Senate Bill text for SB0238

SENATE BILL 238

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

INTRODUCED BY

Cisco McSorley

AN ACT

RELATING TO STATE INVESTMENTS; REMOVING THE GOVERNOR FROM THE STATE INVESTMENT COUNCIL; AMENDING THE POWERS AND DUTIES OF THE STATE BOARD OF FINANCE, THE STATE INVESTMENT COUNCIL, THE PUBLIC EMPLOYEES RETIREMENT BOARD AND THE EDUCATIONAL RETIREMENT BOARD; CLARIFYING FIDUCIARIES OF THE STATE INVESTMENT COUNCIL, THE PUBLIC EMPLOYEES RETIREMENT BOARD AND THE EDUCATIONAL RETIREMENT BOARD; RESTRICTING THE RECEIPT OF GIFTS AND CAMPAIGN CONTRIBUTIONS BY CERTAIN MEMBERS OF THE STATE INVESTMENT COUNCIL; RECONCILING MULTIPLE AMENDMENTS TO THE SAME SECTION OF LAW IN LAWS 2005.

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

Section 1. Section 6-1-1 NMSA 1978 (being Laws 1923, Chapter 76, Section 3, as amended) is amended to read:

"6-1-1. MEMBERSHIP OF STATE BOARD OF FINANCE--POWERS AND DUTIES--ESTABLISHMENT IN CONNECTION WITH THE BOARD OF FINANCE DIVISION OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION.--

A. The state board of finance shall consist of seven members:

(1) the governor;

(2) the lieutenant governor;

(3) the state treasurer; and

(4) four members appointed by the governor with the advice and consent of the senate, no more than two of these members to be from the same political party.

B. The terms of office for members appointed by the governor shall be two years. The term of each remaining member shall be coextensive with [his] the member's term of office. If the office of lieutenant governor becomes vacant, [his] the lieutenant governor's position on the state board of finance shall remain vacant until the election and qualification of a new lieutenant governor.

C. Members of the state board of finance, other than the governor and the state treasurer, shall be reimbursed for attending meetings of the board as provided in the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

D. The governor shall be president of the state board of finance, and the board shall annually elect a secretary from its membership. Meetings of the board shall be held at the state capitol at times determined by the governor. Four voting members of the board constitute a quorum for the transaction of business. Minutes of all proceedings and transactions of the board shall be kept in the offices of the department of finance and administration.

E. Except as otherwise provided by law, the state board of finance, in addition to other powers and duties provided by law, has general supervision of the fiscal affairs of the state and of the safekeeping and depositing of all money and securities belonging to or in the custody of the state, and it may make rules and regulations for carrying out the provisions of [Sections 6-1-1] this section and Sections 6-10-2, 6-10-3, 6-10-20, 6-10-29, 6-10-37 through 6-10-44, 6-10-46, 6-10-47, 6-10-50, 6-10-52 through 6-10-54, 6-10-58 and 6-10-61 NMSA 1978. The board shall have access to all reports and correspondence relating to the condition of banks and savings and loan associations whose deposits are insured by an agency of the United States in this state [which] that are in the financial institutions division of the regulation and licensing department or any department or agency of the state. If the board deems action necessary to enable it to perform its duties, it may require the director of the financial institutions division to make a special examination of any state bank or trust company or any state savings and loan association whose deposits are insured by an agency of the United States.

F. The state board of finance may make investigations it deems necessary to enable it to perform the duties imposed on it by law and may instruct the director of the board of finance division to employ experts, auditors, accountants and attorneys as it may, from time to time, deem necessary and prescribe their duties and fix their compensation within the appropriations made for that purpose by the legislature for use by the board.

G. The state board of finance is established in connection with the board of finance division of the department of finance and administration. The secretary of finance and administration, with the approval of the board, shall appoint a director of the division. This subsection shall not be construed to affect the exercise of any board power or duty nor shall it be construed as placing the board under the provisions of the Executive Reorganization Act or the provisions of Section 9-6-5 NMSA 1978."

Section 2. 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.] (4) three public members appointed by the governor with the advice and consent of the senate;

[F.] (5) the state investment officer; and

[G.] (6) the chief financial officer of a state institution of higher education appointed by the governor with the advice and consent of the senate.

[The chairman of] B. The council shall [be the governor] elect from its membership a chair and vice chair.

All actions of the council shall be by majority vote, and at least three members appointed pursuant to [Subsections E and G] Paragraphs (4) and (6) of Subsection A of this section must be present to constitute a quorum.

C. Members of the council appointed pursuant to Paragraph (4) 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 3. 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, 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 Paragraph (4) of Subsection [E] A of Section 6-8-2 NMSA 1978 shall be qualified by competence and 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. 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.

C. Any member of the council appointed pursuant to Paragraph (4) or (6) of Subsection [E or G] A of Section 6-8-2 NMSA 1978 may be removed from the council by the governor, 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. 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 4. 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 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 shall see that money invested is at all times handled in the best interests of the state.

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. 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.

E. The council, 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.

F. 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.] G. For funds available for investment for more than one year, the state investment officer 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 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 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.] H. 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 5. A new section of Chapter 6, Article 8 NMSA 1978 is enacted to read:

"[NEW MATERIAL] RESTRICTIONS ON RECEIPT OF GIFTS AND CAMPAIGN CONTRIBUTIONS.--

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, the state investment officer, council members and employees of the council shall not receive or accept anything of value directly or indirectly from a person who:

(1) has a current contract with the council;

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

(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 council and no member serving ex officio on the council 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 all or some of the members of the association from a person who:

(1) has a current contract with the council; (2) is a potential bidder, offeror or contractor for the provision of services or personal property to the council;

(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."

Section 6. 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) 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) after the sale of the land and building acquired pursuant to Paragraph (8) 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) of this subsection or any funds controlled by the board, the use of which for such purposes is not otherwise prohibited by law;

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

(12) 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. 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. 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 7. 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 8. Section 22-11-5 NMSA 1978 (being Laws 1967, Chapter 16, Section 129) is amended to read:

"22-11-5. BOARD--RECORD--QUORUM--COMPENSATION.--

A. The board shall elect from its membership a [chairman] chair and a vice [chairman] chair.

B. A record shall be taken and preserved of all meetings of the board.

C. A quorum of the board shall be required for the transaction of any business. A majority of the members of the board [constitute] constitutes a quorum. Each member of the board shall have one vote, and a proposal shall pass by the affirmative vote of a majority of the members present at the meeting.

D. While performing [their] the member's duties, each member of the board shall be entitled to receive per diem and mileage as provided by the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

E. 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."

Section 9. Section 22-11-6 NMSA 1978 (being Laws 1967, Chapter 16, Section 130) is amended to read:

"22-11-6. BOARD--POWERS--DUTIES.--The board shall:

A. properly and uniformly enforce the Educational Retirement Act;

B. hire employees and delegate administrative authority to these employees;

C. make an actuarial report on the financial operation of the Educational Retirement Act to the legislature at each regular session every odd-numbered year;

D. accept donations, gifts or bequests; [and]

E. adopt regulations pursuant to the Educational Retirement Act; and

F. 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 10. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2010.

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