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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 55-H.F.No. 1692 
                  An act relating to state government; regulating 
                  compensation plans of the State Board of Investment; 
                  amending Minnesota Statutes 2004, sections 11A.04; 
                  11A.07, subdivision 4; 15A.0815, subdivision 2; 
                  43A.18, by adding a subdivision. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2004, section 11A.04, is 
        amended to read: 
           11A.04 [DUTIES AND POWERS.] 
           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 finance 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 board employees who 
        are not covered by a collective bargaining agreement. 
           Sec. 2.  Minnesota Statutes 2004, 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) employ professional and clerical staff as is necessary 
        within the complement limits established by the legislature.  
        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; 
           (3) report to the state board on all operations under the 
        director's control and supervision; 
           (4) maintain accurate and complete records of securities 
        transactions and official activities; 
           (5) establish a policy relating to the purchase and sale of 
        securities on the basis of competitive offerings or bids.  The 
        policy is subject to board approval; 
           (6) cause securities acquired to be kept in the custody of 
        the commissioner of finance or other depositories consistent 
        with chapter 356A, as the state board deems appropriate; 
           (7) 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 year.  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, and brokerage 
        organizations.  The report must contain financial statements for 
        funds managed by the board prepared in accordance with generally 
        accepted accounting principles; 
           (8) 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; 
           (9) receive and expend legislative appropriations; 
           (10) undertake any other activities necessary to implement 
        the duties and powers set forth in this subdivision consistent 
        with chapter 356A. 
           Sec. 3.  Minnesota Statutes 2004, section 15A.0815, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GROUP I SALARY LIMITS.] The salaries for 
        positions in this subdivision may not exceed 95 percent of the 
        salary of the governor:  
           Commissioner of administration; 
           Commissioner of agriculture; 
           Commissioner of education; 
           Commissioner of commerce; 
           Commissioner of corrections; 
           Commissioner of employee relations; 
           Commissioner of finance; 
           Commissioner of health; 
           Executive director, Higher Education Services Office; 
           Commissioner, Housing Finance Agency; 
           Commissioner of human rights; 
           Commissioner of human services; 
           Executive director, State Board of Investment; 
           Commissioner of labor and industry; 
           Commissioner of natural resources; 
           Director of Office of Strategic and Long-Range Planning; 
           Commissioner, Pollution Control Agency; 
           Commissioner of public safety; 
           Commissioner of revenue; 
           Commissioner of employment and economic development; 
           Commissioner of transportation; and 
           Commissioner of veterans affairs. 
           Sec. 4.  Minnesota Statutes 2004, section 43A.18, is 
        amended by adding a subdivision to read: 
           Subd. 3b.  [STATE BOARD OF INVESTMENT PLAN.] Total 
        compensation for unclassified positions not covered by a 
        collective bargaining agreement under section 11A.04 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 employee relations 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. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Sections 1 to 4 are effective July 1, 2005.  An employee 
        who is covered by a compensation plan or whose salary is 
        established under Minnesota Statutes, section 15A.0815, on July 
        1, 2005, continues to be covered by the compensation plan or 
        salary until the compensation plan adopted under Minnesota 
        Statutes, section 43A.18, subdivision 3b, is first implemented. 
           Presented to the governor May 12, 2005 
           Signed by the governor May 16, 2005, 4:05 p.m.