2004 Legislation
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HOUSE BILL NO. 509 – Permanent endowmnt funds, invstmnt

HOUSE BILL NO. 509

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Bill Status



H0509......................................................by STATE AFFAIRS
PERMANENT ENDOWMENT FUNDS - Amends existing law to provide that permanent
endowment funds and earnings reserve funds may be combined or pooled for
investment.
                                                                        
01/21    House intro - 1st rdg - to printing
01/22    Rpt prt - to St Aff
02/03    Rpt out - rec d/p - to 2nd rdg
02/04    2nd rdg - to 3rd rdg
02/05    3rd rdg - PASSED - 63-1-6
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Bedke, Bell,
      Black, Block, Boe, Bradford, Campbell, Cannon, Clark(Jorgenson),
      Collins, Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson,
      Ellsworth, Eskridge, Field(18), Field(23), Garrett, Harwood, Jaquet,
      Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez,
      McGeachin, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen,
      Pasley-Stuart, Raybould, Ridinger, Ring, Ringo, Roberts, Robison,
      Rydalch, Sali, Sayler, Shepherd, Shirley, Smith(30), Smith(24),
      Smylie, Snodgrass, Stevenson, Trail, Wills, Wood
      NAYS -- McKague
      Absent and excused -- Bolz, Gagner, Henbest, Schaefer, Skippen, Mr.
      Speaker
    Floor Sponsor - Deal
    Title apvd - to Senate
02/06    Senate intro - 1st rdg - to St Aff
02/23    Rpt out - rec d/p - to 2nd rdg
02/24    2nd rdg - to 3rd rdg
03/10    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason(Andreason), Bailey, Bunderson, Burkett, 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 -- Brandt
    Floor Sponsor - Little
    Title apvd - to House
03/11    To enrol
03/12    Rpt enrol - Sp signed
03/15    Pres signed
03/16    To Governor
03/19    Governor signed
         Session Law Chapter 96
         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. 509
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE  IDAHO  ENDOWMENT  FUND  INVESTMENT  BOARD;  AMENDING  SECTION
  3        57-720, IDAHO CODE, TO PROVIDE THAT PERMANENT ENDOWMENT FUNDS AND EARNINGS
  4        RESERVE FUNDS MAY BE COMBINED OR POOLED FOR INVESTMENT AND TO PROVIDE COR-
  5        RECT  TERMINOLOGY;  DECLARING  AN  EMERGENCY AND PROVIDING FOR RETROACTIVE
  6        APPLICATION.
                                                                        
  7    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  8        SECTION 1.  That Section 57-720, Idaho Code, be, and the  same  is  hereby
  9    amended to read as follows:
                                                                        
 10        57-720.  PERMANENT  ENDOWMENT  FUNDS  --  EARNINGS RESERVE FUNDS -- INCOME
 11    FUNDS -- INVESTMENT POLICY REGULATIONS  POLICIES  --  ANNUAL  AUDIT.  (1)  The
 12    investment  board  or its investment manager(s) may, and are hereby authorized
 13    to, invest the permanent endowment funds and the earnings reserve funds of the
 14    state of Idaho.
 15        (2)  The permanent endowment funds and the earnings reserve funds  may  be
 16    combined or pooled for investment.
 17        (3)  Earnings  reserve funds shall be accounted for separately from perma-
 18    nent endowment funds.
 19        (4)  Gains and losses as defined in section 57-724, Idaho Code,  shall  be
 20    annually  allocated  between  the  permanent  endowment funds and the earnings
 21    reserve funds at the end of each fiscal year. This allocation  shall  be  made
 22    based  upon  the  proportion  that the market value of the permanent endowment
 23    funds and the market value of the earnings reserve funds bear to the  combined
 24    market value of both sets of funds, at the end of the fiscal year.
 25        (5)  The  investment  board  shall formulate investment policy regulations
 26    policies governing the investment of permanent endowment  funds  and  earnings
 27    reserve  funds.  The regulations policies shall pertain to the types, kinds or
 28    nature of investment of any of the funds, and any limitations,  conditions  or
 29    restrictions  upon  the  methods,  practices  or  procedures  for  investment,
 30    reinvestments,  purchases, sales or exchange transactions, provided such regu-
 31    lations policies shall not conflict with nor be in  derogation  of  any  Idaho
 32    constitutional provision or of the provisions of this act.
 33        (6)  Annually,  the  investment board shall cause an audit to be conducted
 34    of the investment of permanent endowment funds  and  earnings  reserve  funds,
 35    such  audit  to  be conducted by a recognized certified public accountant. The
 36    certified public accountant conducting the audit shall not be an  employee  of
 37    the  state.  The expense of such audit shall be paid from the appropriation to
 38    the investment board.
 39        (7)  The state treasurer shall invest the income funds of  the  respective
 40    endowments and distribute the moneys in the income funds according to legisla-
 41    tive appropriation.
                                                                        
 42        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
                                                                        
                                           2
                                                                        
  1    declared to exist, this act shall be in full force and effect on and after its
  2    passage and approval, and retroactively to January 1, 2004.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13601
The combination of funds allows the board to reduce fees incurred
in the investment of endowment funds.  The board believes that it
may be advantageous to make combinations of funds as it invests in
new markets.  For example, the board may receive reduced fee rates
or eliminate a duplication of fees if it combines the public school
funds with the higher education funds in a foreign equity
investment.  Outside investment managers have requested
clarification of the authority for such combinations.  This
legislation provides such clarification.  This legislation further
provides technical changes clarifying that the board shall
formulate investment policies and that such policies are not to be
promulgated as rules.  The legislation is effective January 01,
2004.  This effective date allows the board to implement its plan
to reduce the investment costs to the endowment funds as early as
practicable in the calendar year.
                                
                         FISCAL IMPACT
                                
There will be no fiscal impact on the general fund.  There will be
savings to the endowment earnings reserve accounts from reduced
trading and custodial fees.



                                 
Contact
Name: Matthew J. Haertzen
      Idaho Endowment Fund Investment Board 
Phone: 208/334-3311



STATEMENT OF PURPOSE/FISCAL NOTE                    H 509