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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
]]]] 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 REGULATIONSPOLICIES -- 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 regulations26 policies governing the investment of permanent endowment funds and earnings 27 reserve funds. The regulationspolicies 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 lationspolicies 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 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