-1a. Legislative findings.
(a) The Legislature hereby finds and declares that all the public employees covered by the public employees retirement system,
the teachers retirement system, the West Virginia state police
retirement system, the death, disability and retirement fund of the
division of public safety, the judges' retirement system and the
deputy sheriff's retirement system should benefit from a prudent
and conscientious staff of financial professionals dedicated to the
administration, investment and management of those employees' and
employers' financial contributions and that an independent board
and staff should be immune to changing political climates and
should provide a stable and continuous source of professional
financial investment and management.
(b) The Legislature finds and declares that teachers and other
public employees throughout the state are experiencing economic
difficulty and that in order to reduce this economic hardship on
these dedicated public employees and to help foster sound financial
practices, the West Virginia investment management board is given
the authority to develop, implement and maintain an efficient and
modern system for the investment and management of the state's
money except those funds managed by the West Virginia board of
treasury investments under the provisions of article six-c, chapter
twelve of this code. The Legislature further finds that in order
to implement these sound fiscal policies, the West Virginia
investment management board shall operate as an independent board
with its own full-time staff of financial professionals, immune to changing political climates, in order to provide a stable and
continuous source of professional financial management.
(c) The Legislature hereby finds and declares further that
experience has demonstrated that prudent investment provides
diversification and beneficial return not only for public employees
but for all citizens of the state and that in order to have access
to this sound fiscal policy, public employee and employer
contributions to the 401(a) plans are declared to be made to an
irrevocable trust on behalf of each plan, available for no use or
purpose other than for the benefit of those public employees.
(d) The Legislature hereby finds and declares further that the
workers' compensation funds and coal-workers' pneumoconiosis fund
are trust funds to be used exclusively for those workers, miners
and their beneficiaries who have sacrificed their health in the
performance of their jobs and further finds that the assets
available to pay awarded benefits should be prudently invested so
that awards may be paid.
(e) The Legislature hereby finds and declares further that an
independent public body corporate with appropriate governance shall
be the best means of assuring prudent financial management of these
funds under rapidly changing market conditions and regulations.
(f) The Legislature hereby finds and declares further that in
accomplishing this purpose, the West Virginia investment management
board, created and established by this article, is acting in all respects for the benefit of the state's public employees and
ultimately the citizens of the state and the West Virginia
investment management board is empowered by this article to act as
trustee of the irrevocable trusts created by this article and to
manage and invest other state funds except those funds managed by
the West Virginia board of treasury investments under the
provisions of article six-c, chapter twelve of this code.
(g) The Legislature hereby finds and declares further that the
standard of care and prudence applied to trustees, the conduct of
the affairs of the irrevocable trusts created by this article and
the investment of other state funds is intended to be that applied
to the investment of funds as described in the "uniform prudent
investor act" codified as article six-c, chapter forty-four of this
code and as described in section eleven of this article.
(h) The Legislature further finds and declares that the West
Virginia supreme court of appeals declared the "West Virginia Trust
Fund Act" unconstitutional in its decision rendered on the
twenty-eighth day of March, one thousand nine hundred ninety-seven,
to the extent that it authorized investments in corporate stock,
but the court also recognized that there were other permissible
constitutional purposes of the "West Virginia Trust Fund Act" and
that it is the role of the Legislature to determine those purposes
consistent with the court's decision and the constitution of West
Virginia.
(i) The Legislature hereby further finds and declares that it
is in the best interests of the state and its citizens to create a
new investment management board in order to:
(1) Be in full compliance with the provisions of the
constitution of West Virginia; and
(2) Protect all existing legal and equitable rights of persons
who have entered into contractual relationships with the West
Virginia board of investments and the West Virginia trust fund.
§12-6-2. Definitions.
As used in this article, unless a different meaning clearly
appears from the context:
(1) "Beneficiaries" means those individuals entitled to
benefits from the participant plans;
(2) "Board" means the governing body for the West Virginia
investment management board and any reference elsewhere in this
code to board of investments or West Virginia trust fund means the
board as defined in this subdivision;
(3) "Consolidated fund" means the investment fund managed by
the board and established pursuant to subsection (a), section eight
of this article the West Virginia board of treasury investments
established under the provisions of article six-c, chapter twelve
of this code;
(4) "401(a) plan" means a plan which is described in section
401(a) of the Internal Revenue Code of 1986, as amended, and with respect to which the board has been designated to hold assets of
the plan in trust pursuant to the provisions of section nine-a of
this article;
(5) "Local government funds" means the moneys of a political
subdivision, including policemen's pension and relief funds,
firemen's pension and relief funds and volunteer fire departments,
transferred to the board for deposit;
(6) (5) "Participant plan" means any plan or fund subject now
or hereafter to subsection (a), section nine-a, article six of this
chapter;
(7) "Political subdivision" means and includes a county,
municipality or any agency, authority, board, county board of
education, commission or instrumentality of a county or
municipality and regional councils created pursuant to the
provisions of section five, article twenty-five, chapter eight of
this code;
(8) (6) "Trustee" means any member serving on the West
Virginia investment management board: Provided, That in section
nine-a of this article in which the terms of the trusts are set
forth, "trustee" means the West Virginia investment management
board; and
(9) (7) "Securities" means all bonds, notes, debentures or
other evidences of indebtedness and other lawful investment
instruments. and
(10) "State funds" means all moneys of the state which may be
lawfully invested except the "school fund" established by section
four, article XII of the state constitution.
§12-6-5. Powers of the board.
The board may exercise all powers necessary or appropriate to
carry out and effectuate its corporate purposes. The board may:
(1) Adopt and use a common seal and alter it at pleasure;
(2) Sue and be sued;
(3) Enter into contracts and execute and deliver instruments;
(4) Acquire (by purchase, gift or otherwise), hold, use and
dispose of real and personal property, deeds, mortgages and other
instruments;
(5) Promulgate and enforce bylaws and rules for the management
and conduct of its affairs;
(6) Notwithstanding any other provision of law, retain and
employ legal, accounting, financial and investment advisors and
consultants;
(7) Acquire (by purchase, gift or otherwise), hold, exchange,
pledge, lend and sell or otherwise dispose of securities and invest
funds in interest earning deposits and in any other lawful
investments;
(8) Maintain accounts with banks, securities dealers and
financial institutions both within and outside this state;
(9) Engage in financial transactions whereby securities are purchased by the board under an agreement providing for the resale
of the securities to the original seller at a stated price;
(10) Engage in financial transactions whereby securities held
by the board are sold under an agreement providing for the
repurchase of the securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other
assets of the other funds and accounts of the state and the moneys
of political subdivisions which may be made available to it under
the provisions of this article except those funds managed by the
West Virginia board of treasury investments under the provisions of
article six-c, chapter twelve of the code;
(12) Enter into agreements with political subdivisions of the
state whereby moneys of the political subdivisions are invested on
their behalf by the board;
(13) Charge and collect administrative fees from political
subdivisions for its services;
(14) (12) Exercise all powers generally granted to and
exercised by the holders of investment securities with respect to
management of the investment securities;
(15) (13) Contract with one or more banking institutions in or
outside the state for the custody, safekeeping and management of
securities held by the board;
(16) (14) Make and, from time to time, amend and repeal
bylaws, regulations and procedures not inconsistent with the provisions of this article;
(17) (15) Hire its own employees, consultants, managers and
advisors as it considers necessary and fix their compensation and
prescribe their duties;
(18) (16) Develop, implement and maintain its own banking
accounts and investments;
(19) (17) Do all things necessary to implement and operate the
board and carry out the intent of this article;
(20) Require the state auditor and treasurer to transmit state
funds on a daily basis for investment: Provided, That money held
for meeting the daily obligations of state government need not be
transferred;
(21) (18) Upon request of the treasurer, transmit funds for
deposit in the state treasury to meet the daily obligations of
state government;
(22) (19) Establish one or more investment funds for the
purpose of investing the funds for which it is trustee, custodian
or otherwise authorized to invest pursuant to this article.
Interests in each fund shall be designated as units and the board
shall adopt industry standard accounting procedures to determine
each fund's unit value. The securities in each investment fund are
the property of the board and each fund shall be considered an
investment pool or fund and may not be considered a trust nor may
the securities of the various investment funds be considered held in trust. However, units in an investment fund established by or
sold by the board and the proceeds from the sale or redemption of
any unit may be held by the board in its role as trustee of the
participant plans; and
(23) (20) Notwithstanding any other provision of the code to
the contrary, conduct investment transactions, including purchases,
sales, redemptions and income collections, which shall not be
treated by the auditor as recordable transactions on the state's
accounting system.
§12-6-12. Investment restrictions.
(a) The board shall hold in equity investments no more than
sixty percent of the assets managed by the board and no more than
sixty percent of the assets of any individual participant plan. or
the consolidated fund
(b) The board shall hold in international securities no more
than twenty percent of the assets managed by the board and no more
than twenty percent of the assets of any individual participant
plan. or the consolidated fund.
(c) The board may not at the time of purchase hold more than
five percent of the assets managed by the board in the equity
securities of any single company or association: Provided, That if
a company or association has a market weighting of greater than
five percent in the Standard & Poor's 500 index of companies, the
board may hold securities of that equity equal to its market weighting.
(d) The board shall at all times limit its asset allocation
and types of securities to the following:
(1) The board may not hold more than twenty percent of the
aggregate participant plan assets in commercial paper. Any
commercial paper at the time of its acquisition shall be in one of
the two highest rating categories by an agency nationally known for
rating commercial paper;
(2) At no time shall may the board hold more than seventy-five
percent of the assets managed by the board in corporate debt. Any
corporate debt security at the time of its acquisition shall be
rated in one of the six highest rating categories by a nationally
recognized rating agency; and
(3) No security may be purchased by the board unless the type
of security is on a list approved by the board. The board may
modify the securities list at any time and shall give notice of
that action pursuant to subsection (g), section three of this
article and shall review the list at its annual meeting.
(e) Notwithstanding the investment limitations set forth in
this section, it is recognized that the assets managed by the
board, or the assets of the consolidated fund or participant plans,
whether considered in the aggregate or individually, may
temporarily exceed the investment limitations in this section due
to market appreciation, depreciation and rebalancing limitations. Accordingly, the limitations on investments set forth in this
section shall not be considered to have been are not violated if
the board rebalances the assets it manages or the assets of the
consolidated fund or participant plans, whichever is applicable, to
comply with the limitations set forth in this section at least once
every six months based upon the latest available market information
and any other reliable market data that the board considers
advisable to take into consideration.
(f) The board, at the annual meeting provided for in
subsection (h), section three of this article, shall review,
establish and modify, if necessary, the investment objectives of
the individual participant plans as incorporated in the investment
policy statements of the respective trusts so as to provide for the
financial security of the trust funds giving consideration to the
following:
(1) Preservation of capital;
(2) Diversification;
(3) Risk tolerance;
(4) Rate of return;
(5) Stability;
(6) Turnover;
(7) Liquidity; and
(8) Reasonable cost of fees.
ARTICLE 6C.WEST VIRGINIA BOARD OF TREASURY INVESTMENTS.
§12-6C-1. Purposes and objects; how article cited.
This article, may be cited as the "West Virginia Treasury
Investments Act," and is enacted to provide investment and
management services for the consolidated fund which includes the
operating funds of the state and of its political subdivisions for
the purposes of making moneys in the consolidated fund more
accessible to state government, enabling investment managers to
focus on the consolidated fund and allowing the investment
management board to focus on long-term investment of the trust
estates it manages pursuant to article six of this chapter.
§12-6C-2. Legislative findings.
(a) The Legislature finds and declares that the consolidated
fund should benefit from a prudent and conscientious staff of
financial professionals within state government dedicated to and
focused on the sound administration, investment and management of
the fund.
(b) The Legislature finds and declares that the state
treasurer already enters into agreements on behalf of the West
Virginia investment management board and provides reporting
services for participants in the consolidated fund.
(c) The Legislature finds and declares that transferring the
consolidated fund to the West Virginia board of treasury
investments will allow for management of the fund within state
government and more accountability and better cash management of all state moneys.
(d) The Legislature finds and declares that a public body
corporate within state government with appropriate governance is
the best means of assuring reasonable access to and prudent
management and investment of the consolidated fund under rapidly
changing market conditions, laws and regulations.
(e) The Legislature finds and declares that in accomplishing
these purposes, the West Virginia board of treasury investments,
created and established by this article, is acting in all respects
for the benefit of the citizens of the state in managing and
investing the consolidated fund.
(f) The Legislature finds and declares that the standard of
care and prudence applied to directors and the investment of the
consolidated fund is intended to be that applied to the investment
of funds as described in the "uniform prudent investor act"
codified in article six-c, chapter forty-four of this code.
(g) The Legislature further finds and declares that it is in
the best interests of the state and its citizens to create the West
Virginia board of treasury investments to manage and invest the
consolidated fund to:
(1) Provide focused investment services for the operating
funds of the state and of its political subdivisions;
(2) Provide better management of all state funds within state
government;
(3) Protect all existing legal and equitable rights of persons
who have entered into contractual relationships with the West
Virginia investment management board; and
(4) Allow the West Virginia investment management board to
focus on the long-term investment of the trust estates it manages
pursuant to section nine-a, article six of this chapter.
§12-6C-3. Definitions.
As used in this article, unless a different meaning clearly
appears from the context:
(1) "Board" means the governing body for the West Virginia
board of treasury investments and any reference elsewhere in this
code to the West Virginia board of investments or the West Virginia
trust fund for investing in the consolidated fund means the board
as defined in this subdivision;
(2) "Consolidated fund" means the investment fund managed by
the board and established pursuant to section nine of this article;
(3) "Local government funds" means the moneys of a political
subdivision, including policemen?s pension and relief funds,
firemen?s pension and relief funds and volunteer fire departments,
transferred to the board for deposit;
(4) "Participant" means any state government spending unit or
political subdivision which transfers moneys to the board for
investment;
(5) "Political subdivision" means and includes a county, municipality or any agency, authority, board, county board of
education, commission or instrumentality of a county or
municipality and regional councils created pursuant to the
provisions of section five, article twenty-five, chapter eight of
this code;
(6) "Director" means any member serving on the West Virginia
board of treasury investments;
(7) "Securities" means all bonds, notes, debentures or other
evidences of indebtedness and other lawful investment instruments;
and
(8) "State funds" means all moneys of the state which may be
lawfully invested except the "school fund" established by section
four, article XII of the state constitution.
§12-6C-4. West Virginia board of treasury investments created;
body corporate; trust fund board; directors;
nomination and appointment of directors,
qualifications and terms of appointment, advice and
consent; annual and other meetings; board meetings
with committees regarding investment policy
statement required; open meetings, qualifications.
(a) There is created the West Virginia board of treasury
investments. The board is created as a public body corporate and
established to provide prudent fiscal administration, investment
and management for the moneys in the consolidated fund.
(b) The board consists of five directors, as follows:
(1) The state treasurer, the state auditor and the secretary
of administration or their designees. They serve by virtue of
their offices and are not entitled to compensation under the
provisions of this article. The treasurer, the auditor and the
secretary of administration or their designees are subject to all
duties, responsibilities and requirements of the provisions of this
article; and
(2) The president of the Senate shall recommend a nominee to
the governor and the speaker of the House of Delegates shall
recommend a nominee to the governor. From the nominees submitted
by the president of the Senate and the speaker of the House of
Delegates the governor shall make his or her appointments to the
board. Any appointment is effective immediately upon appointment
by the governor with respect to voting, constituting a quorum,
receiving expenses and all other rights and privileges of the
director position. All appointees shall have experience in
finance, management and investing.
(c) Each director serves a four-year term ending on the
thirty-first day of December in the fourth year following the year
of his or her appointment. The governor may reappoint or appoint
a successor after receiving the list of nominees from the president
of the Senate and the speaker of the House of Delegates. Except,
of the initial appointees, one has a two-year term and one has a four-year term as determined by the governor.
(d) In the event of a vacancy among the directors, the
governor shall appoint a successor after receiving the list of
nominees from the president of the Senate and the speaker of the
House of Delegates to fill the unexpired term.
(e) The governor may remove any director, other than directors
who serve by virtue of their elective office, in case of gross
negligence or misfeasance and may declare that position vacant and
may appoint a person for the vacancy as provided in subsection (d)
of this section.
(f) All directors are entitled to receive reasonable and
necessary expenses actually incurred in discharging director duties
pursuant to this article.
(g) The board shall hold an annual meeting and quarterly
meetings, and may include in the bylaws procedures for the calling
and holding of additional meetings. Representatives of
participants and the public may attend any meeting held by the
board, except during those meetings or part of meetings closed by
the board as permitted by law.
(h) The board shall hold an annual meeting which may also
serve as a quarterly meeting. The board shall receive written
statements or questions from attendees or others prior to the
beginning of the meeting and oral statements or questions from
attendees during the meeting in accordance with the policy established by the board. Attendees shall observe standards of
decorum established by the board. At the annual meeting the board
shall adopt a fee schedule and a budget reflecting fee structures
for the year.
(i) The board chairman may appoint committees as needed,
including an investment policies committee to discuss the board?s
drafting, reviewing or modifying a written investment policy. The
board may meet with any or all committees during any of its
meetings.
(j) Any meeting of the board may be closed upon adoption of a
motion by any director when necessary to preserve the
attorney-client privilege, to protect the privacy interests of
individuals, to review personnel matters or to maintain
confidentiality when confidentiality is in the best interest of the
participants.
§12-6C-5. Management and control of fund; officers; staff;
fiduciary or surety bonds for directors; liability
of directors.
(a) The management and control of the board shall be vested
solely in the directors in accordance with the provisions of this
article.
(b) The treasurer is the chairperson of the board and the
directors shall elect a vice chairperson who may not be a
constitutional officer or his or her designee to serve for a term of two years. Effective with any vacancy in the position of vice
chairperson, the board shall elect a vice chairman to complete the
incomplete term. Annually, the directors shall elect a secretary,
who need not be a member of the board, to keep a record of the
proceedings of the board.
(c) The board may use the staff of the West Virginia state
treasurer, employ personnel and contract with any person or entity
needed to perform the tasks related to operating the consolidated
fund.
(d) The board shall retain an internal auditor to report
directly to the board and shall fix his or her compensation. The
internal auditor shall be a certified public accountant with at
least three years experience as an auditor. The internal auditor
shall develop an internal audit plan, with board approval, for the
testing of procedures and the security of transactions.
(e) Each director shall give a separate fiduciary or surety
bond from a surety company qualified to do business within this
state in a penalty amount of one million dollars for the faithful
performance of his or her duties as a director. The board shall
purchase a blanket bond for the faithful performance of its duties
in the amount of twenty million dollars or in an amount equivalent
to one percent of the assets under management, whichever is
greater. The amount of the blanket bond is in addition to the one
million dollar individual bond required of each director by the provisions of this section. The board may require a fiduciary or
surety bond from a surety company qualified to do business in this
state for any person who has charge of, or access to, any
securities, funds or other moneys held by the board and the amount
of the fiduciary or surety bond shall be fixed by the board. The
premiums payable on all fiduciary or surety bonds are expenses of
the board.
(f) The directors and employees of the board are not liable
personally, either jointly or severally, for any debt or obligation
created by the board. Except the directors and employees of the
board are liable for acts of misfeasance or gross negligence.
(g) The board is exempt from the provisions of sections seven
and eleven, article three, chapter twelve of this code and article
three, chapter five-a of this code. Except the directors and
employees of the board are subject to purchasing policies and
practices of the treasurer?s office.
§12-6C-6. Powers of the board.
The board may exercise all powers necessary or appropriate to
carry out and effectuate its corporate purposes. The board may:
(1) Adopt and use a common seal and alter it at pleasure;
(2) Sue and be sued;
(3) Enter into contracts and execute and deliver instruments
using the policies and procedures of the state treasurer;
(4) Acquire, by purchase, gift or otherwise, hold, use and dispose of real and personal property, deeds, mortgages and other
instruments;
(5) Promulgate and enforce bylaws and rules for the management
and conduct of its affairs;
(6) Notwithstanding any other provision of law, specifically
article two, chapter five of this code, retain and contract with
legal, accounting, financial and investment advisors, managers and
consultants;
(7) Acquire, by purchase, gift or otherwise, hold, exchange,
pledge, lend and sell or otherwise dispose of securities and invest
funds in interest earning deposits and in any other lawful
investments;
(8) Maintain accounts with banks, securities dealers and
financial institutions both in and out of this state;
(9) Engage in financial transactions whereby securities are
purchased by the board under an agreement providing for the resale
of the securities to the original seller at a stated price;
(10) Engage in financial transactions whereby securities held
by the board are sold under an agreement providing for the
repurchase of the securities by the board at a stated price;
(11) Consolidate and manage moneys, securities and other
assets of the consolidated fund and accounts of the state and the
moneys of political subdivisions which may be made available to it
under the provisions of this article;
(12) Enter into agreements with political subdivisions of the
state whereby moneys of the political subdivisions are invested on
their behalf by the board;
(13) Charge and collect administrative fees from participants,
including political subdivisions, for its services;
(14) Exercise all powers generally granted to and exercised by
the holders of investment securities with respect to management of
the investment securities;
(15) Use any contract or agreement of the treasurer?s office,
and enter into its own contract or agreement, including without
limitation entering into a contract or agreement with one or more
banking institutions in or outside the state for the custody,
safekeeping and management of securities held by the board and with
any investment manager and investment advisor needed;
(16) Make and, from time to time, amend and repeal bylaws,
rules and procedures not inconsistent with the provisions of this
article;
(17) Hire its own employees, consultants, managers and
advisors as it considers necessary and fix their compensation and
prescribe their duties;
(18) Develop, implement and maintain its own banking accounts
and investments;
(19) Do all things necessary to implement and operate the
board and carry out the intent of this article, which may include holding training seminars for political subdivisions and creating
a local government investment pool;
(20) Require the state treasurer to transmit state funds on a
daily basis for investment;
(21) Upon request of the treasurer, transmit funds for deposit
in the state treasury to meet the daily obligations of state
government;
(22) Establish one or more investment funds or pools for the
purpose of investing the moneys and assets for which it is
director, custodian or otherwise authorized to invest pursuant to
this article. Interests in each fund or poo1 shall be designated
as units and the board shall adopt industry standard accounting
procedures to determine the unit value of each fund or pool. The
securities in each investment fund or pool are the property of the
board, and each fund or pool shall be considered an investment pool
or fund and may be considered a trust and the securities of the
various investment funds held in trust; and
(23) Notwithstanding any other provision of the code to the
contrary, conduct investment transactions, including purchases,
sales, redemptions and income collections, which may not be treated
by the auditor as recordable transactions on the state?s accounting
system.
§12-6C-7.Annual audits: reports and information.
(a) The board shall have an annual financial and compliance audit of the assets managed by the board made by a certified public
accounting firm which has a minimum staff of ten certified public
accountants and which is a member of the American institute of
certified public accountants and if doing business in West
Virginia, a member of the West Virginia society of certified public
accountants. The financial and compliance audit shall be made of
the board?s books, accounts and records with respect to its
receipts, disbursements, investments, contracts and all other
matters relating to its financial operations. Copies of the audit
report shall be furnished to the governor, state treasurer, state
auditor, president of the Senate, speaker of the House of
Delegates, council of finance and administration and as requested,
by any person.
(b) The board shall produce monthly financial statements for
the assets managed by the board and cause them to be delivered to
each director and as reasonably requested by any person.
(c) Each quarter the board shall deliver a report for the
prior quarter to the council of finance and administration.
(d) The board shall cause an annual audit of the reported
returns of the assets managed by the board to be made by an
investment consulting or a certified public accounting firm meeting
the criteria set out in subsection (a) of this section. The board
shall furnish copies of the audit report to the governor, state
treasurer, state auditor, president of the Senate, speaker of the House of Delegates, council of finance and administration and
pursuant to any reasonable request by any person.
(e) The board shall provide any other information requested
in writing by the council of finance and administration or any
member of the Legislature.
(f) All statements, reports and plans required in this section
shall be available for inspection upon reasonable request by any
person.
§12-6C-8. Legal status of agencies and boards continued.
Except as otherwise provided in this article, every state
agency or board shall continue to have all of the powers and shall
exercise all of the functions and duties vested in or imposed upon
it by law, as to any fund or account, and shall continue to be
constituted as provided by existing law.
§12-6C-9. Consolidated fund continued; management of fund.
(a) The special investment fund managed by the West Virginia
investment management board and designated as the "consolidated
fund" is transferred to the board.
(b) Each board, commission, department, official or agency
charged with the administration of state funds may make moneys
available to the board for investment.
(c) Each political subdivision of this state through its
treasurer or equivalent financial officer may enter into agreements
with the board for the investment of moneys of the political subdivision. Any political subdivision may enter into an agreement
with any state agency from which it receives funds to allow the
funds to be transferred to their investment account with the board.
(d) Moneys held in the various funds and accounts administered
by the board shall be invested as permitted by this article and
subject to the restrictions contained in this article.
(e) For the consolidated fund, the board shall maintain
records of the deposits and withdrawals of each participant and the
performance of the various funds and accounts. The board shall on
a monthly basis provide to each state agency and any other entity
investing moneys in the consolidated fund an itemized statement of
the agency?s or the entity?s account in the consolidated fund. The
statement shall include the beginning balance, contributions,
withdrawals, income distributed, change in value and ending
balance. The board shall report the earnings on the various funds
under management to the treasurer at the times determined by the
board. The board shall also establish rules for the administration
of the various funds, pools and accounts established by this
section as it considers necessary for administrative purposes,
including the specification of amounts which may be deposited in
any fund or account and minimum periods of time for which deposits
will be retained.
§12-6C-10. Fees for service.
The board may charge fees, which may be subtracted from the total return, for the reasonable and necessary expenses incurred by
the board in rendering services. All fees which are dedicated or
identified or readily identifiable to an entity, fund or pool shall
be charged to that entity, fund or pool and all other fees shall be
charged as a percentage of assets under management. At its annual
meeting, the board shall adopt a fee schedule and a budget
reflecting fee structures.
§12-6C-l1. Administration of fund.
(a) In the administration of the consolidated fund continued
by this article, the board has the following powers:
(1) To purchase, retain, hold, transfer and exchange and to
sell at public or private sale, the whole or any part of the fund
or pools upon terms and conditions it considers advisable;
(2) To invest and reinvest the fund and pools or any part of
the fund or pools in fixed income securities as provided in this
article;
(3) To carry the securities and other property held in trust
either in the name of the board or in the name of its nominee;
(4) To vote, in person or by proxy, all securities held; to
join in or to dissent from and oppose the reorganization,
recapitalization, consolidation, merger, liquidation or sale of
corporations or property; to exchange securities for other
securities issued in connection with or resulting from any
transaction; to pay any assessment or expense which the board considers advisable for the protection of its interest as holder of
the securities; to exercise any option appurtenant to any
securities for the conversion of any securities into other
securities; and to exercise or sell any rights issued upon or with
respect to the securities of any corporation, all upon terms the
director considers advisable;
(5) To prosecute, defend, compromise, arbitrate or otherwise
adjust or settle claims in favor of or against the board or a
director;
(6) To employ and pay from the fund any investment advisers,
brokers, counsel, managers and any other assistants and agents the
board considers advisable; and
(7) To develop, implement and modify an asset allocation plan
for each fund or pool.
(b) All income and earnings are free from anticipation,
alienation, assignment or pledge by, and free from attachment,
execution, appropriation or control by or on behalf of any and all
creditors of any beneficiary by any proceeding at law, in equity,
in bankruptcy or insolvency.
(c) The board shall render an annual accounting to the
governor not more than one hundred twenty days following the close
of the fiscal year.
§12-6C-l2. Authorization of additional investments.
Notwithstanding the restrictions which may otherwise be provided by law with respect to the investment of funds, the board,
all administrators, custodians, each political subdivision of this
state and each county board of education is authorized to invest
funds in the securities of or any other interest in any investment
company or investment trust registered under the Investment Company
Act of 1940, 15 U.S.C. §80a, the portfolio of which is limited: (i)
To obligations issued by or guaranteed as to the payment of both
principal and interest by the United States of America or its
agencies or instrumentalities; and (ii) to repurchase agreements
fully collateralized by obligations of the United States government
or its agencies or instrumentalities: Provided, That the
investment company or investment trust takes delivery of the
collateral either directly or through an authorized custodian and:
Provided, however, That the investment company or investment trust
is rated within one of the top two rating categories of any
nationally recognized rating service such as Moody's or Standard
and Poor's.
§12-6C-l3. Legislative findings; loans for industrial
development; availability of funds and interest
rates.
(a) The Legislature finds and declares that the citizens of
the state benefit from the creation of jobs and businesses within
the state; that a business and industrial development loan program
provides for economic growth and stimulation within the state; that loans from pools established in the consolidated fund will assist
in providing the needed capital to assist business and industrial
development; and that time constraints relating to business and
industrial development projects prohibit duplicative review by both
the board and West Virginia economic development authority board.
This section is enacted in view of these findings.
(b) (1) The board shall make available, subject to cash
availability, in the form of a revolving loan, up to one hundred
fifty million dollars from the consolidated fund to loan the West
Virginia economic development authority for business or industrial
development projects authorized by section seven, article fifteen,
chapter thirty-one of this code and to consolidate existing loans
authorized to be made to the West Virginia economic development
authority pursuant to this section and pursuant to section twenty,
article fifteen, chapter thirty-one of this code which authorizes
a one hundred fifty million dollar revolving loan and article
eighteen-b, chapter thirty-one of this code which authorizes a
fifty million dollar investment pool. Except the West Virginia
economic development authority may not loan more than fifteen
million dollars for any one business or industrial development
project. The revolving loan authorized by this subsection shall be
secured by one note at a variable interest rate equal to the
twelve-month average of the board?s yield on its cash liquidity
pool. The rate shall be set on the first day of July and the rate shall be adjusted annually on the same date. The maximum annual
adjustment may not exceed one percent. Monthly payments made by
the West Virginia economic development authority to the board shall
be calculated on a one hundred twenty-month amortization. The
revolving loan shall be secured by a security interest that pledges
and assigns the cash proceeds of collateral from all loans under
this revolving loan pool. The West Virginia economic development
authority may also pledge as collateral certain revenue streams
from other revolving loan pools which source of funds does not
originate from federal sources or from the board.
(2) The outstanding principal balance of the revolving loan
from the board to the West Virginia economic development authority
may at no time exceed one hundred three percent of the aggregate
outstanding principal balance of the business and industrial loans
from the West Virginia economic development authority to economic
development projects funded from this revolving loan pool. This
provision shall be certified annually by an independent audit of
theWest Virginia economic development authority financial
records.
(c) The interest rates and maturity dates on the loans made by
the West Virginia economic development authority for business and
industrial development projects authorized by section seven,
article fifteen, chapter thirty-one of this code shall be at
competitive rates and maturities as determined by the West Virginia economic development authority board.
(d) Any and all outstanding loans made by the board, or any
predecessor entity to the West Virginia economic development
authority shall be refunded by proceeds of the revolving loan
contained in this section and no loans may be made by the board to
the West Virginia economic development authority pursuant to
section twenty, article fifteen, chapter thirty-one of this code or
article eighteen-b of chapter thirty-one.
(e) The directors of the board shall bear no fiduciary
responsibility as provided in section sixteen of this article with
specific regard to the revolving loan contemplated in this section.
§12-6C-l4. Securities handling.
In financial transactions where securities are purchased by
the board under an agreement providing for the resale of the
securities to the original seller at a stated price, the board
shall take physical possession of the securities, directly, by its
custodian bank or through a neutral third party. Except, an
agreement with a neutral third party may not waive liability for
the handling of the securities and when the board is unable to take
possessions directly, by its custodian bank or through a mutual
third party, the board may leave securities in a segregated account
with the original seller, if the amount of the securities with any
one seller does not exceed one hundred fifty million dollars.
§12-6C-15. Restrictions on investments.
Notwithstanding any other provision in this code, moneys on
deposit in the consolidated fund shall be invested as permitted by
section sixteen of this article subject to the restrictions and
conditions contained in this section:
(1) At no time may more than seventy-five percent of the
consolidated fund be invested in any bond, note, debenture,
commercial paper or other evidence of indebtedness of any private
corporation or association;
(2) At no time may more than five percent of the consolidated
fund be invested in securities issued by a single private
corporation or association; and
(3) At no time may less than fifteen percent of the
consolidated fund be invested in any direct obligation of or
obligation guaranteed as to the payment of both principal and
interest by the United States of America.
§12-6C-16. Standard of care.
Any investments made under this article shall be made in
accordance with the provisions of the "Uniform Prudent Investor
Act" codified as article six-c, chapter forty-four of this code and
are further subject to the following requirements:
(1) Directors shall discharge their duties with respect to the
consolidated fund;
(2) Directors shall diversify fund investment so as to
minimize the risk of large losses unless, under the circumstances, it is clearly prudent not to do so;
(3) Directors shall defray reasonable expenses of investing
and managing the consolidated fund;
(4) Directors shall discharge their duties in accordance with
the documents and instruments governing the moneys under management
insofar as the documents and instruments are consistent with the
provisions of this article; and
(5) The duties of the board apply only with respect to those
assets deposited with or otherwise held by it.
§12-6C-17. Board as sole agency for investment in the
consolidated fund; exceptions.
All duties vested by law in the state treasurer and the West
Virginia investment management fund relating to the consolidated
fund are transferred to the board, including without limitation the
investment of moneys, and the acquisition, sale, exchange or
disposal of securities or any other investment. Neither this
section nor any other section of this article applies to the "board
of the school fund" and the "school fund" established by section 4,
article XII of the state constitution. The funds under the control
of the municipal bond commission may, in the discretion of the
commission, be made available to the board for investment to be
invested by the commission as provided in article three, chapter
thirteen of this code.
§12-6C-18. Reports of board.
The board shall prepare annually, or more frequently if
considered necessary by the board, a report of its operations and
the performance of the various funds administered by it. A copy of
the report shall be furnished to each participant upon request, the
president of the Senate, speaker of the House of Delegates, the
legislative auditor, and upon request to any legislative committee,
any legislator, any banking institution or state or federal savings
and loan association in this state, and any member of the news
media. The report shall be kept available for inspection by any
citizen of this state.
§12-6C-19. Existing investments.
The board is vested with ownership of all securities or other
investments lawfully held by the investment management board in the
consolidated fund as of the effective date of this article. All
obligations and assets of the investment management board are
vested in the board as of the effective date of this article.
§12-6C-20. Authorization for loans by the board.
Any loans made by a predecessor of the board remain in
existence and in accordance with the terms and conditions of the
loan.
§12-6C-21. Termination of board.
Pursuant to the provisions of article ten, chapter four of
this code, the West Virginia board of treasury investments shall
continue to exist until the first day of July, two thousand eight.
NOTE: The purpose of this bill is to create
the "West
Virginia Treasury Investments Act," and create the West Virginia
Board of Treasury Investments. The Board is to provide investment
and management services for the consolidated fund which includes
the operating funds of the state and of its political subdivisions
for the purposes of making moneys in the consolidated fund more
accessible to state government, enabling investment managers to
focus on the consolidated fund and allowing the investment
management board to focus on long-term investment of the trust
estates it manages.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
Article 6C, chapter 12 is new; therefore, strike-throughs and
underscoring have been omitted.