Committee Substitute for SB0018FCS

SENATE FINANCE COMMITTEE SUBSTITUTE FOR

SENATE RULES COMMITTEE SUBSTITUTE FOR

SENATE BILLS 18, 218 & 238

49th legislature - STATE OF NEW MEXICO - second session, 2010

AN ACT

RELATING TO STATE INVESTMENTS; CHANGING THE COMPOSITION OF THE STATE INVESTMENT COUNCIL; AMENDING POWERS AND DUTIES OF THE STATE INVESTMENT OFFICER, THE STATE INVESTMENT COUNCIL, THE PUBLIC EMPLOYEES RETIREMENT BOARD AND THE EDUCATIONAL RETIREMENT BOARD; PROVIDING FOR THE STATE INVESTMENT COUNCIL TO APPOINT THE STATE INVESTMENT OFFICER AND TO APPOINT MEMBERS TO THE PRIVATE EQUITY INVESTMENT ADVISORY COMMITTEE; PROVIDING FOR ALTERNATIVE INVESTMENT ADVISORY COMMITTEES; RECONCILING MULTIPLE AMENDMENTS TO THE SAME SECTION OF LAW IN LAWS 2005; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 6-8-2 NMSA 1978 (being Laws 1957, Chapter 179, Section 2, as amended) is amended to read:

"6-8-2. STATE INVESTMENT COUNCIL.--

A. There is created a "state investment council". The council shall be composed of:

[A. the governor;

B.] (1) the state treasurer;

[C.] (2) the commissioner of public lands;

[D.] (3) the secretary;

[E. three public members appointed by the governor with the advice and consent of the senate;

F. the state investment officer; and

G. the chief financial officer of a state institution of higher education appointed by the governor with the advice and consent of the senate;]

(4) one public member appointed by the president pro tempore of the senate with the advice and consent of the senate;

(5) one public member appointed by the minority floor leader of the senate with the advice and consent of the senate;

(6) one public member appointed by the speaker of the house of representatives with the advice and consent of the senate;

(7) one public member appointed by the minority floor leader of the house of representatives with the advice and consent of the senate; and

(8) three members appointed by the governor, with no more than two from the same political party, and with the advice and consent of the senate.

B. The [chairman of the] council shall [be the governor] select a chair and vice chair from its membership. All actions of the council shall be by majority vote, and [at least three members appointed pursuant to Subsections E and G of this section must be present to] a majority of the members shall constitute a quorum.

C. Members of the council appointed pursuant to Paragraphs (4) through (8) of Subsection [E] A of this section shall be reimbursed per diem and mileage pursuant to the provisions of the Per Diem and Mileage Act."

Section 2. Section 6-8-3 NMSA 1978 (being Laws 1957, Chapter 179, Section 3, as amended) is amended to read:

"6-8-3. COUNCIL TERMS AND QUALIFICATIONS.--

A. Members of the council appointed [by the governor] pursuant to Paragraphs (4) through (8) of Subsection A of Section 6-8-2 NMSA 1978, with the advice and consent of the senate, shall serve for staggered terms of five years. Members of the council shall serve until their successors are appointed and have qualified.

B. The members of the council appointed pursuant to Paragraphs (4) through (8) of Subsection [E] A of Section 6-8-2 NMSA 1978 shall be qualified by competence and no less than ten years experience in the field of investment or finance. [During tenure, a member of the council shall not be engaged in any capacity in the sale of securities to the state.] A member of the council shall not have had any contracts to do business with the state investment council, the investment office, the office of the state treasurer, the educational retirement board, the public employees retirement association, the New Mexico finance authority or the state board of finance for a period of two calendar years prior to the person's appointment to the council and shall not enter into any contracts to do business with any of the named state agencies or instrumentalities for a period of two calendar years after the end of the term for which the member was appointed. Members of the council and officers and employees of the council shall be governed by the provisions of the [Conflict of Interest] Governmental Conduct Act. Nothing in this section or in the [Conflict of Interest] Governmental Conduct Act shall be construed as prohibiting an officer of a financial institution from participating as a member of the council in setting general policies of the council, nor shall any provision of the [Conflict of Interest] Governmental Conduct Act prohibit the council or the state treasurer from depositing funds under the jurisdiction of the council in any financial institution. A council member shall not hold an office or employment in a political party. [Any]

C. A member of the council appointed pursuant to Paragraphs (4) through (8) of Subsection [E or G] A of Section 6-8-2 NMSA 1978 may be removed from the council by the [governor] appointing person or entity, for failure to attend three consecutive meetings or other cause, in the manner provided for removal of members of boards of regents under Article 12, Section 13 of the constitution of New Mexico. A vacancy in the membership of the council occurring other than by expiration of term shall be filled in the same manner as the original appointment but for the unexpired term only."

Section 3. Section 6-8-4 NMSA 1978 (being Laws 1957, Chapter 179, Section 4, as amended) is amended to read:

"6-8-4. INVESTMENT OFFICE--STATE INVESTMENT OFFICER--TERMS.--

A. There is established an "investment office". The chief administrative officer of the office shall be known as the "state investment officer".

B. The state investment officer shall be appointed by the [governor] council with the advice and consent of the senate. [Recommendations as to his appointment shall be made to the governor by the investment council.] The state investment officer shall devote [his] the officer's entire time and attention to the duties of [his] that office and shall not engage in any other occupation or profession [nor shall he] or hold any other public office, appointive or elective. [He] The officer shall be a person qualified, by training and investment experience, to direct the work of the investment [division] office and shall have had at least five years' professional experience as an investment officer. [He] The officer shall receive a salary to be determined by the state investment council but in no case less than fifty thousand dollars ($50,000) annually.

C. The state investment officer shall serve for an initial term of two years beginning July 1, 1981 and thereafter for terms of four years. The state investment officer may be removed from office by the [governor] council for cause in the manner provided for removal of members of boards of regents under Article 12, Section 13 of the constitution of New Mexico."

Section 4. Section 6-8-6 NMSA 1978 (being Laws 1957, Chapter 179, Section 6, as amended) is amended to read:

"6-8-6. TRANSFER OF INVESTMENT POWERS.--

A. The functions, powers and duties vested by law relating to the investment or reinvestment of money and the purchase, sale or exchange of investments or securities of the permanent fund are transferred to the state investment council, provided, however, that the council may delegate administrative functions and duties to the state investment officer. The state treasurer shall maintain custody of the [state] permanent fund but shall at all times render the fund or any part of it available for investment in accordance with the provisions of Sections 6-8-1 through 6-8-18 NMSA 1978.

B. Any provision of existing law requiring or designating an elected state official to serve by virtue of [his] the official's office in an active or advisory capacity concerning the investment of the [state] permanent fund [shall be] is inoperative."

Section 5. Section 6-8-7 NMSA 1978 (being Laws 1957, Chapter 179, Section 7, as amended by Laws 2005, Chapter 194, Section 1 and by Laws 2005, Chapter 240, Section 1) is amended to read:

"6-8-7. POWERS AND DUTIES OF THE STATE INVESTMENT COUNCIL AND STATE INVESTMENT OFFICER--INVESTMENT POLICY--INVESTMENT MANAGERS.--

A. Subject to the limitations, conditions and restrictions contained in policy-making regulations or resolutions adopted by the council, [and subject to prior authorization by] the council [the state investment officer] may make purchases, sales, exchanges, investments and reinvestments of the assets of all funds [administered under the supervision of the council] in accordance with the Uniform Prudent Investor Act. The state investment officer and the council are trustees of all funds under their control and shall see that money invested is at all times handled in the best interests of the state. The council may delegate administrative functions to the state investment officer.

B. The state investment officer shall formulate and recommend to the council for approval investment regulations or resolutions pertaining to the kind or nature of investments and limitations, conditions and restrictions upon the methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions that should govern the activities of the investment office.

C. The council shall meet at least once each month, and as often as exigencies may demand, to consult with the state investment officer concerning the work of the investment office. The council shall have access to all files and records of the investment office and shall require the state investment officer to report on and provide information necessary to the performance of council functions. The council may hire one or more investment management firms to advise the council with respect to the council's overall investment plan for the investment of all funds managed by the investment office and pay reasonable compensation for such advisory services from the assets of the applicable funds, subject to budgeting and appropriation by the legislature. The terms of any such investment management services contract shall incorporate the statutory requirements for investment of funds under the council's jurisdiction.

D. The council shall provide an opportunity for public comment at meetings of the council. Advance notice of meetings shall be published on the council's web site and in a newspaper of general circulation at least ten days in advance of the meeting.

[D.] E. All funds managed by the state investment officer shall be managed in accordance with the Uniform Prudent Investor Act. [With the approval of] The council [the state investment officer] may employ investment management services to invest the funds and may pay reasonable compensation for investment management services from the assets of the applicable funds, subject to budgeting and appropriation by the legislature.

F. The council, the state investment officer, any person providing investment advice to the council or state investment officer for a fee or other compensation and all persons exercising discretionary authority or control of funds under the management of the council are fiduciaries.

G. The council may select and contract for the services of one or more custodian banks for all funds under the council's management. For the purpose of this subsection, "custodian bank" means a financial institution with the general fiduciary duties to manage, control and collect the assets of an investment fund, including receiving all deposits and paying all disbursements as directed by staff, safekeeping of assets, coordination of asset transfers, timely settlement of securities transactions and accurate and timely reporting of the assets by individual account and in total.

[E.] H. For funds available for investment for more than one year, the [state investment officer] council may contract with any state agency to provide investment advisory or investment management services, separately or through a pooled investment fund, provided the state agency enters into a joint powers agreement with the council and that state agency pays at least the direct cost of such services. Notwithstanding any statutory provision governing state agency investments, the [state investment officer] council may invest funds available from a state agency pursuant to a joint powers agreement in any type of investment permitted for the land grant permanent funds under the prudent investor rule. In performing investment services for a state agency, the council and the state investment officer are exempt from the New Mexico Uniform Securities Act [of 1986]. As used in this subsection, "state agency" means any branch, agency, department, board, instrumentality, institution or political subdivision of the state, the New Mexico finance authority, the New Mexico mortgage finance authority and any tax-exempt private endowment entity whose sole beneficiary is a state agency.

[F.] I. The state investment officer shall provide quarterly performance reports to the legislative finance committee. Annually, the state investment officer shall ratify and provide written investment policies, including any amendments, to the legislative finance committee."

Section 6. Section 6-8-14 NMSA 1978 (being Laws 1957, Chapter 179, Section 14, as amended) is amended to read:

"6-8-14. MONTHLY REPORTS.--No later than ten days after the close of each month, the state investment officer shall submit to the secretary and the state investment council a report of the operations of the [division] office during the past month. Each report shall give a complete statement of the state investment portfolio as of the time of the report and in addition, shall include a detailed summary of the month's investment, reinvestment, purchase, sale and exchange transactions, setting forth the investments bought, sold or exchanged, the dates thereof, the prices paid or obtained, the names of the dealers involved, fees paid for each transaction, disclosure of contractor arrangements and a statement of the funds or accounts referred to herein. The reports shall also be circulated to a mailing list of investment bankers and brokers recommended by the council. The reports shall be published on the web sites of the council, the legislature and the department of finance and administration and shall be open for inspection to the public and the press in the office of the state investment officer."

Section 7. Section 6-8-20 NMSA 1978 (being Laws 1987, Chapter 219, Section 3, as amended) is amended to read:

"6-8-20. PRIVATE EQUITY INVESTMENT ADVISORY COMMITTEE CREATED--MEMBERSHIP--DUTIES--TERMS--LIABILITIES--CONFLICT OF INTEREST.--

A. There is created the "private equity investment advisory committee" to the council. The committee consists of the state investment officer, a member of the council appointed by the [governor] council and three members who are qualified by competence and experience in finance and investment and knowledgeable about the private equity investment process and who are appointed by the [governor] council.

B. Members appointed by the [governor] council, except the council member, shall be appointed for three-year terms; provided that the terms of the initial committee members shall be staggered so that the term of one member expires each year. After the initial appointments, all [governor] appointed members shall be appointed for three-year terms. Members shall serve until their successors are appointed. A vacancy occurring other than by expiration of term shall be filled in the same manner as the original appointment, but only for the unexpired term.

C. The committee shall review and make recommendations to the council on investments authorized pursuant to Sections 7-27-5.15 and 7-27-5.26 NMSA 1978 and all other private equity investments and shall advise the council in matters and policies related to such investments. The committee shall establish policies for national private equity fund investments, New Mexico private equity fund investments and New Mexico film private equity fund investments not less often than annually and shall make copies available to interested parties.

D. Members of the committee shall receive per diem and mileage as provided for nonsalaried public officers in the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

E. The committee shall elect annually a [chairman] chair from among its members and may elect other officers as necessary. The committee shall meet upon the call of the [chairman] chair or the state investment officer.

F. Members of the committee are public employees within the meaning of the Tort Claims Act and are entitled to all immunity and indemnification provided under that act.

G. A person shall not be a member of the committee if any recommendation, action or decision of the committee will or is likely to result in direct, measurable economic gain to that person or that person's employer.

[H. The state investment officer may enter into contracts with investment advisors for private equity fund investments and film fund investments authorized pursuant to Sections 7-27-5.15 and 7-27-5.26 NMSA 1978 and all other private equity investments and may pay budgeted expenses for the advisors from the assets of any fund administered under the supervision of the council, as applicable.

I.] H. As used in this section, "private equity investments" means any legal entity that has as its primary business activity the investment of funds in return for equity in or debt of businesses for the purpose of providing capital for startup, expansion, new product development, recapitalization or a similar business purpose."

Section 8. Section 6-10-35 NMSA 1978 (being Laws 1934 (S.S.), Chapter 24, Section 3, as amended by Laws 1987, Chapter 79, Section 14 and by Laws 1987, Chapter 87, Section 1) is amended to read:

"6-10-35. FISCAL AGENT OF NEW MEXICO--STATE CHECKING DEPOSITORIES--STATE DEPOSITORIES--DESIGNATION BY BOARD OF FINANCE.--

A. Except as otherwise provided by law, the state board of finance may designate a bank or savings and loan association doing business in this state and having an unimpaired capital and surplus of at least one hundred fifty thousand dollars ($150,000) as the "fiscal agent of New Mexico". The designation is subject to change, from time to time, by the state board of finance; however, the board shall formulate and adopt designation procedures, filed in accordance with the State Rules Act, [which] that shall be adhered to on each occasion of designation. The board, after it has designated the [state] fiscal agent, shall apprise the legislature of its action and, in addition to the name of the designated fiscal agent, the communication shall include a brief description of the designee's particular qualifications.

B. The bank or savings and loan association [so] designated as the fiscal agent of New Mexico shall enter into an agreement with the state, acting through [its] the state board of finance, for:

(1) the collection for the state of all checks and other items received by the state on any account;

(2) the handling of the checking account of the state treasurer;

(3) the handling of all transfers of money in connection with the sale or retirement of bonds or obligations of the state or the purchase by the state of bonds or other securities;

(4) the investment of permanent or other funds of the state;

(5) the safekeeping of bonds or other securities belonging to or held by the state or any official [thereof] of the state;

(6) the rate of interest to be paid upon average daily balances of state funds; and

(7) acting as the agent of the state in fiscal matters generally, subject always to the supervision and approval of the state board of finance.

C. The agreement shall contain the terms and conditions [which] that are necessary, in the judgment of the state board of finance, for the proper conduct of the fiscal affairs of the state and the safekeeping of the money of the state.

D. The state board of finance shall require the fiscal agent of New Mexico to furnish surety company bond or securities of the kinds specified by law for the security of deposits of public money in an amount not less than two million five hundred thousand dollars ($2,500,000) as security for the safekeeping of the money of the state and the faithful performance of its duties as the fiscal agent. The state board of finance may adjust the amount of bond or security from time to time, but in no event shall the bond or security be in an amount less than two million five hundred thousand dollars ($2,500,000). No other bond or security is required of the fiscal agent for the securing of funds deposited by the state treasurer in the fiscal agency account, and the state treasurer is not liable upon [his] the state treasurer's official bond on account of [any] funds deposited in the fiscal agency account when the account is so secured. Nothing in this section shall prevent the bank or savings and loan association designated as fiscal agent from also qualifying as a state depository [under Sections 11-2-18 NMSA 1953 or 6-10-30, 6-10-35 and 6-10-36] pursuant to Chapter 6, Article 10 NMSA 1978.

E. Payment to the fiscal agent of New Mexico for services performed may be made by the state board of finance upon warrants drawn by the secretary [of finance and administration] upon the state treasury as provided by law for expenditure of state funds or by compensating balances or a combination thereof. The legislature shall appropriate funds to the state board of finance for this purpose annually.

F. The state board of finance may also designate, according to its adopted designation procedures, not more than two other banks or savings and loan associations doing business in this state as "state checking depositories" in which money necessary to meet the current obligations of the state may be deposited in temporary checking accounts. No bank or savings and loan association shall be so designated unless it has an unimpaired capital and surplus of at least one hundred fifty thousand dollars ($150,000). Not more than twenty percent of all the state's money on hand shall be on deposit in all such checking accounts, including the checking account with the fiscal agent of New Mexico, for any period of time longer than is required to distribute the amount above twenty percent to applying, qualified depository banks or savings and loan associations. The state board of finance shall require a designated state checking depository to furnish surety company bond or securities of the kinds specified by law for the security of deposits of public money in an amount established by the board. Nothing in this section shall prevent [any] a bank or savings and loan association designated as a state checking depository from also qualifying as a state depository [under Sections 11-2-18 NMSA 1953 and 6-10-30, 6-10-35 and 6-10-36] pursuant to Chapter 6, Article 10 NMSA 1978, and nothing in this section shall prohibit the state treasurer from transferring to out-of-state banks and keeping on deposit with them funds necessary to pay interest upon and principal of those outstanding bonds, debentures and certificates of indebtedness [which] that, with the interest coupons, were made payable at an out-of-state bank.

G. [Any] An authorized bank, savings and loan association or credit [unions] union desiring to receive public money deposits may file with the board of finance having control of [any such] the money its written proposal to receive the money on deposit, together with its agreement to pay interest on daily balances of the deposits at the rate of interest fixed by the state board of finance as prescribed in Section 6-10-30 NMSA 1978. The proposal shall specify whether the deposit is desired as a time deposit. [Such] The board of finance shall, at its next meeting after receipt of the proposal, consider the proposal, and, if it is in accordance with [Sections 11-2-18 NMSA 1953 and 6-10-30, 6-10-35 and 6-10-36] Chapter 6, Article 10 NMSA 1978, the board shall thereupon notify the bank or savings and loan association that upon its furnishing security as provided, it will be designated as a "state depository" of public money in an amount to be fixed by the board, which amount shall not exceed seventy-five percent of the capital and surplus of the applicant bank or savings and loan association if the deposit is secured by surety bond. If, after considering the proposal of a credit union and finding it in accordance with [Sections 6-10-30 and] Section 6-10-36 NMSA 1978, the board of finance may designate [such] the credit union a "state depository" of public money in an amount to be fixed by the board, which shall not exceed that amount insured by an agency of the United States. Upon furnishing proper bond or other security authorized by [Sections 11-2-18 NMSA 1953 and 6-10-30, 6-10-35 and 6-10-36] Chapter 6, Article 10 NMSA 1978, a certificate shall be issued to the bank or savings and loan association by the board of finance qualifying it as a depository of public money; and, if designated, a certificate shall be issued to a credit union qualifying it as a depository of public money; provided that a bank located [without] outside the state, acting solely in the capacity of a paying bank for the purpose of paying interest upon and principal of state obligations represented by bonds, debentures and certificates of indebtedness and attached interest coupons, is not required to furnish collateral security in excess of one hundred thousand dollars ($100,000) regardless of the amount of state public money on deposit."

Section 9. Section 10-11-130 NMSA 1978 (being Laws 1987, Chapter 253, Section 130, as amended) is amended to read:

"10-11-130. RETIREMENT BOARD--AUTHORITY--MEMBERSHIP.--

A. The "retirement board" is created and is the trustee of the association and the funds created by the state retirement system acts and has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of the state retirement system acts, including, in addition to any specific powers provided for in the Public Employees Retirement Act but without limiting the generality of the foregoing, the power to:

(1) administer the state retirement system acts, including the management of the association and making effective the provisions of those acts, as well as to administer and manage any other employee benefit acts as provided by law;

(2) in addition to utilizing services of the attorney general and notwithstanding any other provision of law, employ or contract with and compensate competent legal counsel to handle the legal matters and litigation of the retirement board and the association and to give advice and counsel in regard to any matter connected with the duties of the retirement board;

(3) administer oaths;

(4) adopt and use a seal for authentication of records, processes and proceedings;

(5) create and maintain records relating to all members, affiliated public employers and all activities and duties required of the retirement board;

(6) issue subpoenas and compel the production of evidence and attendance of witnesses in connection with any hearings or proceedings of the retirement board;

(7) make and execute contracts;

(8) make purchases, sales, exchanges, investments and reinvestments of all funds and employ contractors, advisors or investment management services;

[(8)] (9) purchase, acquire or hold land adjacent to the state capitol grounds or other suitable location and build thereon a building to house the association and its employees and, in the event additional office space is available in the building after the retirement board and its employees have been housed, to rent or lease the additional space to any public agency or private person; provided that first priority for the rental or leasing shall be to public agencies and further provided that for the purpose of purchasing, acquiring or holding the land and the building thereon, the retirement board may use funds from the income fund and any other funds controlled by the retirement board the use of which for such purposes is not prohibited by law;

[(9)] (10) after the sale of the land and building acquired pursuant to Paragraph [(8)] (9) of this subsection, acquire land and build thereon a new building to house the association and its employees and hold the building and land in fee simple in the name of the association. In order to acquire the land and plan, design and construct the building, the retirement board may expend the proceeds of the sale of the land and building acquired pursuant to Paragraph [(8)] (9) of this subsection or any funds controlled by the board, the use of which for such purposes is not otherwise prohibited by law;

[(10)] (11) make and adopt such reasonable rules as may be necessary or convenient to carry out the duties of the retirement board and activities of the association, including any rules necessary to preserve the status of the association as a qualified pension plan under the provisions of the Internal Revenue Code of 1986, as amended, or under successor or related provisions of law; [and

(11)] (12) designate committees and designate committee members, including individuals who may not be members of the association; and

(13) select and contract for the services of one or more custodian banks for all funds under the retirement board's management. For the purpose of this subsection, "custodian bank" means a financial institution with the general fiduciary duties to manage, control and collect the assets of an investment fund, including receiving all deposits and paying all disbursements as directed by staff, safekeeping of assets, coordination of asset transfers, timely settlement of securities transactions and accurate and timely reporting of the assets by individual account and in total.

B. The retirement board consists of:

(1) the secretary of state;

(2) the state treasurer;

(3) four members under a state coverage plan to be elected by the members under state coverage plans;

(4) four members under a municipal coverage plan to be elected by the members under municipal coverage plans, provided one member shall be a municipal member employed by a county; and

(5) two retired members to be elected by the retired members of the association.

C. The results of elections of elected members of the retirement board shall be certified at the annual meeting of the association. Elections shall be conducted according to rules the retirement board adopts from time to time.

D. The regular term of office of the elected members of the retirement board is four years. The term of one retirement board member under a state coverage plan expires annually on December 31. The terms of retirement board members under a municipal coverage plan expire on December 31 of noncoinciding years in the pattern set by the retirement board. Members of the retirement board serve until their successors have qualified.

E. A member elected to the retirement board who fails to attend four consecutively scheduled meetings of the retirement board, unless in each case excused for cause by the retirement board members in attendance, is considered to have resigned from the retirement board, and the retirement board shall by resolution declare the office vacated as of the date of adoption of the resolution. A vacancy occurring on the retirement board, except in the case of an elected official, shall be filled by the remaining retirement board members, without requirement that a quorum be present. The member appointed to fill the vacancy serves for the remainder of the vacated term.

F. Members of the retirement board serve without salary for their services as retirement board members, but they shall receive those amounts authorized under the Per Diem and Mileage Act.

G. The retirement board shall hold four regular meetings each year and shall designate in advance the time and place of the meetings. Special meetings and emergency meetings of the retirement board may be held upon call of the [chairman] chair or any three members of the retirement board. Written notice of special meetings shall be sent to each member of the retirement board at least seventy-two hours in advance of the special meeting. Verbal notice of emergency meetings shall be given to as many members as is feasible at least eight hours before the emergency meeting, and the meeting shall commence with a statement of the nature of the emergency. The retirement board shall adopt its own rules of procedure and shall keep a record of its proceedings. All meetings of the retirement board shall comply with the Open Meetings Act. A majority of retirement board members shall constitute a quorum. Each attending member of the retirement board is entitled to one vote on each question before the retirement board, and at least a majority of a quorum shall be necessary for a decision by the retirement board.

H. The retirement board shall provide an opportunity for public comment at meetings. Advance notice of meetings shall be published on the association's web site and in a newspaper of general circulation at least ten days in advance of the meeting.

[H.] I. Annual meetings of the members of the association shall be held in Santa Fe at such time and place as the retirement board shall from time to time determine. Special meetings of the members of the association shall be held in Santa Fe upon call of any seven retirement board members. The retirement board shall send a written notice to the last known residence address of each member currently employed by an affiliated public employer at least ten days prior to any meeting of the members of the association. The notice shall contain the call of the meeting and the principal purpose of the meeting. All meetings of the association shall be public and shall be conducted according to procedures the retirement board shall from time to time adopt. The retirement board shall keep a record of the proceedings of each meeting of the association.

[I.] J. Neither the retirement board nor the association shall allow public inspection of, or disclosure of, information from any member or retiree file unless a prior release and consent, in the form prescribed by the association, has been executed by the member or retiree; except that applicable coverage plans, amounts of retirement plan contributions made by members and affiliated public employers, pension amounts paid and the names and addresses of public employees retirement association members or retirees requested for election purposes by candidates for election to the retirement board may be produced or disclosed without release or consent."

Section 10. Section 10-11-132 NMSA 1978 (being Laws 1987, Chapter 253, Section 132, as amended) is amended to read:

"10-11-132. INVESTMENT OF FUNDS--PRUDENT INVESTOR STANDARD--INDEMNIFICATION OF BOARD MEMBERS.--

A. The funds created by the state retirement system acts are trust funds of which the retirement board is trustee. Members of the retirement board jointly and individually shall be indemnified by the state from the funds administered by the retirement board from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and attorney fees and against all liability losses and damages of any nature that members shall or may sustain by reason of any decision made in the performance of their duties pursuant to the state retirement system acts. The retirement board shall invest and reinvest the funds in accordance with the Uniform Prudent Investor Act.

B. The retirement board and any person providing investment advice to the retirement board for a fee or other compensation and all persons exercising discretionary authority or control of funds under the management of the retirement board are fiduciaries."

Section 11. Section 10-11-133 NMSA 1978 (being Laws 1987, Chapter 253, Section 133, as amended) is amended to read:

"10-11-133. INVESTMENT OF FUNDS--PRUDENT INVESTOR STANDARD--CONDITIONS.--

A. Commissions paid for the purchase and sale of any security shall not exceed brokerage rates prescribed and approved by stock exchanges that have been approved by or are under the control of the United States securities and exchange commission or by industry practice.

B. The retirement board shall invest and manage the funds administered by the retirement board in accordance with the Uniform Prudent Investor Act.

C. The retirement board shall provide quarterly reports disclosing all contractor arrangements and detailing investment, reinvestment, purchase, sale and exchange transactions and fees paid for each transaction and performance [reports] of the funds to the legislative finance committee and the department of finance and administration. The reports shall be published on the web sites of the association, the legislature and the department of finance and administration. Annually, the retirement board shall ratify and provide its written investment policy, including any amendments, to the legislative finance committee and the department of finance and administration. The policies shall be published on the web sites of the association, the legislature and the department of finance and administration.

D. Securities purchased with money from or held for any fund administered by the retirement board and for which the retirement board is trustee shall be in the custody of the state treasurer who shall, at the direction of the retirement board, deposit with a bank or trust company the securities for safekeeping or servicing.

E. The retirement board may consult with the state investment council or state investment officer and request information or advice with respect to the retirement board's overall investment plan, may utilize the services of the state investment council and state investment officer and may act on their advice concerning the plan. The state investment council and state investment officer shall render investment services to the retirement board without expense to the retirement board. The retirement board may also employ the investment management services and related management services of a trust company or national bank exercising trust powers or of an investment counseling firm or brokers for the purchase and sale of securities, commission recapture and transitioning services and may pay reasonable compensation for such services from funds administered by the retirement board. The terms of any such investment management services contract shall incorporate the statutory requirements for investment of funds under the retirement board's jurisdiction.

F. The retirement board shall annually provide for its members no less than eight hours of training in pension fund investing, fiduciary obligations or ethics. A member elected to the retirement board who fails to attend the training for two consecutive years shall be deemed to have resigned from the retirement board.

G. Except as provided in the Public Employees Retirement Act, a member of the retirement board, employee of the retirement board or any person connected with the retirement board in any manner shall not:

(1) have any direct or indirect interest in the gains or profits of any investment made by the retirement board;

(2) receive any direct or indirect pay or emolument for services provided to the retirement board or the association;

(3) directly or indirectly, for the member, employee or person, for themselves or as agent or partner of others, borrow any of the funds or deposits of the association or in any manner use them except to make current and necessary payments authorized by the retirement board; or

(4) become an endorser or surety or become in any manner an obligor for money of the retirement board loaned or borrowed."

Section 12. Section 19-1-19 NMSA 1978 (being Laws 1966, Chapter 4, Section 1, as amended) is amended to read:

"19-1-19. PUBLIC BUILDINGS AT CAPITAL PERMANENT FUND--INVESTMENT.--The state investment [officer] council shall, in the same manner provided under Section [11-2-8.9 NMSA 1953] 6-8-6 NMSA 1978 for other permanent funds, assume the investment responsibility for the public buildings at capital permanent fund created by Section [7-1-16 NMSA 1953] 19-1-17 NMSA 1978."

Section 13. Section 22-11-3 NMSA 1978 (being Laws 1967, Chapter 16, Section 127, as amended) is amended to read:

"22-11-3. EDUCATIONAL RETIREMENT BOARD--MEMBERS--TERMS--VACANCIES.--

A. The "educational retirement board" is created.

B. The board shall be composed of seven members, consisting of the following:

(1) the [superintendent] secretary of public [instruction] education;

(2) the state treasurer;

(3) one member to be elected for a term of four years by members of the New Mexico association of educational retirees;

(4) one member to be elected for a term of four years by the members of the [New Mexico] national education association of New Mexico;

(5) one member to be elected for a term of four years by the New Mexico members of the American association of university professors; and

(6) two members to be appointed by the governor for terms of four years each.

C. In the initial composition of the board, the member elected by the members of the American association of university professors shall serve for a term of three years; one member appointed by the governor shall serve for a term of two years; and the other member appointed by the governor shall serve for a term of one year.

D. Except for ex-officio members, a member of the board who fails to attend three consecutively scheduled meetings, unless in each case excused for cause by the board members in attendance, is considered to have resigned from the board, and the board shall by resolution declare the office vacated as of the date of adoption of the resolution.

[D.] E. Vacancies occurring in the [term] terms of office of those members appointed by the governor or elected by an association shall be filled either by the governor appointing, or by the association electing, a new member to fill the unexpired term."

Section 14. Section 22-11-4 NMSA 1978 (being Laws 1967, Chapter 16, Section 128, as amended) is amended to read:

"22-11-4. BOARD--REGULAR AND SPECIAL MEETINGS.--

A. The board shall hold regular meetings four times each year and may, by its bylaws, provide for additional regular meetings. Prior to each regular meeting, written notice shall be given to each member of the board specifying the time and place of the regular meeting.

B. Special meetings of the board may be called by the [chairman] chair or by any three members of the board. Written notice of the special meeting shall be sent to each member of the board at least three days in advance of the special meeting.

C. If not in violation of Subsection A or B of this section, the rules of the board or the Open Meetings Act, the [chairman] chair or any of three members of the board may cancel or reschedule a meeting.

D. The board shall provide an opportunity for public comment at meetings of the board. Advance notice of meetings shall be published on the board's web site and in a newspaper of general circulation at least ten days in advance of the meeting."

Section 15. Section 22-11-5.1 NMSA 1978 (being Laws 1999, Chapter 153, Section 2) is amended to read:

"22-11-5.1. RESTRICTIONS ON RECEIPT OF GIFTS--RESTRICTION ON CAMPAIGN CONTRIBUTIONS--REQUIRED REPORTING.--

A. Except for gifts of food or beverage given in a place of public accommodation, consumed at the time of receipt, not exceeding fifty dollars ($50.00) for a single gift and the aggregate value of which gifts may not exceed one hundred fifty dollars ($150) in a calendar year, neither a board member nor an employee of the board shall receive or accept anything of value directly or indirectly from a person who:

(1) has a current contract with the [retirement] board [or association];

(2) is a potential bidder, offeror or contractor for the provision of services or personal property to the [retirement] board [or association];

(3) is authorized to invest public funds pursuant to state or federal law or is an employee or agent of such a person; or

(4) is an organization, association or other entity having a membership that includes persons described in Paragraphs (1) through (3) of this subsection.

B. No person who is a candidate in a primary or general election for a position that qualifies the person for ex-officio membership on the board, no member serving ex officio on the board and no person who is a nominee for board membership by election by the members of an association shall accept anything of a value of more than twenty-five dollars ($25.00) as a contribution to an ex-officio member's statewide campaign in a primary or general election or as a contribution to the campaign of a nominee for membership on the board as a member elected by an association from a person who:

(1) has a current contract with the board;

(2) is a potential bidder, offeror or contractor for the provision of services or personal property to the board;

(3) is authorized to invest public funds pursuant to state or federal law or is an employee or agent of such a person; or

(4) is an organization, association or other entity having a membership that includes persons described in Paragraphs (1) through (3) of this subsection.

C. Within ten days after an election in which one or more board members are elected by an association, all persons who were candidates for board membership in that election shall file with the board a report disclosing all contributions to their respective campaigns whether made directly to the candidate, to a political action committee or to some other entity supporting the candidate's election. The contributions shall be reported by amount and specific source. Within sixty days after the election, the board shall publish the reports required by this subsection."

Section 16. Section 22-11-13 NMSA 1978 (being Laws 1967, Chapter 16, Section 137, as amended) is amended to read:

"22-11-13. BOARD AUTHORITY TO INVEST THE FUND--PRUDENT INVESTOR STANDARD--INDEMNIFICATION OF BOARD.--

A. The board is authorized to invest or reinvest the fund in accordance with the Uniform Prudent Investor Act and may employ contractors, advisors or investment management services in any investment or reinvestment.

B. The board shall provide quarterly reports disclosing all contractor arrangements and detailing investment, reinvestment, purchase, sale and exchange transactions and fees paid for each transaction and performance [reports] of the fund to the legislative finance committee and the department of finance and administration. The reports shall be published on the web sites of the board, the legislature and the department of finance and administration. Annually, the board shall ratify and provide its written investment policy, including any amendments, to the legislative finance committee and the department of finance and administration. The policies shall be published on the web sites of the board, the legislature and the department of finance and administration.

C. The board or its designated agent may enter into contracts for the temporary exchange of securities for the use by broker-dealers, banks or other recognized institutional investors, for periods not to exceed one year, for a specified fee or consideration. Such a contract shall not be entered into unless the contract is fully secured by a collateralized, irrevocable letter of credit running to the board, cash or equivalent collateral of at least one hundred two percent of the market value of the securities plus accrued interest temporarily exchanged. This collateral shall be delivered to the state fiscal agent or its designee contemporaneously with the transfer of funds or delivery of the securities. Such contract may authorize the board to invest cash collateral in instruments or securities that are authorized fund investments and may authorize payment of a fee from the fund or from income generated by the investment of cash collateral to the borrower of securities providing cash as collateral. The board may apportion income derived from the investment of cash collateral to pay its agent in securities lending transactions.

D. Commissions paid for the purchase or sale of any securities pursuant to the provisions of the Educational Retirement Act shall not exceed brokerage rates prescribed and approved by national stock exchanges or by industry practice.

E. Securities purchased for the fund shall be held in the custody of the state treasurer. At the direction of the board, the state treasurer shall deposit with a bank or trust company the securities for safekeeping or servicing.

F. The board may consult with the state investment council or the state investment officer; may request from the state investment council or the state investment officer any information, advice or recommendations with respect to investment of the fund; may utilize the services of the state investment council or the state investment officer; and may act upon any advice or recommendations of the state investment council or the state investment officer. The state investment council or the state investment officer shall render investment advisory services to the board upon request and without expense to the board. The board may also employ the investment management services and related management services of a trust company or national bank exercising trust powers or of an investment counseling firm or brokers for the purchase and sale of securities, commission recapture and transitioning services and may pay reasonable compensation for those services from funds administered by the board.

G. The board shall annually provide for its members no less than eight hours of training in pension fund investing, fiduciary obligations or ethics. A member elected or appointed to the board who fails to attend the training for two consecutive years shall be deemed to have resigned from the board.

H. Members of the board, jointly and individually, shall be indemnified from the fund by the state from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and attorney fees, and against all liability, losses and damages of any nature whatsoever that members shall or may at any time sustain by reason of any decision made in the performance of their duties pursuant to this section.

I. The board and any person providing investment advice to the board for a fee or other compensation and all persons exercising discretionary authority or control of funds under the management of the board are fiduciaries.

J. The board may select and contract for the services of one or more custodian banks for all funds under the board's management. For the purpose of this subsection, "custodian bank" means a financial institution with the general fiduciary duties to manage, control and collect the assets of an investment fund, including receiving all deposits and paying all disbursements as directed by staff, safekeeping of assets, coordination of asset transfers, timely settlement of securities transactions and accurate and timely reporting of the assets by individual account and in total."

Section 17. A new section of Chapter 6, Article 8 NMSA 1978 is enacted to read:

"[NEW MATERIAL] ALTERNATIVE INVESTMENT ADVISORY COMMITTEE.--

A. An alternative investment advisory committee shall be appointed by the council for any separate alternative investment asset class when the percentage of the portfolio invested by the council in that alternative investment asset class exceeds ten percent of the total funds invested by the council. An alternative investment advisory committee shall consist of five members, one of whom shall be the state investment officer and four of whom shall be appointed by the council. Of the members appointed to the committee by the council, at least one, but not more than two, shall be a member of the council and the remainder of the members appointed by the council shall be public members who are not members of the council. All members appointed by the council shall be qualified by competence, experience and knowledge of the alternative investment asset class for which the advisory committee is created and shall have no less than five years of experience in the field of investment or finance.

B. Public members shall be appointed for three-year terms; provided that the terms of the initial committee members shall be staggered so that the term of one member expires each year. After the initial appointments, all public members shall be appointed for three-year terms. Members shall serve until their successors are appointed. A vacancy occurring other than by expiration of term shall be filled in the same manner as the original appointment but only for the unexpired term.

C. The council may dissolve an alternative investment advisory committee when the percentage of the portfolio invested by the council in that alternative investment asset class falls below five percent of the total funds invested by the council for a period of more than one year.

D. An alternative investment advisory committee shall review and make recommendations to the council on its designated alternative investment asset class and shall advise the council in matters and policies related to such investments.

E. Members of an alternative investment advisory committee shall receive per diem and mileage as provided for nonsalaried public officers in the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

F. An alternative investment advisory committee shall elect annually a chair from among its members and may elect other officers as necessary. The committee shall meet upon the call of the chair.

G. Members of an alternative investment advisory committee are public employees within the meaning of the Tort Claims Act and are entitled to all immunity and indemnification provided under that act.

H. A person shall not be a member of an alternative investment advisory committee if any recommendation, action or decision of the committee will or is likely to result in direct, measurable economic gain to that person or that person's employer.

I. As used in this section, "alternative investment" means an asset class other than private equity investments as defined in Section 6-8-20 NMSA 1978, a traditional public equity or a fixed income mutual fund and includes New Mexico economic development investments, hedge funds, real estate and real assets."

Section 18. A new section of the Public Employees Retirement Act is enacted to read:

"[NEW MATERIAL] ALTERNATIVE INVESTMENT ADVISORY COMMITTEE.--

A. An alternative investment advisory committee shall be appointed by the retirement board for any separate alternative investment asset class when the percentage of the portfolio invested by the retirement board in that alternative investment asset class exceeds ten percent of the total fund. An alternative investment advisory committee shall consist of five members, one of whom shall be the chief investment officer of the association and four of whom shall be appointed by the retirement board. Of the members appointed to the committee by the retirement board, at least one, but not more than two, shall be a member of the retirement board and the remainder of the members appointed by the retirement board shall be public members who are not members of the retirement board. All members appointed by the retirement board shall be qualified by competence, experience and knowledge of the alternative investment asset class for which the advisory committee is created and shall have no less than five years of experience in the field of investment or finance.

C. The retirement board may dissolve an alternative investment advisory committee when the percentage of the portfolio invested by the retirement board in that alternative investment asset class falls below five percent of the total fund for a period of more than one year.

D. An alternative investment advisory committee shall review and make recommendations to the retirement board on its designated alternative investment asset class and shall advise the retirement board in matters and policies related to such investments.

F. An alternative investment advisory committee shall elect annually a chair from among its members and may elect other officers as necessary. The committee shall meet upon the call of the chair.

G. Members of an alternative investment advisory committee are public employees within the meaning of the Tort Claims Act and are entitled to all immunity and indemnification provided under that act.

I. As used in this section, "alternative investment" means an asset class other than publicly traded equities, fixed income securities or mutual funds and includes hedge funds, private equity, commodities, derivative securities, real estate and real assets."

Section 19. A new section of the Educational Retirement Act is enacted to read:

"[NEW MATERIAL] ALTERNATIVE INVESTMENT ADVISORY COMMITTEE.--

A. An alternative investment advisory committee shall be appointed by the board for any separate alternative investment asset class when the portion of the fund invested by the board in that alternative investment asset class exceeds ten percent of the total fund, excluding cash or cash equivalents. An alternative investment advisory committee shall consist of five members, one of whom shall be the director and four of whom shall be appointed by the board. Of the members appointed to the committee by the board, at least one, but not more than two, shall be a member of the board and the remainder of the members appointed by the retirement board shall be public members who are not members of the board. All members appointed by the board shall be qualified by competence, experience and knowledge of the alternative investment asset class for which the advisory committee is created and shall have no less than five years of experience in the field of investment or finance.

C. The board may dissolve an alternative investment advisory committee when the percentage of the portfolio invested by the board in that alternative investment asset class falls below five percent of the total fund for a period of more than one year.

D. An alternative investment advisory committee shall review and make recommendations to the board on its designated alternative investment asset class and shall advise the board in matters and policies related to such investments.

F. An alternative investment advisory committee shall elect annually a chair from among its members and may elect other officers as necessary. The committee shall meet upon the call of the chair.

G. Members of an alternative investment advisory committee are public employees within the meaning of the Tort Claims Act and are entitled to all immunity and indemnification provided under that act.

Section 20. TEMPORARY PROVISION--TRANSITION MEMBERSHIP OF STATE INVESTMENT COUNCIL.--

A. On the effective date of this act:

(1) the state investment officer and the governor are no longer members of the state investment council;

(2) the three public members serving on the state investment council the day before the effective date of this act shall continue to serve until their successors are appointed for an interim basis pursuant to Subsection B of this section; and

(3) the chief financial officer of a state institution of higher education appointed by the governor shall continue to serve until the officer's successor is appointed on an interim basis pursuant to Subsection C of this section.

B. Within forty-five days of the effective date of this act, members shall be appointed pursuant to Paragraphs (4) through (7) of Subsection A of Section 6-8-2 NMSA 1978 and shall serve on an interim basis until confirmed by the senate, provided that the first three members appointed pursuant to this subsection shall succeed to the positions held by the three public members serving on the day before the effective date of this act.

C. After the appointments made pursuant to Subsection B of this section, three members may be appointed pursuant to Paragraph (8) of Subsection A of Section 6-8-2 NMSA 1978 and shall serve on an interim basis until confirmed by the senate.

D. The seven members appointed pursuant to Subsections B and C of this section shall, by lot, determine the initial terms of office for each position so that one position will be for a term of one year, one position will be for a term of two years, two positions will be for a term of three years, two positions will be for a term of four years and one position shall be for a term of five years. Thereafter, the terms shall be for five years.

Section 21. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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