SF 4572
Introduction - 94th Legislature (2025 - 2026)
Posted on 03/19/2026 09:12 a.m.
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A bill for an act
relating to the State Board of Investment; modifying practices for billing, expenses,
and reporting; amending Minnesota Statutes 2024, section 11A.07, subdivision 5;
Minnesota Statutes 2025 Supplement, sections 11A.04; 11A.07, subdivision 4.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2025 Supplement, section 11A.04, is amended to read:
11A.04 DUTIES AND POWERS; APPROPRIATION.
The state board shall:
(1) Act as trustees for each fund for which it invests or manages money in accordance
with the standard of care set forth in section 11A.09 if state assets are involved and in
accordance with chapter 356A if pension assets are involved.
(2) Formulate policies and procedures deemed necessary and appropriate to carry out
its functions. Procedures adopted by the new text begin state new text end board must allow fund beneficiaries and
members of the public to become informed of proposed board actions. Procedures and
policies of the new text begin state new text end board are not subject to the Administrative Procedure Act.
(3) Employ an executive director as provided in section 11A.07.
(4) deleted text begin Employdeleted text end new text begin Retainnew text end investment advisors and consultants as it deems necessary.
(5) Prescribe policies concerning personal investments of all employees of the new text begin state
new text end board to prevent conflicts of interest.
(6) Maintain a record of its proceedings.
(7) As it deems necessary, establish advisory committees subject to section 15.059 to
assist the new text begin state new text end board in carrying out its duties.
(8) Not permit state funds to be used for the underwriting or direct purchase of municipal
securities from the issuer or the issuer's agent.
(9) Direct the commissioner of management and budget to sell property other than money
that has escheated to the state when the new text begin state new text end board determines that sale of the property is
in the best interest of the state. Escheated property must be sold to the highest bidder in the
manner and upon terms and conditions prescribed by the new text begin state new text end board.
(10) Undertake any other activities necessary to implement the duties and powers set
forth in this section.
(11) Establish a formula or formulas to measure management performance and return
on investment. Public pension funds in the state shall utilize the formula or formulas
developed by the state board.
(12) Except as otherwise provided in article XI, section 8, of the Constitution of the state
of Minnesota, deleted text begin employdeleted text end new text begin retainnew text end , at its discretion, qualified deleted text begin privatedeleted text end new text begin externalnew text end firms to invest deleted text begin anddeleted text end new text begin ,new text end
managenew text begin , or provide services with respect tonew text end the assets of funds over which the state board
has investment management responsibility. deleted text begin There is annually appropriated to the state board,
from the assets of the funds for which the state board utilizes a private investment manager,
sums sufficient to pay the costs of employing private firms. Each year, by January 15, the
board shall report to the governor and legislature on the cost and the investmentdeleted text end new text begin The state
board must include in the report required under section 11A.07, subdivision 4, clause (8),
the management fees paid under this clause and thenew text end performance of each investment manager
deleted text begin employeddeleted text end new text begin retainednew text end by the new text begin state new text end board.
(13) Adopt an investment policy statement that includes investment objectives, asset
allocation, and the investment management structure for the retirement fund assets under
its control. The statement may be revised at the discretion of the state board. The state board
shall seek the advice of the council regarding its investment policy statement. Adoption of
the statement is not subject to chapter 14.
(14) Adopt a compensation plan setting the terms and conditions of employment for
unclassified employees of the state board pursuant to section 43A.18, subdivision 3b.
(15) Contract, as necessary, with the board of trustees of the Minnesota State Colleges
and Universities System for the provision of investment review and selection services under
section 354B.25, subdivision 3, and arrange for the receipt of payment for those services.
There is annually appropriated to the state board, from the assets of the funds for which
the state board provides investment services, sums sufficient to pay the deleted text begin costs of all necessarydeleted text end
expenses deleted text begin for the administrationdeleted text end of the new text begin state new text end boardnew text begin , including any fees or expenses charged
by advisors, consultants, or external firmsnew text end . These sums will be deposited in the State Board
of Investment operating account, which must be established by the commissioner of
management and budgetnew text begin in the special revenue fundnew text end .
Sec. 2.
Minnesota Statutes 2025 Supplement, section 11A.07, subdivision 4, is amended
to read:
Subd. 4.
Duties and powers.
The new text begin executive new text end director, at the direction of the state board,
shall:
(1) plan, direct, coordinate, and execute administrative and investment functions in
conformity with the policies and directives of the state board and the requirements of this
chapter and of chapter 356A;
(2) prepare and submit biennial and annual budgets to the new text begin state new text end board and with the
approval of the new text begin state new text end board submit the budgets to the Department of Management and Budget;
(3) employ professional and clerical staff as necessary;
(4) report to the state board on all operations under the new text begin executive new text end director's control and
supervision;
(5) maintain accurate and complete records of securities transactions and official
activities;
(6) establish a policy, which is subject to state board approval, relating to the purchase
and sale of securities on the basis of competitive offerings or bids;
(7) cause securities acquired to be kept in the custody of the commissioner of management
and budget or other depositories consistent with chapter 356A, as the state board deems
appropriate;
(8) prepare and file with the director of the Legislative Reference Library a report
summarizing the activities of the state board, the council, and the new text begin executive new text end director during
the preceding fiscal year;
(9) include on the state board's website its annual report and an executive summary of
its quarterly reports;
(10) require state officials from any department or agency to produce and provide access
to any financial documents the state board deems necessary in the conduct of its investment
activities;
new text begin
(11) with respect to any fund for which the state board provides investment services,
modify the billing procedure or apportionment of expenses under subdivision 5 to the extent
the executive director determines is appropriate or necessary, with any such modification
consistent with the applicable duties in this chapter and section 356A.04;
new text end
deleted text begin (11)deleted text end new text begin (12)new text end receive and expend legislative appropriations; and
deleted text begin (12)deleted text end new text begin (13)new text end undertake any other activities necessary to implement the duties and powers
set forth in this subdivision consistent with chapter 356A.
Sec. 3.
Minnesota Statutes 2024, section 11A.07, subdivision 5, is amended to read:
Subd. 5.
Apportionment of expenses.
new text begin (a) new text end The annual expenses incurred by the deleted text begin State
Board of Investment willdeleted text end new text begin state board, including any fees or expenses charged by advisors,
consultants, or external firms, mustnew text end be apportioned among deleted text begin the state general fund, the
retirement funds administered by the Minnesota State Retirement System, Public Employees
Retirement Association, and Teachers Retirement Association, anddeleted text end all deleted text begin otherdeleted text end funds deleted text begin as follows:deleted text end new text begin
for which the state board provides investment services, in accordance with this subdivision.
There is annually appropriated to the state board, from the assets of all funds for which the
state board provides investment services, sums sufficient to pay the apportioned expenses.
These sums must be deposited in the State Board of Investment operating account, which
must be established by the commissioner of management and budget in the special revenue
fund. Those sums must be apportioned as follows:
new text end
deleted text begin
(1) on a biennial basis, the State Board of Investment, in accordance with biennial budget
procedures established by the commissioner of management and budget, may request a
direct appropriation that represents the portion of the State Board of Investment expenses
necessary to provide investment services to the state general fund. This appropriation must
be deposited in the State Board of Investment operating account;
deleted text end
deleted text begin (2)deleted text end new text begin (1)new text end the executive director shall new text begin first new text end apportion deleted text begin the actualdeleted text end new text begin expenses allocable solely
to a specific fund or in the case of multiple funds, among the funds proportionally based on
weighted average assets under management during the fiscal year; and
new text end
new text begin (2) next, the executive director shall apportion the new text end expenses incurred by the deleted text begin State Board
of Investmentdeleted text end new text begin state boardnew text end , less the deleted text begin charge to the state general funddeleted text end new text begin charges apportioned
under clause (1) and accounting for any modification made pursuant to subdivision 4, clause
(11)new text end , among the funds deleted text begin whose assets are invested by the State Board of Investment, with the
exception of the state general fund,deleted text end new text begin for which the state board provides investment services,
with such expenses allocated proportionallynew text end based on the weighted average assets under
management during the fiscal year. deleted text begin The amounts necessary to pay these charges are
apportioned from the investment earnings of each fund. Receipts must be credited to the
State Board of Investment operating account;
deleted text end
deleted text begin (3)deleted text end new text begin (b)new text end The deleted text begin actualdeleted text end expenses apportioned and charged to the fundsnew text begin under paragraph (a)new text end ,
with the exception of deleted text begin the state general fund anddeleted text end the retirement funds administered by the
Minnesota State Retirement System, Public Employees Retirement Association, and Teachers
Retirement Association, must be calculated, billed, and paid new text begin at least new text end on a quarterly basis in
accordance with procedures for interdepartmental payments established by the commissioner
of management and budgetdeleted text begin ; anddeleted text end new text begin . Sums received to pay the expenses must be deposited in
the operating account under section 11A.04.
new text end
deleted text begin (4)deleted text end new text begin (c)new text end The annual estimated expenses to be incurred by the deleted text begin State Board of Investmentdeleted text end new text begin
state boardnew text end that will be payable by the retirement funds administered by the Minnesota State
Retirement System, Public Employees Retirement Association, and Teachers Retirement
Association must be deposited in the State Board of Investment operating accountnew text begin under
section 11A.04new text end onnew text begin or aboutnew text end the first business day of each fiscal year. A reconciliation of the
deleted text begin actualdeleted text end expensesnew text begin allocable to each retirement fundnew text end compared to thenew text begin applicablenew text end estimated deleted text begin costsdeleted text end new text begin
expensesnew text end must occurnew text begin at least annuallynew text end at the end of deleted text begin eachdeleted text end new text begin thenew text end fiscal year deleted text begin with any surplus ordeleted text end new text begin .
Anynew text end deficit deleted text begin being credited or debited to each of the respective funds. The State Board of
Investment must present a statement of accrued actualdeleted text end new text begin determined by such reconciliation
is due and payable to the State Board of Investment operating account promptly upon notice
of the amount due. Any fiscal year-end surplus may, at the executive director's discretion,
be retained in the operating account and credited against the following fiscal year's estimatednew text end
expenses deleted text begin todeleted text end new text begin ofnew text end eachnew text begin respective retirementnew text end fund deleted text begin at the end of each quarter during each fiscal
yeardeleted text end .new text begin The executive director must refund to the respective retirement fund any portion of
any surplus not credited against the following fiscal year's estimated expenses.
new text end