Wisconsin Legislature: SB402,15,6

SB402,11,1413 25.18 (2) (intro.) In addition to the powers set forth in sub. (1) and s. 25.17, but
14subject to s. 25.183, the investment board may:

SB402, s. 24 15Section 24. 25.18 (2) (e) of the statutes is amended to read:

SB402,12,216 25.18 (2) (e) Contract with and delegate to investment advisers the
17management and control over assets from any fund or trust delivered to such
18investment advisers for investment in real estate, mortgages, equities, debt of
19foreign corporations and debt of foreign governments, and pay such advisers fees
20from the current income of the fund or trust being invested. No more than 10% 20%
21of the total assets of the fixed retirement investment trust or 10% 20% of the total
22assets of the variable retirement investment trust may be delivered to investment
23advisers. The board shall set performance standards for such investment advisers,
24monitor such investments to determine if performance standards are being met and

1if an investment adviser does not consistently meet the performance standards then
2terminate the contract with such investment adviser.

SB402, s. 25 3Section 25. 25.183 of the statutes is created to read:

SB402,12,4 425.183 Certain investments prohibited. (1) Definition. In this section:

SB402,12,85 (a) "Derivative" means any financial contract or other instrument that derives
6its value from the value or performance of any security, currency exchange rate or
7interest rate or of any index or group of any securities, currency exchange rates or
8interest rates, but does not include any of the following:

SB402,12,119 1. Any security that is traded on a national securities exchange or on an
10automated interdealer quotation system sponsored by a securities association
11registered under 15 USC 78o-3, et seq.

SB402,12,1312 2. Any forward contract which has a maturity at the time of issuance not
13exceeding 270 days.

SB402,12,16143. Any contract of sale of a commodity, as defined under 7 USC 2, for future
15delivery, or any option on such a contract, traded or executed on a designated contract
16market and subject to regulation under 7 USC 1 to 26.

SB402,12,1917 4. Any security of an open-end management investment company or
18investment trust, if the investment company or investment trust is registered under
1915 USC 80a-1 to 80a-64.

SB402,12,2020 5. Any deposit held by a financial institution.

SB402,12,2121 6. Any investment specifically authorized under s. 25.17 (3) (b) and (ba).

SB402,13,222 6e. Any collateralized mortgage obligation or other asset-backed security
23which either has one of the 2 highest ratings given by a nationally recognized rating
24service or is backed or collateralized by insured instruments, guarantees or pledges

1of the federal government, this state or an agency of the federal government or this
2state.

SB402,13,43 6m. Any transaction permitted under s. 25.18 (1) (n), if all of the following
4conditions are met at the time the transaction is entered into:

SB402,13,75 a. The counterparty to the transaction is rated in, or has outstanding long-term
6debt which is rated in, one of the 2 highest ratings given by a nationally recognized
7rating service.

SB402,13,98 b. The transaction is used only for specified hedging or interest rate risk
9reduction purposes.

SB402,13,1110 c. All of the board's payment obligations under the transaction are fully backed
11by distinctly identified assets held in the state investment fund.

SB402,13,1312 7. Any financial contract or instrument that the board determines, by rule, is
13not a derivative.

SB402,13,1614 (b) "Reverse repurchase agreement" means an agreement for the sale of
15securities by the board under which the board will repurchase those securities on or
16before a specified date and for a specified amount.

SB402,13,24 17(2) Derivative investments. After the effective date of this subsection ....
18[revisor inserts date], the board may not purchase or acquire any derivative in the
19state investment fund except in accordance with rules promulgated by the board.
20Rules promulgated under this subsection may not permit the purchase or acquisition
21of derivatives in the state investment fund unless the purchase or acquisition is
22made for the purpose of reducing risk of price changes or of interest rate or currency
23exchange rate fluctuations with respect to investments held or to be held by the
24board.

SB402,14,4

1(3) Reverse repurchase agreements. After the effective date of this subsection
2.... [revisor inserts date], the board may not enter into any reverse repurchase
3agreement unless the repurchase of securities under the agreement is required to
4occur no later than the next business day.

SB402, s. 26 5Section 26. 25.50 (5) of the statutes is renumbered 25.50 (5) (intro.) and
6amended to read:

SB402,14,167 25.50 (5) Investment policies. (intro.) The investment board shall formulate
8policies for the investment and reinvestment of moneys in the fund and the
9acquisition, retention, management and disposition of such investments. The board
10shall provide a copy of the investment policies, together with any guidelines adopted
11by the board to direct staff investment activity, to each local government having an
12investment in the fund upon the local government's request and at least annually to
13all investors. The board shall distribute at least annually performance information
14over the preceding one-year, 5-year and 10-year periods, compared with
15appropriate indices or benchmarks in the private sector. The investment policies
16shall include all of the following:

SB402, s. 27 17Section 27. 25.50 (5) (a) to (d) of the statutes are created to read:

SB402,14,1818 25.50 (5) (a) Any types of prohibited investments.

SB402,14,1919 (b) Any restrictions on allocation of assets among various asset types.

SB402,14,2020 (c) Credit standards for private companies in which the fund may invest.

SB402,14,2121 (d) Dollar or percentage limits on investments in a single company or bank.

SB402, s. 28 22Section 28. 25.50 (5m) of the statutes is created to read:

SB402,15,623 25.50 (5m) Monthly reporting requirements. (a) The board, in cooperation
24with the department of administration, shall provide information necessary for the
25state treasurer to provide a monthly report to each local government having an

1investment in the fund. The board shall provide the information to the state
2treasurer in time to allow the treasurer to mail or electronically transmit the report
3to the local government no later than 6 business days after the end of the month
4covered by the report. The report shall include information on the fund's earnings
5for the month, with comparison to appropriate indices or benchmarks in the private
6sector.

SB402,15,117 (b) Upon request of any local government having an investment in the fund,
8the board shall provide a summary of securities held by the fund, including for each
9type of security, its cost, current value and, in the case of debt instruments, the
10average maturity. The board shall provide the information as soon as practicable
11after receiving the request.

SB402, s. 29 12Section 29. Nonstatutory provisions.

SB402,15,17 13(1) Alternative insurance arrangements for the local government-pooled
14investment fund. No later than December 31, 1995, or the first day of the 2nd month
15beginning after publication, whichever is later, the investment board shall report to
16the joint legislative audit committee on alternative insurance arrangements for the
17local government pooled-investment fund under section 25.50 of the statutes.

SB402,15,18 18(2) Submission of investment board reports.

SB402,15,24 19(a) Notwithstanding the deadline for the submission of the report of the
20investment board's annual investment goals and long-term investment strategies
21that is specified in section 25.17 (14g) of the statutes, as created by this act, the
22investment board, for the 1996 calendar year, shall submit the report on or before
23January 1, 1996, or on or before the first day of the 2nd month beginning after
24publication, whichever is later.

SB402,16,5

1(b) Notwithstanding the deadline for the submission of the report of the
2investment board that is specified in section 25.17 (14m) of the statutes, as affected
3by this act, the investment board shall submit the report for 1995 on or before March
431, 1996, or on or before the first day of the 2nd month beginning after publication,
5whichever is later.

SB402,16,8 6(3) Investment board officers. The officers of the investment board
7designated by the governor under section 15.07 (2) (a), 1993 stats., shall cease to hold
8the designated offices on the effective date of this subsection.

SB402, s. 30 9Section 30. Appropriation changes.

SB402,16,16 10(1) Internal auditor. In the schedule under section 20.005 (3) of the statutes
11for the appropriation to the investment board under section 20.536 (1) (k) of the
12statutes, as affected by the acts of 1995, the dollar amount is increased by $124,200
13for fiscal year 1995-96 and the dollar amount is increased by $230,500 for fiscal year
141996-97 to increase the authorized FTE positions for the investment board by 3.0 PR
15positions on January 1, 1996, for the performance of the functions of the internal
16auditor.

SB402,16,23 17(2) Chief investment officer. In the schedule under section 20.005 (3) of the
18statutes for the appropriation to the investment board under section 20.536 (1) (k)
19of the statutes, as affected by the acts of 1995, the dollar amount is increased by
20$78,400 for fiscal year 1995-96 and the dollar amount is increased by $157,100 for
21fiscal year 1996-97 to increase the authorized FTE positions for the investment
22board by 1.0 PR position on January 1, 1996, for the performance of the functions of
23the chief investment officer.

SB402,17,5 24(3) Investment operations. In the schedule under section 20.005 (3) of the
25statutes for the appropriation to the investment board under section 20.536 (1) (k)

1of the statutes, as affected by the acts of 1995, the dollar amount is increased by
2$72,000 for fiscal year 1995-96 and the dollar amount is increased by $129,600 for
3fiscal year 1996-97 to increase the authorized FTE positions for the investment
4board by 2.0 PR positions on January 1, 1996, for the performance of certain
5investment operations.

SB402,17,12 6(4) Investment technology. In the schedule under section 20.005 (3) of the
7statutes for the appropriation to the investment board under section 20.536 (1) (k)
8of the statutes, as affected by the acts of 1995, the dollar amount is increased by
9$36,000 for fiscal year 1995-96 and the dollar amount is increased by $64,800 for
10fiscal year 1996-97 to increase the authorized FTE positions for the investment
11board by 1.0 PR position on January 1, 1996, for the development of a comprehensive
12strategic information systems plan.

SB402,17,1313 (End)