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HF 409

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/23/2017 07:36pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to local government; providing long-term equity investment authority;
proposing coding for new law in Minnesota Statutes, chapter 118A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [118A.09] ADDITIONAL LONG-TERM EQUITY INVESTMENT
AUTHORITY.
new text end

new text begin Subdivision 1. new text end

new text begin Definition; qualifying government. new text end

new text begin "Qualifying government" means:
(1) a county or statutory or home rule charter city with a population of more than 100,000;
(2) a county or statutory or home rule charter city which had its most recently issued general
obligation bonds rated in the highest category by a national bond rating agency; or (3) a
self-insurance pool listed in section 471.982, subdivision 3. A county or statutory or home
rule charter city with a population of 100,000 or less that is a qualifying government, but
is subsequently rated less than the highest category by a national bond rating agency on a
general obligation bond issue, may not invest additional funds under this section but may
continue to manage funds previously invested under subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Additional investment authority. new text end

new text begin Qualifying governments may invest the
amount described in subdivision 3 (1) in index mutual funds based in the United States and
indexed to the Standard & Poor's 500 Index or the Dow Jones United States Total Stock
Market Index; or (2) with the Minnesota State Board of Investment subject to such terms
and minimum amounts as may be adopted by the board. Index mutual fund investments
must be made directly with the main sales office of the fund.
new text end

new text begin Subd. 3. new text end

new text begin Funds. new text end

new text begin (a) Qualifying governments may only invest under subdivision 2
according to the limitations in this subdivision. A qualifying government under subdivision
1, clause (1) or (2), may only invest its cash and investments that are held for long-term
capital plans authorized by the city council or county board, or long-term obligations of the
qualifying government. Long-term obligations of the qualifying government include
long-term capital plan reserves, funds held to offset long-term environmental exposure,
pension liabilities, other postemployment benefit liabilities, and compensated absences.
new text end

new text begin (b) Qualifying governments under subdivision 1, clause (1) or (2), may invest up to 15
percent of the sum of (1) unassigned cash; (2) cash equivalents; (3) deposits; and (4)
investments. This calculation must be based on the qualifying government's most recent
audited statement of net position, which must be compliant and audited pursuant to
governmental accounting and auditing standards. Once the amount invested reaches 15
percent of the sum of unassigned cash, cash equivalents, deposits, and investments, no
further funds may be invested under this section; however, a qualifying government may
continue to manage the funds previously invested under this section even if the total amount
subsequently exceeds 15 percent of the sum of unassigned cash, cash equivalents, deposits,
and investments.
new text end

new text begin (c) A qualified government under subdivision 1, clause (3), may invest up to the lesser
of:
new text end

new text begin (1) 15 percent of the sum of its cash, cash equivalents, deposits, and investments; or
new text end

new text begin (2) 25 percent of its net assets as reported on the pool's most recent audited statement
of net position, which must be compliant and audited pursuant to governmental accounting
and auditing standards.
new text end

new text begin Subd. 4. new text end

new text begin Approval. new text end

new text begin Before investing pursuant to this section, the governing body of the
qualifying government must adopt a resolution that includes the following statements:
new text end

new text begin (1) the governing body understands that investments under subdivision 2 have a risk of
loss; and
new text end

new text begin (2) the governing body understands the type of funds that are being invested and the
specific investment itself.
new text end

new text begin Subd. 5. new text end

new text begin Public Employees Retirement Association to act as account administrator.
new text end

new text begin A qualifying government exercising authority under this section to invest amounts with the
State Board of Investment shall establish an account with the Public Employees Retirement
Association (PERA), which shall act as the account administrator.
new text end

new text begin Subd. 6. new text end

new text begin Purpose of account. new text end

new text begin The account established under subdivision 5 may only
be used for the purposes provided under subdivision 3. PERA may rely on representations
made by the qualifying government in exercising its duties as account administrator and
has no duty to further verify qualifications, use, or intended use of the funds that are invested
or withdrawn.
new text end

new text begin Subd. 7. new text end

new text begin Account maintenance. new text end

new text begin (a) A qualifying government may establish an account
to be held under the supervision of PERA for the purposes of investing funds with the State
Board of Investment under subdivision 2. PERA shall establish a separate account for each
qualifying government. PERA may charge participating qualifying governments a fee for
reasonable administrative costs. The amount of any fee charged by PERA is annually
appropriated to the association from the account. PERA may establish other reasonable
terms and conditions for creation and maintenance of these accounts.
new text end

new text begin (b) PERA must report to the qualifying government on the investment returns of invested
funds and on all investment fees or costs incurred by the account.
new text end

new text begin Subd. 8. new text end

new text begin Investment. new text end

new text begin (a) The assets of an account shall be invested and held as required
by this subdivision.
new text end

new text begin (b) PERA must certify all money in the accounts for which it is account administrator
to the State Board of Investment for investment under section 11A.14, subject to the policies
and procedures established by the State Board of Investment. Investment earnings must be
credited to the account of the individual qualifying government.
new text end

new text begin (c) For accounts invested by the State Board of Investment, the investment restrictions
shall be the same as those generally applicable to the State Board of Investment.
new text end

new text begin (d) A qualifying government may provide investment direction to PERA.
new text end

new text begin Subd. 9. new text end

new text begin Withdrawal of funds and termination of account. new text end

new text begin (a) A government may
withdraw some or all of its money or terminate the account.
new text end

new text begin (b) A government requesting withdrawal of money from an account created under this
section must do so at a time and in the manner required by the executive director of PERA.
new text end