SENATE RULES COMMITTEE SUBSTITUTE FOR
SENATE BILLS 17 & 64
50th legislature - STATE OF NEW MEXICO - first session, 2011
AN ACT
RELATING TO PUBLIC FINANCES; CHANGING THE MEMBERSHIP, POWERS AND DUTIES OF THE STATE INVESTMENT COUNCIL; PROVIDING FOR THE ELECTION OF THE CHAIR AND VICE CHAIR OF THE COUNCIL; EXTENDING REPORTING DEADLINES; 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:
[(1) the governor;
(2)] (1) the state treasurer;
[(3)] (2) the commissioner of public lands;
[(4)] (3) the secretary;
[(5) the chief financial officer of a state institution of higher education appointed by the governor with the advice and consent of the senate;
(6) four members appointed by the New Mexico legislative council with the advice and consent of the senate; provided that no more than two members shall be members of the same political party;]
(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
[(7) two] (8) three members appointed by the governor with the advice and consent of the senate.
B. No more than two members of the council appointed pursuant to Paragraphs (4) though (7) of Subsection A of this section shall be members of the same political party.
[B.] C. The chair [of the council shall be the governor] and the vice chair of the council shall be selected by the council from among the members appointed pursuant to Paragraphs (4) through (8) of Subsection A of this section for terms of two years, provided that the chair and the vice chair shall serve staggered terms, shall serve no more than two consecutive terms and the vice chair elected in 2011 shall serve a one-year term to allow for staggered terms.
D. All actions of the council shall be by majority vote, and a majority of the members shall constitute a quorum.
[C.] E. Members of the council appointed pursuant to Paragraphs [(6) and (7)] (4) through (8) of Subsection 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 pursuant to Paragraphs [(6) and (7)] (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 [(6) and (7)] (4) through (8) of Subsection 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. 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 Governmental Conduct Act. Nothing in this section or in the 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 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. [The member appointed pursuant to Paragraph (5) of Subsection A of Section 6-8-2 NMSA 1978 shall serve at the pleasure of the governor.] A member of the council appointed pursuant to Paragraphs [(6) and (7)] (4) through (8) of Subsection A of Section 6-8-2 NMSA 1978 may be removed from the council by the 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 council with the advice and consent of the senate. The state investment officer shall devote the officer's entire time and attention to the duties of that office and shall not engage in any other occupation or profession or hold any other public office, appointive or elective. The officer shall be a person qualified, by training and investment experience, to direct the work of the investment office and shall have had at least five years' professional experience as an investment officer. 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 council for cause."
SECTION 4. Section 6-8-7 NMSA 1978 (being Laws 1957, Chapter 179, Section 7, as amended) 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 policymaking regulations or resolutions adopted by the council, the council may make purchases, sales, exchanges, investments and reinvestments of the assets of all funds 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 and investment-related functions to the state investment officer.
B. The state investment officer shall formulate and recommend to the council for approval investment [regulations or resolutions] policies 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 or consulting 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] investments 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.
E. All funds managed by the [state investment officer] council shall be managed in accordance with the Uniform Prudent Investor Act. [The council 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 or investment office staff 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.
H. For funds available for investment for more than one year, the 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 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 and investment office staff are exempt from the New Mexico Uniform Securities Act. 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.
I. The state investment officer shall provide quarterly performance reports to the legislative finance committee. Annually, the [state investment officer] council shall [ratify and] provide written investment policies [including any amendments] to the legislative finance committee."
SECTION 5. 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] thirty 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 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] site 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 6. 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 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 council.
B. Members appointed by the 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 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 chair from among its members and may elect other officers as necessary. The committee shall meet upon the call of the 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. 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 7. TEMPORARY PROVISION--TRANSITION MEMBERSHIP OF STATE INVESTMENT COUNCIL.--
A. On July 1, 2011, the chief financial officer appointed by the governor is no longer a member of the state investment council.
B. Within thirty days of July 1, 2011, the governor shall appoint a member of the state investment council, pursuant to Paragraph (8) of Subsection A of Section 6-8-2 NMSA 1978, who shall serve on an interim basis until confirmed by the senate.
C. The four public members serving on the state investment council that were appointed by the New Mexico legislative council shall continue to serve until their terms expire or they resign or are removed.
D. Members of the state investment council shall be appointed pursuant to Paragraphs (4) through (7) of Subsection A of Section 6-8-2 NMSA 1978 as vacancies occur on the board pursuant to Subsection C of this section and shall serve on an interim basis until confirmed by the senate. The four appointing entities shall, by lot, determine the order in which they will appoint replacement members to the council.
SECTION 8. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
- 14 -