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SF 3542

as introduced - 92nd Legislature (2021 - 2022) Posted on 06/03/2022 08:31am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to the State Board of Investment; making administrative and technical
changes clarifying the classification of professional employees; amending
Minnesota Statutes 2020, sections 11A.04; 11A.07, subdivision 4, by adding
subdivisions; 43A.18, subdivision 3b; 179A.10, subdivision 1.

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

Section 1.

Minnesota Statutes 2020, 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 board must allow fund beneficiaries and members
of the public to become informed of proposed board actions. Procedures and policies of the
board are not subject to the Administrative Procedure Act.

(3) Employ an executive director as provided in section 11A.07.

(4) Employ investment advisors and consultants as it deems necessary.

(5) Prescribe policies concerning personal investments of all employees of the 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 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 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 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, employ, at its discretion, qualified private firms to invest and manage the
assets of funds over which the state board has investment management responsibility. 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 investment performance of each investment manager employed by the
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 new text beginemployees of the state new text endboard deleted text beginemployees who are not covered by a collective
bargaining agreement
deleted text endnew text begin pursuant to section 43A.18, subdivision 3bnew text end.

(15) Contract, as necessary, with the board of trustees of the Minnesota State Universities
and Colleges 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 costs of all necessary
expenses for the administration of the board. These sums will be deposited in the State
Board of Investment operating account, which must be established by the commissioner of
management and budget.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2020, section 11A.07, subdivision 4, is amended to read:


Subd. 4.

Duties and powers.

The 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 board and with the approval
of the board submit the budgets to the Department of Management and Budget;

(3) employ professional and clerical staff as necessarydeleted text begin. Employees whose primary
responsibility is to invest or manage money or employees who hold positions designated
as unclassified under section 43A.08, subdivision 1a, are in the unclassified service of the
state. Other employees are in the classified service. Unclassified employees who are not
covered by a collective bargaining agreement are employed under the terms and conditions
of the compensation plan approved under section 43A.18, subdivision 3b
deleted text end;

(4) report to the state board on all operations under the director's control and supervision;

(5) maintain accurate and complete records of securities transactions and official
activities;

(6) establish a policynew text begin, which is subject to state board approval,new text end relating to the purchase
and sale of securities on the basis of competitive offerings or bidsdeleted text begin. The policy is subject to
board approval
deleted text end;

(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, by December
31 of each year, a report summarizing the activities of the state board, the council, and the
director during the preceding fiscal yeardeleted text begin. The report must be prepared so as to provide the
legislature and the people of the state with a clear, comprehensive summary of the portfolio
composition, the transactions, the total annual rate of return, and the yield to the state treasury
and to each of the funds whose assets are invested by the state board, and the recipients of
business placed or commissions allocated among the various commercial banks, investment
bankers, money managers, and brokerage organizations and the amount of these commissions
or other fees. The report must include an executive summary
deleted text end;

(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;

(11) receive and expend legislative appropriations; and

(12) undertake any other activities necessary to implement the duties and powers set
forth in this subdivision consistent with chapter 356A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2020, section 11A.07, is amended by adding a subdivision to
read:


new text begin Subd. 4a. new text end

new text begin Classification of state board employees. new text end

new text begin (a) Employees of the state board
who are in the unclassified service of the state are employed under the terms and conditions
of the compensation plan approved under section 43A.18, subdivision 3b. The following
state board employees are in the unclassified service of the state:
new text end

new text begin (1) professional employees who, in the determination of the director, are primarily
responsible for managing or administering the investment portfolio, including but not limited
to investment diligence and analysis, investment risk mitigation, and implementing
investment strategy; and
new text end

new text begin (2) employees who hold positions designated as unclassified under section 43A.08,
subdivision 1a.
new text end

new text begin (b) Employees of the state board who are not in the unclassified service under paragraph
(a) are in the classified service of the state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2020, section 11A.07, is amended by adding a subdivision to
read:


new text begin Subd. 4b. new text end

new text begin Annual report. new text end

new text begin The report required under subdivision 4, clause (8), must
include an executive summary and must be prepared so as to provide the legislature and the
people of the state with:
new text end

new text begin (1) a clear, comprehensive summary of the portfolio composition, the transactions, the
total annual rate of return, and the yield to the state treasury and to each of the funds with
assets invested by the state board; and
new text end

new text begin (2) the recipients of business placed or commissions allocated among the various
commercial banks, investment bankers, money managers, and brokerage organizations and
the amount of these commissions or other fees.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2020, section 43A.18, subdivision 3b, is amended to read:


Subd. 3b.

State Board of Investment plan.

Total compensation for unclassified positions
deleted text begin not covered by a collective bargaining agreementdeleted text end under section 11A.04new text begin, clause (14),new text end in the
State Board of Investment must be determined by the State Board of Investment. Before
submitting a compensation plan to the legislature and the Legislative Coordinating
Commission, the State Board of Investment must submit the plan to the commissioner of
management and budget for review and comment. The commissioner must complete the
review within 14 days of its receipt. Compensation plans established under this subdivision
must be approved by the legislature and the Legislative Coordinating Commission under
section 3.855, before becoming effective.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2020, section 179A.10, subdivision 1, is amended to read:


Subdivision 1.

Exclusions.

The commissioner of management and budget shall meet
and negotiate with the exclusive representative of each of the units specified in this section,
except as provided in section 43A.06, subdivision 1, paragraph (c). The units provided in
this section are the only appropriate units for executive branch state employees. The following
employees shall be excluded from any appropriate unit:

(1) the positions and classes of positions in the classified and unclassified services defined
as managerial by the commissioner of management and budget in accordance with section
43A.18, subdivision 3, and so designated in the official state compensation schedules;

(2) unclassified positions in the Minnesota State Colleges and Universities defined as
managerial by the Board of Trustees;

(3) positions of all unclassified employees appointed by a constitutional officer;

(4) positions in the Bureau of Mediation Services and the Public Employment Relations
Board;

(5) positions of employees whose classification is pilot or chief pilot;

(6) administrative law judge and compensation judge positions in the Office of
Administrative Hearings; deleted text beginand
deleted text end

(7) positions of all confidential employeesdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (8) unclassified positions in the State Board of Investment.
new text end

The governor may upon the unanimous written request of exclusive representatives of
units and the commissioner direct that negotiations be conducted for one or more units in
a common proceeding or that supplemental negotiations be conducted for portions of a unit
or units defined on the basis of appointing authority or geography.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end