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SF 3672

as introduced - 91st Legislature (2019 - 2020) Posted on 02/27/2020 03:26pm

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

Current Version - as introduced

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A bill for an act
relating to retirement; revising public pension plan investment portfolio and
performance information and reporting; amending Minnesota Statutes 2018, section
356.219, subdivisions 1, 6, 7; Minnesota Statutes 2019 Supplement, section
356.219, subdivisions 3, 8.

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

Section 1.

Minnesota Statutes 2018, section 356.219, subdivision 1, is amended to read:


Subdivision 1.

Report required.

(a) The deleted text beginState Board of Investment, on behalf of the
public pension funds and programs for which it is the investment authority, and any
Minnesota public pension plan that is not fully invested through the State Board of
Investment, including the
deleted text end Bloomington Fire Department Relief Association deleted text beginand a localdeleted text endnew text begin,new text end
volunteer firefighters relief deleted text beginassociationdeleted text end new text beginassociations new text endgoverned by sections 424A.091 to
424A.095, deleted text beginshalldeleted text end new text beginthe St. Paul Teachers Retirement Fund Association, and any Minnesota
public pension plan that is not fully invested through the State Board of Investment, must
new text end report the information specified in subdivision 3 to the state auditor. The state auditor may
prescribe a form or forms for the purposes of the reporting requirements contained in this
section.

deleted text begin (b) The Bloomington Fire Department Relief Association and a local volunteer firefighters
relief association governed by sections 424A.091 to 424A.095 is fully invested during a
given calendar year for purposes of this section if all assets of the applicable pension plan
beyond sufficient cash equivalent investments to cover six months expected expenses are
invested under section 11A.17. The board of any fully invested public pension plan remains
responsible for submitting investment policy statements and subsequent revisions as required
by subdivision 3, paragraph (a).
deleted text end

deleted text begin (c) For purposes of this section, the State Board of Investment is considered to be the
investment authority for any Minnesota public pension fund required to be invested by the
State Board of Investment under section 11A.23, or for any Minnesota public pension fund
authorized to invest in the supplemental investment fund under section 11A.17 and which
is fully invested by the State Board of Investment.
deleted text end

new text begin (b) For purposes of this section, a pension plan is fully invested through the State Board
of Investment during a given calendar year if all assets of the pension plan beyond sufficient
cash equivalent investments to cover six months of expected expenses are invested under
section 11A.17.
new text end

new text begin (c) A public pension plan to which subdivision 3, paragraph (b) or (c), applies is not
required to file the report required by this subdivision for a given calendar year if the pension
plan's most recent annual financial audit was conducted by the state auditor.
new text end

(d) This section does not apply to the following plans:

(1) the Minnesota unclassified employees retirement program under chapter 352D;

(2) the public employees defined contribution plan under chapter 353D;

(3) the individual retirement account plans under chapters 354B and 354D;

(4) the higher education supplemental retirement plan under chapter 354C;

(5) any alternative retirement benefit plan established under section 383B.914; deleted text beginand
deleted text end

(6) the University of Minnesota faculty retirement plandeleted text begin.deleted text endnew text begin and supplemental plan; and
new text end

new text begin (7) any other statewide plan required to be invested by the State Board of Investment
under section 11A.23.
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. 2.

Minnesota Statutes 2019 Supplement, section 356.219, subdivision 3, is amended
to read:


Subd. 3.

Content of reports.

(a) The report required by subdivision 1 must include a
written statement of the investment policy. Following that initial report, subsequent reports
must include investment policy changes and the effective date of each policy change rather
than a complete statement of investment policy, unless the state auditor requests submission
of a complete current statement. The report must also include the information required by
the following paragraphs, as applicable.

(b) deleted text beginIf, after four years of reporting under this paragraph, the total portfolio time weighted
rate of return, net of all investment related costs and fees, provided by the public pension
plan differs by no more than 0.1 percent from the comparable return for the plan calculated
by the Office of the State Auditor, and if a public pension plan has a total market value of
$50,000,000 or more as of the beginning of the calendar year, and if the public pension
plan's annual audit is performed by the state auditor or by the legislative auditor,
deleted text end new text beginFor public
pension plans not fully invested through the State Board of Investment with assets having
a market value of $50,000,000 or more as of the beginning of the calendar year, or that had
a market value of $50,000,000 or more in a prior calendar year,
new text endthe report required by
subdivision 1 must include deleted text beginthe market value of the total portfolio and the market value of
each asset class included in the pension fund as of the beginning of the calendar year and
as of the end of the calendar year. At the discretion of the state auditor, the public pension
plan may be required to submit
deleted text endnew text begin the following:
new text end

new text begin (1)new text end the market value of the total portfolio and the market value of each investment
account, investment portfolio, or asset class included in the pension fund for each monthdeleted text begin,
and
deleted text endnew text begin;
new text end

new text begin (2)new text end the amount and date of each injection and withdrawal to the total portfolio and to
each investment account, investment portfolio, or asset classdeleted text begin. If the market value of a public
pension plan's fund drops below $50,000,000 in a subsequent year, it must continue reporting
under this paragraph for any subsequent year in which the public pension plan is not fully
invested as specified in subdivision 1, paragraph (b), except that if the public pension plan's
annual audit is not performed by the state auditor or legislative auditor, paragraph (c) applies.
deleted text endnew text begin;
new text end

deleted text begin (c) If paragraph (b) would apply if the annual audit were provided by the state auditor
or legislative auditor, the report required by subdivision 1 must include the market value
of the total portfolio and the market value of each asset class included in the pension fund
as of the beginning of the calendar year and for each month, and the amount and date of
each injection and withdrawal to the total portfolio and to each investment account,
investment portfolio, or asset class.
deleted text end

deleted text begin (d) For public pension plans to which paragraph (b) or (c) applies, the report required
by subdivision 1 must also include
deleted text end new text begin(3) new text enda calculation of the total time-weighted rate of return
available from index-matching investments assuming the asset class performance targets
and target asset mix indicated in the written statement of investment policydeleted text begin. The provided
information must include
deleted text endnew text begin;
new text end

new text begin (4)new text end a description of indices used in the analyses and an explanation of why those indices
are appropriatedeleted text begin. This paragraph does not apply to any fully invested plan, as defined by
subdivision 1, paragraph (b). Reporting by the State Board of Investment under this paragraph
is limited to information on the Minnesota public pension plans required to be invested by
the State Board of Investment under section 11A.23.
deleted text endnew text begin;
new text end

new text begin (5) computed time-weighted rates of return; and
new text end

new text begin (6) any other information required by the state auditor, as applicable.
new text end

new text begin (c) For public pension plans fully invested through the State Board of Investment with
assets having a market value of $50,000,000 or more as of the beginning of the calendar
year, or that had a market value of $50,000,000 or more in a prior calendar year, the report
required by subdivision 1 must be in the form required by the state auditor and include the
information needed by the state auditor to supplement the reporting available from the State
Board of Investment.
new text end

deleted text begin (e)deleted text endnew text begin (d)new text end If a public pension plan has new text beginassets with new text enda total market value of less than
$50,000,000 as of the beginning of the calendar year and was never required to file under
paragraph (b) or (c), the report required by subdivision 1 must include thenew text begin following:
new text end

new text begin (1) unless paragraph (f) applies, thenew text end amount and date of each total portfolio injection
and withdrawaldeleted text begin. In addition, the report must includedeleted text endnew text begin; and
new text end

new text begin (2)new text end the market value of the total portfolio as of the beginning of the calendar year and
for each quarter.

deleted text begin (f) Any public pension plan reporting under paragraph (b) or (c) must include computed
time-weighted rates of return with the report, in addition to all other required information,
as applicable. The chief administrative officer of the public pension plan submitting the
returns must certify, on a form prescribed by the state auditor, that the returns have been
computed by the pension plan's investment performance consultant or custodial bank. The
chief administrative officer of the public pension plan submitting the returns also must
certify that the returns are net of all costs and fees, including investment management fees,
and that the procedures used to compute the returns are consistent with Bank Administration
Institute studies of investment performance measurement and presentation standards set by
the CFA Institute. If the certifications required under this paragraph are not provided, the
reporting requirements of paragraph (c) apply.
deleted text end

deleted text begin (g)deleted text end new text begin(e) new text endFor public pension plans reporting under paragraph deleted text begin(e)deleted text endnew text begin (d)new text end, the public pension
plan must retain supporting information specifying the date and amount of each injection
and withdrawal to each investment account and investment portfolio. The public pension
plan must also retain the market value of each investment account and investment portfolio
at the beginning of the calendar year and for each quarter. Information that is required to
be collected and retained for any given year or years under this paragraph must be submitted
to the deleted text beginOffice of thedeleted text end state auditor if the deleted text beginOffice of thedeleted text end state auditor requests in writing that the
information be submitted by deleted text beginadeleted text end new text beginthe new text endpublic pension plan deleted text beginor plans, or be submitted by the State
Board of Investment for any plan or plans for which the State Board of Investment is the
investment authority under this section
deleted text end. If the state auditor requests information under this
subdivision, and the deleted text beginpublicdeleted text end new text beginpension new text endplan fails to comply, the pension plan is subject to
penalties under subdivision 5, unless penalties are waived by the state auditor under that
subdivision.

new text begin (f) A public pension plan reporting under paragraph (d) that is fully invested through
the State Board of Investment for the given calendar year is required to report the market
value of the total portfolio as of the beginning of the calendar year and for each quarter, but
need not report the amount and date of each total portfolio injection and withdrawal.
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. 3.

Minnesota Statutes 2018, section 356.219, subdivision 6, is amended to read:


Subd. 6.

Investment disclosure report.

(a) The state auditor shall prepare an annual
report to the legislature on the investment performance of the deleted text beginvariousdeleted text end public pension plans
subject to this section. The content of the report is specified in paragraphs (b) to deleted text begin(f)deleted text endnew text begin (d)new text end.

(b) For each public pension plan reporting under subdivision 3, paragraph (b), the state
auditor shall new text begincompute and new text endreport total portfolio and asset class time-weighted rates of return,
net of all investment-related costs and fees. deleted text beginIf the state auditor has required a plan to submit
the market value of the total portfolio and the market value of each investment account,
investment portfolio, or asset class included in the pension fund for each month, and the
amount and date of each injection and withdrawal to the total portfolio and to each investment
account, investment portfolio, or asset class as prescribed under subdivision 3, paragraph
(b), the state auditor shall also compute and report total portfolio and asset class
time-weighted rates of return, net of all costs and fees.
deleted text endnew text begin The report by the state auditor must
also include the information submitted by the pension plans under subdivision 3 or a summary
of that information.
new text end

deleted text begin (c) For each public pension plan reporting under subdivision 3, paragraph (c), the state
auditor shall compute and report total portfolio and asset class time-weighted rates of return,
net of all costs and fees.
deleted text end

deleted text begin (d)deleted text endnew text begin (c)new text end For each public pension plan reporting under subdivision 3, paragraph deleted text begin(e)deleted text endnew text begin (d)new text end,
the state auditor shall compute and report total portfolio time-weighted rates of return, net
of all costs and fees. deleted text beginIf the state auditor has requested data for a plan under subdivision 3,
paragraph (g), the state auditor may also compute and report asset class time-weighted rates
of return, net of all costs and fees.
deleted text end

deleted text begin (e) The report by the state auditor must include the information submitted by the pension
plans under subdivision 3, paragraph (d), or a synopsis of that information.
deleted text end

deleted text begin (f)deleted text end new text begin(d) new text endThe report by the state auditor may also include a presentation of multiyear
performancedeleted text begin, information collected under subdivision 4,deleted text end and any other information or
analysis deemed appropriate by the state auditor.

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 2018, section 356.219, subdivision 7, is amended to read:


Subd. 7.

Expense of report.

All administrative expenses incurred relating to the
investment report by the state auditor described in subdivision 6 must be borne by the deleted text beginOffice
of the
deleted text end state auditor and may not be charged back to the entities described in subdivisions 1
or 4.

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 2019 Supplement, section 356.219, subdivision 8, is amended
to read:


Subd. 8.

Timing of reports.

(a) For the Bloomington Fire Department Relief Association
and the volunteer deleted text beginfirefighterdeleted text end new text beginfirefighters new text endrelief associations, the information required under
this section must be submitted by the due date for reports required under section 424A.014,
subdivision 1
or 2, as applicable. deleted text beginIf a relief association satisfies the definition of a fully
invested plan under subdivision 1, paragraph (b), for the calendar year covered by the report
required under section 424A.014, subdivision 1 or 2, as applicable, the chief administrative
officer of the covered pension plan shall certify that compliance on a form prescribed by
the state auditor. The state auditor shall transmit annually to the State Board of Investment
a list or lists of covered pension plans which submitted certifications in order to facilitate
reporting by the State Board of Investment under paragraph (c).
deleted text end

(b) For the St. Paul Teachers Retirement Fund Association deleted text beginand the University of
Minnesota faculty supplemental retirement plan
deleted text end, the information required under this section
must be submitted to the state auditor by June 1 of each year.

(c) deleted text beginThe State Board of Investment, on behalf ofdeleted text end new text beginAny public new text endpension deleted text beginfunds specified in
subdivision 1,
deleted text end new text beginplan required to submit information under this section that is not identified
in
new text endparagraph deleted text begin(c), shall reportdeleted text end new text begin(a) or (b) must submit the new text endinformation deleted text beginrequired under this
section
deleted text end new text beginto the state auditor new text endby deleted text beginSeptemberdeleted text end new text beginJune new text end1 of each year.

new text begin EFFECTIVE DATE. new text end

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