HOUSE BILL NO. 508

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Bill Status



H0508aa....................................................by STATE AFFAIRS
JUDGES' RETIREMENT FUND - Amends existing law to provide that the Endowment
Fund Investment Board shall select and contract with investment managers at
the direction of the Supreme Court; to revise the investment authority
relating to the Judges' Retirement Fund; and to provide that the investment
board may select and contract with banks and trust companies authorized to
do business in Idaho.
                                                                        
01/21    House intro - 1st rdg - to printing
01/22    Rpt prt - to Jud
01/30    Rpt out - Ref'd to St Aff
02/03    Rpt out - to Gen Ord
02/17    Rpt out amen - to engros
02/18    Rpt engros - 1st rdg - to 2nd rdg as amen
02/19    2nd rdg - to 3rd rdg as amen
02/24    3rd rdg as amen - PASSED - 61-6-3
      AYES -- Andersen, Barraclough, Bayer, Bedke, Bell, Black, Block, Boe,
      Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy, Deal,
      Denney, Douglas, Eberle, Ellsworth, Eskridge, Field(18), Field(23),
      Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg, Kulczyk,
      Lake, Langhorst, Martinez, McGeachin, Meyer, Miller, Mitchell, Moyle,
      Naccarato, Nielsen, Pasley-Stuart, Raybould, Ridinger, Ring, Ringo,
      Robison, Rydalch, Sayler, Shepherd, Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Mr. Speaker
      NAYS -- Barrett, Bauer, Langford, McKague, Schaefer, Wood
      Absent and excused -- Edmunson, Roberts, Sali
    Floor Sponsor - Deal
    Title apvd - to Senate
02/25    Senate intro - 1st rdg - to St Aff
03/15    Rpt out - rec d/p - to 2nd rdg
03/16    2nd rdg - to 3rd rdg
03/19    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett(Maxand),
      Burtenshaw, Calabretta, Cameron, Compton, Darrington, Davis, Gannon,
      Geddes, Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge,
      Malepeai, Marley, McKenzie, McWilliams, Noble, Noh, Pearce,
      Richardson, Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk,
      Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Darrington
    Title apvd - to House
03/20    To enrol - Rpt enrol - Sp signed - Pres signed
03/22    To Governor
03/23    Governor signed
         Session Law Chapter 240
         Effective: 01/01/04

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 508
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE JUDGES' RETIREMENT FUND; AMENDING SECTION 1-2008, IDAHO  CODE,
  3        TO PROVIDE THAT THE ENDOWMENT FUND INVESTMENT BOARD AS ESTABLISHED IN CODE
  4        SHALL SELECT AND CONTRACT WITH INVESTMENT MANAGERS AT THE DIRECTION OF THE
  5        SUPREME  COURT, TO REVISE THE INVESTMENT AUTHORITY RELATING TO THE JUDGES'
  6        RETIREMENT FUND, TO MAKE GRAMMATICAL CORRECTIONS AND TO PROVIDE  THAT  THE
  7        INVESTMENT  BOARD  MAY  SELECT AND CONTRACT WITH BANKS AND TRUST COMPANIES
  8        LICENSED TO DO BUSINESS IN IDAHO; DECLARING AN EMERGENCY AND PROVIDING FOR
  9        RETROACTIVE APPLICATION.
                                                                        
 10    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 11        SECTION 1.  That Section 1-2008, Idaho Code, be, and the  same  is  hereby
 12    amended to read as follows:
                                                                        
 13        1-2008.  INVESTMENT  OF  JUDGES'  RETIREMENT  FUND. (1) The endowment fund
 14    investment board established in section  57-718,  Idaho  Code,  shall  at  the
 15    direction  of  the supreme court select and contract with a minimum of one (1)
 16    investment managers to manage the investment of the judges'  retirement  fund.
 17    The  investment manager(s) shall, subject to the direction of the board, exert
 18    control over the funds as though the  investment  manager(s)  were  the  owner
 19    thereof,  subject  to  the  limitation and are hereby authorized to invest the
 20    judges' retirement fund as hereinafter provided. The investment manager(s)  is
 21    hereby  authorized to invest the judges' retirement fund in the following man-
 22    ner and in the following investments or securities and none others:
 23        (1)  Bonds, notes or other obligations of the United States or any  agency
 24    or instrumentality thereof.
 25        (2)  Money market mutual funds.
 26        (3)  Bonds,  notes,  or  other  obligations  of the state of Idaho and its
 27    political subdivisions, or bonds, notes, or other obligations of other  states
 28    and their political subdivisions, provided such bonds, notes, or other obliga-
 29    tions  or the issuing agency for other than the state of Idaho and its politi-
 30    cal subdivisions have, at the time of their purchase, an AAA rating by a  com-
 31    monly known rating service.
 32        (4)  Bonds,  debentures or notes of any corporation organized, controlled,
 33    and operating within the United States which have, at the time of  their  pur-
 34    chase, an A rating or higher by a commonly known rating service.
 35        (5)  Corporate  obligations designated as corporate convertible debt secu-
 36    rities.
 37        (6)  Obligations secured by mortgages constituting a first lien upon  real
 38    property of the state of Idaho which are fully insured or guaranteed as to the
 39    payment  of the principal by the government of the United States or any agency
 40    thereof.
 41        (7)  Time certificates of deposit and savings accounts.
 42        (8)  Common or preferred stocks of corporations.
 43        (9)  Commercial paper, which at the time of purchase, is rated prime 1  by
                                                                        
                                           2
                                                                        
  1    moody's  investors  service incorporated or is rated A-1 or higher by standard
  2    and poor's corporation.
  3        (a)  Subject to the approval of the supreme court,  the  investment  board
  4        shall  formulate  an investment policy governing the investment of judges'
  5        retirement funds. The policy shall pertain to the types, kinds  or  nature
  6        of  investment  of  any  of  the funds, and any limitations, conditions or
  7        restrictions upon the methods, practices  or  procedures  for  investment,
  8        reinvestments,  purchases,  sales  or exchange transactions, provided such
  9        policy shall not conflict with nor be in derogation of any Idaho constitu-
 10        tional provision or of the provisions of this chapter.  Provided  further,
 11        the  supreme  court  may, in its sole discretion, limit any of the invest-
 12        ments permitted by the investment policy.
 13        (b)  In acquiring, investing, reinvesting, exchanging, retaining,  selling
 14        and  managing  the  moneys  and  securities  of  the  fund, the investment
 15        manager(s) shall also be governed by the prudent man investment act,  sec-
 16        tions  68-501  through  68-506,  Idaho  Code;  provided, however, that the
 17        supreme court may in its sole  discretion,  limit  the  types,  kinds  and
 18        amounts of such investments.
 19        (2)  The  investment  board  shall  be  responsible  for assuring that the
 20    investment manager(s) complies comply with this act section.
 21        (3)  The investment board, subject to the approval of the  supreme  court,
 22    is  hereby  authorized  to  select  and  contract with a bank or trust company
 23    located licensed to do business in the state of Idaho, to act as custodian  of
 24    the  judges'  retirement fund, who shall hold all securities and moneys of the
 25    judges' retirement fund and shall collect the principal, dividends and  inter-
 26    est thereof when due and pay the same into the judges' retirement fund.
 27        (4)  The  state  treasurer  shall  pay  all  warrants drawn on the judges'
 28    retirement fund for making such investments when issued pursuant  to  vouchers
 29    signed by the chief justice of the supreme court.
                                                                        
 30        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 31    declared to exist, this act shall be in full force and effect on and after its
 32    passage and approval, and retroactively to January 1, 2004.

Amendment


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                                                     Moved by    Langhorst           
                                                                        
                                                     Seconded by Campbell            
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                              HOUSE AMENDMENT TO H.B. NO. 508
                                                                        
  1                                AMENDMENT TO SECTION 1
  2        On page 2 of the printed bill, in line 23, delete "licensed"  and  insert:
  3    "authorized".
                                                                        
  4                                 CORRECTION TO TITLE
  5        On page 1, in line 8, delete "LICENSED" and insert: "AUTHORIZED".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                               HOUSE BILL NO. 508, As Amended
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE JUDGES' RETIREMENT FUND; AMENDING SECTION 1-2008, IDAHO  CODE,
  3        TO PROVIDE THAT THE ENDOWMENT FUND INVESTMENT BOARD AS ESTABLISHED IN CODE
  4        SHALL SELECT AND CONTRACT WITH INVESTMENT MANAGERS AT THE DIRECTION OF THE
  5        SUPREME  COURT, TO REVISE THE INVESTMENT AUTHORITY RELATING TO THE JUDGES'
  6        RETIREMENT FUND, TO MAKE GRAMMATICAL CORRECTIONS AND TO PROVIDE  THAT  THE
  7        INVESTMENT  BOARD  MAY  SELECT AND CONTRACT WITH BANKS AND TRUST COMPANIES
  8        AUTHORIZED TO DO BUSINESS IN IDAHO; DECLARING AN EMERGENCY  AND  PROVIDING
  9        FOR RETROACTIVE APPLICATION.
                                                                        
 10    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 11        SECTION  1.  That  Section  1-2008, Idaho Code, be, and the same is hereby
 12    amended to read as follows:
                                                                        
 13        1-2008.  INVESTMENT OF JUDGES' RETIREMENT FUND.  (1)  The  endowment  fund
 14    investment  board  established  in  section  57-718,  Idaho Code, shall at the
 15    direction of the supreme court select and contract with a minimum of  one  (1)
 16    investment  managers  to manage the investment of the judges' retirement fund.
 17    The investment manager(s) shall, subject to the direction of the board,  exert
 18    control  over  the  funds  as  though the investment manager(s) were the owner
 19    thereof, subject to the limitation and are hereby  authorized  to  invest  the
 20    judges'  retirement fund as hereinafter provided. The investment manager(s) is
 21    hereby authorized to invest the judges' retirement fund in the following  man-
 22    ner and in the following investments or securities and none others:
 23        (1)  Bonds,  notes or other obligations of the United States or any agency
 24    or instrumentality thereof.
 25        (2)  Money market mutual funds.
 26        (3)  Bonds, notes, or other obligations of the  state  of  Idaho  and  its
 27    political  subdivisions, or bonds, notes, or other obligations of other states
 28    and their political subdivisions, provided such bonds, notes, or other obliga-
 29    tions or the issuing agency for other than the state of Idaho and its  politi-
 30    cal  subdivisions have, at the time of their purchase, an AAA rating by a com-
 31    monly known rating service.
 32        (4)  Bonds, debentures or notes of any corporation organized,  controlled,
 33    and  operating  within the United States which have, at the time of their pur-
 34    chase, an A rating or higher by a commonly known rating service.
 35        (5)  Corporate obligations designated as corporate convertible debt  secu-
 36    rities.
 37        (6)  Obligations  secured by mortgages constituting a first lien upon real
 38    property of the state of Idaho which are fully insured or guaranteed as to the
 39    payment of the principal by the government of the United States or any  agency
 40    thereof.
 41        (7)  Time certificates of deposit and savings accounts.
 42        (8)  Common or preferred stocks of corporations.
 43        (9)  Commercial  paper, which at the time of purchase, is rated prime 1 by
                                                                        
                                           2
                                                                        
  1    moody's investors service incorporated or is rated A-1 or higher  by  standard
  2    and poor's corporation.
  3        (a)  Subject  to  the  approval of the supreme court, the investment board
  4        shall formulate an investment policy governing the investment  of  judges'
  5        retirement  funds.  The policy shall pertain to the types, kinds or nature
  6        of investment of any of the funds,  and  any  limitations,  conditions  or
  7        restrictions  upon  the  methods,  practices or procedures for investment,
  8        reinvestments, purchases, sales or exchange  transactions,  provided  such
  9        policy shall not conflict with nor be in derogation of any Idaho constitu-
 10        tional  provision  or of the provisions of this chapter. Provided further,
 11        the supreme court may, in its sole discretion, limit any  of  the  invest-
 12        ments permitted by the investment policy.
 13        (b)  In  acquiring, investing, reinvesting, exchanging, retaining, selling
 14        and managing the  moneys  and  securities  of  the  fund,  the  investment
 15        manager(s)  shall also be governed by the prudent man investment act, sec-
 16        tions 68-501 through 68-506,  Idaho  Code;  provided,  however,  that  the
 17        supreme  court  may  in  its  sole  discretion, limit the types, kinds and
 18        amounts of such investments.
 19        (2)  The investment board shall  be  responsible  for  assuring  that  the
 20    investment manager(s) complies comply with this act section.
 21        (3)  The  investment  board, subject to the approval of the supreme court,
 22    is hereby authorized to select and contract  with  a  bank  or  trust  company
 23    located  authorized  to do business in the state of Idaho, to act as custodian
 24    of the judges' retirement fund, who shall hold all securities  and  moneys  of
 25    the  judges'  retirement  fund  and shall collect the principal, dividends and
 26    interest thereof when due and pay the same into the judges' retirement fund.
 27        (4)  The state treasurer shall pay  all  warrants  drawn  on  the  judges'
 28    retirement  fund  for making such investments when issued pursuant to vouchers
 29    signed by the chief justice of the supreme court.
                                                                        
 30        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 31    declared to exist, this act shall be in full force and effect on and after its
 32    passage and approval, and retroactively to January 1, 2004.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13600
Under the current Idaho Code 1-2008, allowable investments for the
Judges' Retirement Fund are restricted to those specified in the
statute.  The statute is more restrictive than the policies
followed by other investment funds, including those for the Public
Employee Retirement System and Idaho Endowment Funds.  

The change allows a prudent investment policy to be developed by
the Endowment Fund Investment Board (EFIB), subject to the review
and approval of the Supreme Court.  Removing this from statute will
allow greater flexibility to diversify the portfolio, improving the
risk/return profile and decreasing costs.  

Finally, with the consolidation in the banking industry, it has
become increasingly difficult to find a bank or trust company
located in the state of Idaho that can provide top-tier custodial
services.  Requiring only licensing in the state will provide a
wider array of alternatives.  


                                
                         FISCAL IMPACT
                                
By changing the allowable investments, the Judges' Retirement Fund
will be able to participate in newer investment vehicles such as
co-mingled equity funds.  By way of example, this would allow the
EFIB to gain the current exposure the fund has to a broad market
equity index at a cost of 1 basis point versus the current 20 basis
points.  The fee saving from this change alone would add more than
$66,000 to the fund annually.  

Additionally, allowing the Judges' Retirement Fund to use the same
custodian as EFIB and the State Insurance Fund will allow us to
receive discounts based on asset size resulting in saving for all
the funds and the State of Idaho.  






Contact
Name:     Matthew J. Haertzen 
          Idaho Endowment Fund Investment Board
Phone:    334-3311 
 
STATEMENT OF PURPOSE/FISCAL NOTE                      H 508