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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1988 

                        CHAPTER 453-H.F.No. 1806 
           An act relating to state agencies; amending and 
          repealing various statutes administered by the state 
          board of investments; amending Minnesota Statutes 
          1986, sections 11A.17, subdivisions 1, 4, 9, 11, and 
          14; 11A.19, subdivision 4; and 352D.04, subdivision 1; 
          Minnesota Statutes 1987 Supplement, sections 11A.24, 
          subdivisions 4 and 6; 136.81, subdivision 3; and 
          353D.05, subdivision 2; repealing Minnesota Statutes 
          1986, section 11A.17, subdivisions 12 and 13. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 11A.17, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ESTABLISHMENT PURPOSE.] There is hereby 
established a The purpose of the supplemental investment fund 
for the purpose of providing is to provide an investment vehicle 
for the assets of various public retirement plans and 
funds.  This The fund shall consist consists of seven six 
investment accounts:  an income share account, a growth share 
account, a bond account, a money market account, a guaranteed 
return account, a bond market account, and a common stock index 
account.  The supplemental investment fund shall be is a 
continuation of the supplemental retirement fund in existence on 
January 1, 1980. 
    Sec. 2.  Minnesota Statutes 1986, section 11A.17, 
subdivision 4, is amended to read:  
    Subd. 4.  [INVESTMENT.] The assets of the supplemental 
investment fund shall must be invested by the state board 
subject to the provisions of section 11A.24; provided, however, 
that: 
    (1) the bond market account and the bond money market 
account shall must be invested entirely in debt obligations,; 
    (2) the growth share account and the common stock index 
account may be invested entirely in corporate stocks; and 
    (2) (3) the guaranteed return account may be invested 
entirely in guaranteed investment contracts; and 
    (3) the money market account shall be invested entirely in 
debt obligations maturing within three years. 
    Sec. 3.  Minnesota Statutes 1986, section 11A.17, 
subdivision 9, is amended to read:  
    Subd. 9.  [VALUATION OF INVESTMENT SHARES.] The value of 
investment shares in the income share account, the growth share 
account, the bond market account, and the common stock index 
account shall must be determined by dividing the total market 
value of the securities constituting the respective account by 
the total number of shares then outstanding in the investment 
account.  The value of investment shares in the money market 
account and the guaranteed return account shall be is $1 per a 
share.  The value of investment shares in the bond account shall 
be $5 per share; provided, however, if the account shares are 
redeemed by a public retirement fund prior to the expiration of 
the multiyear period set by the board for the payment of the 
applicable assumed rate, the value of the investment shares 
shall be at market value.  Terms as to withdrawal schedules will 
be agreed upon by the public retirement fund and the state board.
    Sec. 4.  Minnesota Statutes 1986, section 11A.17, 
subdivision 11, is amended to read:  
    Subd. 11.  [PROSPECTUS.] Annually, on or before July 1 by 
July 2, the state board shall prepare and shall issue a 
prospectus for the supplemental investment fund with separate 
exhibits for each investment account.  The exhibit for each 
account shall list for must include its investment objectives, 
asset allocation, and past investment performance.  Upon 
request, the board shall provide a list of each security 
representing the current assets of the account in the fund and 
show the following items, whichever are applicable: 
    (1) The purchase price of the security; 
    (2) The current market value of the security; 
    (3) The current dividend or interest rate of the security; 
    (4) The rating of a debt security issued by a nationally 
recognized rating agency if it is other than a security issued 
or guaranteed by the United States government. 
    The prospectus shall set forth the statutory provisions 
governing the supplemental investment fund. 
    The state board shall transmit sufficient copies of the 
prospectus shall be transmitted to each public retirement plan 
or fund participating in the supplemental investment account to 
meet the plan or fund's distribution requirements.  Ten copies 
of the prospectus shall must be filed with the director of the 
legislative reference library. 
    Sec. 5.  Minnesota Statutes 1986, section 11A.17, 
subdivision 14, is amended to read:  
    Subd. 14.  [PROCEDURES FOR DISTRIBUTION OF INCOME FOR MONEY 
MARKET ACCOUNT, BOND ACCOUNT, AND GUARANTEED RETURN ACCOUNT.] At 
the end of each fiscal year, and as often as at other times that 
the state board shall in addition might determine appropriate, 
the state board shall determine the earnings of the money market 
account, and the guaranteed return account, and the bond account.
Notwithstanding the provisions of section 11A.12, The earnings 
shall must be used to purchase additional shares in the 
respective accounts on behalf of each participating public 
retirement plan or fund. 
    Sec. 6.  Minnesota Statutes 1986, section 11A.19, 
subdivision 4, is amended to read:  
    Subd. 4.  [INVESTMENT.] The assets of the variable annuity 
investment fund shall must be invested by the state board 
subject to the provisions of section 11A.24 except that:  
    (a) (1) up to 100 percent of the book value may be invested 
in corporate stocks;  
    (b) (2) up to six percent of the book value may be invested 
in the stock of any one corporation;  
    (c) Up to ten percent of the book value may be invested in 
corporate stocks which do not conform with the dividend standard 
provided for in section 11A.24, subdivision 5.  
    Sec. 7.  Minnesota Statutes 1987 Supplement, section 
11A.24, subdivision 4, is amended to read:  
    Subd. 4.  [OTHER OBLIGATIONS.] (a) The state board may 
invest funds in bankers acceptances, certificates of deposit, 
commercial paper, mortgage participation certificates and pools, 
repurchase agreements and reverse repurchase agreements, 
guaranteed investment contracts, savings accounts, and guaranty 
fund certificates, surplus notes, or debentures of domestic 
mutual insurance companies if they conform to the following 
provisions: 
    (a) (1) bankers acceptances of United States banks shall be 
are limited to those issued by banks rated in the highest four 
quality categories by a nationally recognized rating agency; 
    (b) (2) certificates of deposit shall be are limited to 
those issued by United States banks and savings institutions 
that are rated in the highest four quality categories by a 
nationally recognized rating agency or whose certificates of 
deposit are fully insured by the Federal Deposit Insurance 
Corporation or the Federal Savings and Loan Insurance 
Corporation.  Sections 16A.58 and 16B.06 do not apply to 
certifications of deposit and collateralization agreements 
executed by the state board; 
    (c) (3) commercial paper shall be is limited to those 
issued by United States corporations or their Canadian 
subsidiaries and shall be rated in the highest two quality 
categories by a nationally recognized rating agency; 
    (d) (4) mortgage participation or pass through certificates 
evidencing interests in pools of first mortgages or trust deeds 
on improved real estate located in the United States where the 
loan to value ratio for each loan as calculated in accordance 
with section 61A.28, subdivision 3, does not exceed 80 percent 
for fully amortizable residential properties and in all other 
respects meets the requirements of section 61A.28, subdivision 
3.  In addition, the state board may purchase from the Minnesota 
housing finance agency all or any part of any pool of 
residential mortgages, not in default, which has previously been 
financed by the issuance of bonds or notes of the agency.  The 
state board may also enter into a commitment with the agency, at 
the time of any issue of bonds or notes, to purchase at a 
specified future date, not exceeding 12 years from the date of 
the issue, the amount of mortgage loans then outstanding and not 
in default, which have been made or purchased from the proceeds 
of the bonds or notes.  The state board may charge reasonable 
fees for any such commitment, and may agree to purchase the 
mortgage loans at a price such that the yield thereon to the 
state board will, in its judgment, be comparable to that 
available on similar mortgage loans at the date of the bonds or 
notes.  The state board may also enter into agreements with the 
agency for the investment of any portion of the funds of the 
agency for such period, with such withdrawal privileges, and at 
such guaranteed rate of return, if any, as may be agreed between 
the state board and the agency;  
    (e) (5) collateral for repurchase agreements and reverse 
repurchase agreements shall be is limited to letters of credit 
and securities authorized in this section; 
    (f) (6) guaranteed investment contracts shall be are 
limited to those issued by insurance companies or banks rated in 
the top four quality categories by a nationally recognized 
rating agency; 
    (g) (7) savings accounts shall be are limited to those 
fully insured by the Federal Deposit Insurance Corporation or 
the Federal Savings and Loan Insurance Corporation.  
    (b) Sections 16A.58 and 16B.06 do not apply to 
certifications of deposit and collateralization agreements 
executed by the state board under paragraph (a), clause (2). 
    (c) In addition to investments authorized by paragraph (a), 
clause (4), the state board may purchase from the Minnesota 
housing finance agency all or any part of a pool of residential 
mortgages, not in default, that has previously been financed by 
the issuance of bonds or notes of the agency.  The state board 
may also enter into a commitment with the agency, at the time of 
any issue of bonds or notes, to purchase at a specified future 
date, not exceeding 12 years from the date of the issue, the 
amount of mortgage loans then outstanding and not in default 
that have been made or purchased from the proceeds of the bonds 
or notes.  The state board may charge reasonable fees for any 
such commitment and may agree to purchase the mortgage loans at 
a price sufficient to produce a yield to the state board 
comparable, in its judgment, to the yield available on similar 
mortgage loans at the date of the bonds or notes.  The state 
board may also enter into agreements with the agency for the 
investment of any portion of the funds of the agency.  The 
agreement must cover the period of the investment, withdrawal 
privileges, and any guaranteed rate of return. 
    Sec. 8.  Minnesota Statutes 1987 Supplement, section 
11A.24, subdivision 6, is amended to read:  
    Subd. 6.  [OTHER INVESTMENTS.] (a) In addition to the 
investments authorized in subdivisions 1 to 5, and subject to 
the provisions in clause (b), the state board may invest funds 
in:  
    (1) Venture capital investment businesses through 
participation in limited partnerships and corporations;  
    (2) Real estate ownership interests or loans secured by 
mortgages or deeds of trust through investment in limited 
partnerships, bank sponsored collective funds, trusts, and 
insurance company commingled accounts, including separate 
accounts;  
    (3) Regional and mutual funds through bank sponsored 
collective funds and open-end investment companies registered 
under the Federal Investment Company Act of 1940; 
    (4) Resource investments through limited partnerships, 
private placements and corporations; and 
    (5) Debt obligations not subject to subdivision 3; and 
    (6) International securities. 
    (b) The investments authorized in clause (a) may only be 
made if they must conform to the following provisions:  
    (1) The aggregate value of all investments made according 
to clause (a) shall may not exceed 35 percent of the market 
value of the fund for which the state board is investing; 
    (2) There shall must be at least four unrelated owners of 
the investment other than the state board for investments made 
under paragraph (a), clause (1), (2), (3), or (4);  
    (3) State board participation in an investment vehicle 
shall be is limited to 20 percent thereof for investments made 
under paragraph (a), clause (1), (2), (3), or (4); and 
    (4) State board participation in a limited partnership does 
not include a general partnership interest or other interest 
involving general liability.  The state board shall may not 
engage in any activity as a limited partner which creates 
general liability.  
    Sec. 9.  Minnesota Statutes 1987 Supplement, section 
136.81, subdivision 3, is amended to read:  
    Subd. 3.  (a) Each person described in section 136.80, 
subdivision 1, may elect to purchase shares in one or a 
combination of the income share account, the growth share 
account, the money market account, the bond market account, the 
guaranteed return account, or the common stock index account 
established in section 11A.17.  The person may elect to 
participate in one or more of the investment accounts in the 
fund by specifying, on a form provided by the executive director 
of the teachers retirement fund, the percentage of salary 
deductions and state matching funds to be used to purchase 
shares in each of the accounts. 
    (b) Twice in any calendar year, each a person described in 
section 136.80, subdivision 1, may indicate in writing on forms 
provided by the teachers retirement association a choice of 
options for subsequent purchases of shares.  After a choice is 
made, and until a different written indication is made, the 
executive director shall purchase shares in the supplemental 
fund as selected.  A change in choice of investment option 
options is effective no later than the first pay date that 
occurs 30 or more days after the first of the month following 
receipt of the request for a change. 
    (c) One month before the start of a new guaranteed 
investment contract, a person described in section 136.80, 
subdivision 1, may elect to transfer all or a portion of the 
participant's shares previously purchased in the income share, 
growth share, common stock index, bond market, or money market 
accounts to the new guaranteed investment contract in the 
guaranteed return account.  If a partial transfer is made, a 
minimum of $1,000 must be transferred and a minimum balance of 
$1,000 must remain in the previously selected investment 
options.  Upon expiration of a guaranteed investment contract, 
the participant's shares attributable to that contract must be 
transferred to a new guaranteed investment contract unless the 
executive director is otherwise directed by the participant.  
Shares in the guaranteed return account may not be withdrawn 
from the fund or transferred to another account until the 
guaranteed investment contract has expired, unless the 
participant qualifies for redemption of shares under section 
136.82, subdivisions 1 and 2. 
    (d) Twice in any calendar year a person described in 
section 136.80, subdivision 1, may also change the investment 
options selected for all or a portion of the person's shares 
previously purchased in accounts other than the guaranteed 
return account.  If a partial transfer is made, a minimum of 
$1,000 must be transferred and a minimum balance of $1,000 must 
remain in the previously selected investment option.  Before 
January 1, 1989, a change is restricted to a transfer from one 
or more accounts to a single account.  Changes in investment 
options for the person's shares must be effected the first of 
the month following the receipt of a request for a change or as 
soon as cash flow to an account practically permits but not 
provided all changes are made no later than six months after the 
requested change receipt of a request. 
    (e) If a person fails to indicate a choice as provided 
herein in this section, the executive director of the teachers 
retirement fund shall purchase shares in the income account of 
the Minnesota supplemental retirement investment fund for the 
coming year until a different written indication is made by the 
person.  The shares so purchased shall must stand in the name of 
the board of trustees of the teachers retirement fund, but a 
record shall must be kept indicating the number of shares in 
each account of the Minnesota supplemental retirement investment 
fund purchased with the salary deductions and state matching 
funds attributable to the salary deductions of each person.  The 
record shall be is known as the "employee's share account 
record."  The employee's share account record shall must show, 
in addition to the number of shares therein in the account, any 
cash balance of salary deductions or state matching funds 
attributable to those deductions which that stands uninvested in 
shares. 
    Sec. 10.  Minnesota Statutes 1986, section 352D.04, 
subdivision 1, is amended to read:  
    Subdivision 1.  (a) An employee exercising an option to 
participate in the retirement program provided by this chapter 
may elect to purchase shares in one or a combination of the 
income share account, the growth share account, the money market 
account, the bond market account, the guaranteed return account, 
or the common stock index account established in section 
11A.17.  The employee may elect to participate in one or more of 
the investment accounts in the fund by specifying, on a form 
provided by the executive director, the percentage of the 
employee's contributions provided in subdivision 2 to be used to 
purchase shares in each of the accounts. 
    (b) Twice in any calendar year, each a participant may 
indicate in writing on forms provided by the Minnesota state 
retirement system a choice of options for subsequent purchases 
of shares.  Thereafter Until a different written indication is 
made by such the participant, the executive director shall 
purchase shares in the supplemental fund as selected by the 
participant.  If no initial option is chosen, 100 percent income 
shares shall must be purchased for a participant.  A change in 
choice of investment option shall be is effective no later than 
the first pay date first occurring after 30 days following the 
receipt of the request for a change. 
    (c) One month before the start of a new guaranteed 
investment contract, a participant or former participant may 
elect to transfer all or a portion of the participant's shares 
previously purchased in the income share, growth share, common 
stock index, bond market, or money market accounts to the new 
guaranteed investment contract in the guaranteed return 
account.  If a partial transfer is made, a minimum of $1,000 
must be transferred and a minimum balance of $1,000 must remain 
in the previously selected investment options.  Upon expiration 
of a guaranteed investment contract, the participant's shares 
attributable to that contract must be transferred to a new 
guaranteed investment contract unless the executive director is 
otherwise directed by the participant.  Shares in the guaranteed 
return account may not be withdrawn from the fund or transferred 
to another account until the guaranteed investment contract has 
expired, unless the participant qualifies for withdrawal under 
section 352D.05 or for benefit payments under sections 352D.06 
to 352D.075. 
    (d) Twice in any calendar year a participant or former 
participant may also change the investment options selected for 
all or a portion of the participant's shares previously 
purchased in accounts other than the guaranteed return account.  
However, if a partial transfer is made a minimum of $1,000 must 
be transferred and a minimum balance of $1,000 must remain in 
the previously selected investment option.  A change is 
restricted to a transfer from one or more accounts to a single 
account.  Changes in investment options for the participant's 
shares shall must be effected as soon as cash flow to an account 
practically permits, but not later than six months after the 
requested change. 
    Sec. 11.  Minnesota Statutes 1987 Supplement, section 
353D.05, subdivision 2, is amended to read:  
    Subd. 2.  [INVESTMENT OPTIONS.] (a) An individual 
participant may elect to purchase shares in the income share 
account, the growth share account, the money market account, the 
bond market account, the guaranteed return account, or the 
common stock index account established by section 11A.17, or a 
combination of those accounts.  The participant may elect to 
purchase shares in a combination of those accounts by specifying 
the percentage of contributions to be used to purchase shares in 
each of the accounts. 
    (b) Twice in a calendar year, a participant may indicate in 
writing a choice of options for subsequent purchases of shares.  
Thereafter, Until the participant makes a different written 
indication, the executive director of the association shall 
purchase shares in the supplemental investment fund or funds 
specified by the participant.  If no initial option is indicated 
by a participant, the executive director shall invest all 
contributions made by or on behalf of a participant in the 
income share account.  A choice of investment options is 
effective no later than the first pay date first occurring more 
than 30 days after receipt of the written choice of options. 
    (c) One month before the start of a new guaranteed 
investment contract, a participant may elect to transfer all or 
a portion of the participant's shares previously purchased in 
the income share, growth share, common stock index, bond market, 
or money market accounts to the new guaranteed investment 
contract in the guaranteed return account.  If a partial 
transfer is made, a minimum of $500 must be transferred and a 
minimum balance of $500 must remain in the previously selected 
investment options.  Upon expiration of a guaranteed investment 
contract, the participant's shares attributable to that contract 
must be transferred to a new guaranteed investment contract 
unless the executive director is otherwise directed by the 
participant.  Shares in the guaranteed return account may not be 
withdrawn from the fund or transferred to another account until 
the guaranteed investment contract has expired, unless the 
participant qualifies for a benefit payment under section 
353D.07. 
    (d) Twice in a calendar year, a participant or former 
participant may also change the investment options selected for 
all or a portion of the individual's previously purchased shares 
in accounts other than the guaranteed return account.  If a 
partial transfer of previously purchased shares is selected, a 
minimum of $500 must be transferred and a minimum balance of 
$500 must remain in the previously selected investment 
option.  A change may be made only from one account or a 
combination of accounts to a single account.  A change under 
this paragraph is effective as soon as cash flow to an account 
permits, but not later than six months from the requested change.
    Sec. 12.  [REPEALER.] 
    Minnesota Statutes 1986, section 11A.17, subdivisions 12 
and 13, are repealed. 
    Sec. 13.  [EFFECTIVE DATES.] 
    Sections 1 to 8 and 12 are effective the day following 
final enactment.  Section 9 is effective the day following final 
enactment except that contributions or transfers to the 
guaranteed return account may not be made before November 1, 
1989.  Sections 10 and 11 are effective the day following final 
enactment except that contributions or transfers to the 
guaranteed return account may not be made before November 1, 
1988. 
    Approved April 6, 1988