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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
]]]] 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.
]]]] 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".
]]]] 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
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