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BILL AS INTRODUCED 2007-2008

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H.880

Introduced by   Committee on Government Operations

Date:

Subject:  Executive branch; retirement; investment and oversight

Statement of purpose:  This bill proposes to revise the structure and governance of the Vermont pension investment committee.

AN ACT RELATING TO THE VERMONT PENSION INVESTMENT COMMITTEE

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  3 V.S.A. § 521 is amended to read:

§ 521.  DEFINITIONS

As used in this chapter:

(1)  "Asset allocation" means the apportionment of investment funds among categories of assets, such as cash equivalents, stock, fixed income, and real estate, as well as subcategories of assets, such as government, municipal, and corporate bonds, and industry groupings of common stocks.

(2)  "Committee", “committee” means the Vermont pension investment committee.


Sec. 2.  3 V.S.A. § 522 is amended to read:

§ 522.  VERMONT PENSION INVESTMENT COMMITTEE

(a)  There is created the Vermont pension investment committee to be comprised of 17 six members as follows:

(1)  the one member and one alternate, who may or may not be trustees of the board of the Vermont state employees' retirement system, elected by the employee and retiree members of that board;

(2)  the one member and one alternate, who may or may not be trustees of the board of the state teachers' retirement system of Vermont, elected by the employee and retiree members of that board; and

(3)  the one member and one alternate, who may or may not be trustees of the board of the Vermont municipal employees' retirement system, elected by the members of that board pursuant to subsection 5062(a) of Title 24;

(4)  two members and one alternate, appointed by the governor; and

(5)  the state treasurer or designee.

(b)  An authority responsible for electing or appointing a member or alternate shall consider the experience and knowledge of potential members and alternates consistent with the purposes of the committee, and shall inform potential members and alternates that they shall participate in ongoing training in investments, securities, and fiduciary responsibilities as directed by the committee.

(c)  Initially, one appointee and the alternate appointee of the governor shall serve a two-year term, and the second appointee shall serve for a four-year term.  Thereafter, the governor’s appointees and alternate appointee shall serve for four-year terms.  Initially, the member and alternate chosen by the Vermont municipal employees’ retirement board shall serve for a two-year term, the member and alternate chosen by the Vermont state teachers retirement board shall serve for a three-year term and the member and alternate chosen by the Vermont state employees’ retirement board shall serve for a four-year term.  Thereafter, all members and alternates shall serve for four-year terms.

(d)  The members of the Vermont pension investment committee shall elect a chair and vice chair to serve for a term of two years.  The position of chair shall rotate so that the chair is a trustee of one of the boards for only two consecutive years in a six-year period. If any member serves on more than one board, that member may only serve as chair for two consecutive years in a six-year period from among its members.

(c)(e)  Nine Four members of the committee shall constitute a quorum which shall include at least three trustees of the board of the Vermont state employees' retirement system, three trustees of the board of the state teachers' retirement system of Vermont, and two trustees of the board of the Vermont municipal employees' retirement system.  The attendance of the state treasurer may only be counted toward the minimum attendance requirements of one of the three boards.  Nine If a member is not in attendance, the alternate of that member shall be eligible to act as a member of the committee during the absence of the member.  Four concurring votes shall be necessary for a decision of the committee at any meeting of the committee.  The committee shall be attached to the office of the state treasurer for administrative support, and the expenses of the committee and the treasurer’s office in support of the committee shall be paid proportionately from the funds of the three retirement systems and any individual municipalities that have been allowed to invest their retirement funds pursuant to subsection 523(a) of this title.

(f)  Public employee members and alternates shall be granted reasonable leave time by their employers to attend committee meetings and

committee-related educational programs. 

(g)  The committee shall provide an annual report to the respective authorities responsible for electing and appointing members and alternates regarding attendance at committee meetings and relevant educational programs attended.

(h)  A vacancy of an elected or appointed member or alternate shall be filled for the remainder of the term by the authority responsible for electing or appointing that member or alternate.


Sec. 3.  3 V.S.A. § 523 is amended to read:

§ 523.  VERMONT PENSION INVESTMENT COMMITTEE; DUTIES

(a)  The Vermont pension investment committee shall only be responsible, consistent with a duly approved asset allocation, for the investment of the assets of the state teachers' retirement system of Vermont, the Vermont state employees' retirement system, and the Vermont municipal employees' retirement system pursuant to section 472 of this title, section 1943 of Title 16, and section 5063 of Title 24.  The committee shall strive to maximize total return on investment, within acceptable levels of risk for public retirement systems, in accordance with the standards of care established by the prudent investor rule under chapter 147 of Title 9.  The committee may, in its discretion, subject to approval by the attorney general, also enter into agreements with municipalities administering their own retirement systems to invest retirement funds for those municipal pension plans.  The state treasurer shall serve as the custodian of the funds of all three retirement systems.

(b)  Prior to a revision of an existing asset allocation for a retirement system by the committee, the committee shall deliver a report to the appropriate retirement board explaining the revised asset allocation recommendation no later than 30 days prior to the next board meeting. The proposed revisions shall become effective upon adjournment of the board meeting unless the board votes to reject the proposed changes at that meeting.

(c)  Members and alternates of the committee who are not public employees shall serve without compensation but shall be reimbursed from the funds of the retirement systems be entitled to compensation as set forth in section 1010 of Title 32 and reimbursement for all necessary expenses that they may incur through service on the committee from the funds of the retirement systems.

(d)(c)  The committee shall keep a record of all its proceedings which shall be open for public inspection.

(e)(d)  The committee may formulate policies and procedures deemed necessary and appropriate to carry out its functions.

(f)(e)  The attorney general shall serve as legal advisor to the committee.

(f)  Contracts approved by the committee and related documents may be executed by the chair, or in the chair’s absence, the vice chair. 

(g)  Notwithstanding any other provision of law to the contrary, changes to the actuarial rate of return shall be made at a joint meeting of the committee and the appropriate retirement board.  The board and committee shall review the recommendations of the actuary and the investment consultant.  A change to an actuarial rate of return shall be by joint resolution of the board and committee.  Each body shall vote according to its own procedures.  In the event that the board and committee are unable to agree on an actuarial rate of return, the existing assumed rate of return shall remain in effect.


Sec. 4.  VERMONT PENSION INVESTMENT COMMITTEE; REPORT

By January 1, 2010, the Vermont pension investment committee shall file a report with the house and senate committees on government operations that, at a minimum, evaluates:

(1)  how well the committee operates as a six-member committee;

(2)  whether the committee has adequate investment expertise; and

(3)  whether the committee should have more members.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us