Download Zipped Introduced WordPerfect HB0337.ZIP
[Status][Bill Documents][Fiscal Note][Bills Directory]

H.B. 337

             1     

PERMANENT STATE TRUST FUND INVESTMENT

             2     
AMENDMENTS

             3     
2013 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Jim Nielson

             6     
Senate Sponsor: ____________

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill addresses the investment of money in the permanent state trust fund.
             11      Highlighted Provisions:
             12          This bill:
             13          .    repeals a provision relating to the state treasurer's investment of money in the
             14      permanent state trust fund and replaces it with other provisions governing the
             15      investment of permanent state trust fund money;
             16          .    provides for requirements and criteria for the state treasurer's investment of
             17      permanent state trust fund money;
             18          .    requires the state treasurer to invest the money as a prudent investor would and
             19      establishes criteria for determining whether the treasurer has met that prudent
             20      investor standard; and
             21          .    makes technical changes.
             22      Money Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:


             28          51-9-202, as last amended by Laws of Utah 2011, Chapter 119
             29      ENACTS:
             30          51-7b-101, Utah Code Annotated 1953
             31          51-7b-102, Utah Code Annotated 1953
             32          51-7b-201, Utah Code Annotated 1953
             33          51-7b-202, Utah Code Annotated 1953
             34      REPEALS:
             35          51-7-12.1, as enacted by Laws of Utah 2000, Chapter 351
             36     
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 51-7b-101 is enacted to read:
             39     
CHAPTER 7b. INVESTMENT OF PERMANENT STATE TRUST FUND MONEY

             40     
Part 1. General Provisions

             41          51-7b-101. Title.
             42          This chapter is known as "Investment of Permanent State Trust Fund Money."
             43          Section 2. Section 51-7b-102 is enacted to read:
             44          51-7b-102. Definition.
             45          As used in this chapter, "permanent state trust fund" means the permanent state trust
             46      fund created by and operated under Utah Constitution Article XXII, Section 4.
             47          Section 3. Section 51-7b-201 is enacted to read:
             48     
Part 2. State Treasurer Investment Duties

             49          51-7b-201. Investment of money in the permanent state trust fund.
             50          (1) The state treasurer shall:
             51          (a) invest money in the permanent state trust fund with the primary goal of providing
             52      for the stability, income, and growth of the permanent state trust fund's principal;
             53          (b) in making investment decisions, consider:
             54          (i) general economic conditions;
             55          (ii) the possible effect of inflation and deflation;
             56          (iii) the role that each investment or course of action plays within the overall
             57      permanent state trust fund portfolio;
             58          (iv) the expected total return from income and the appreciation of capital; and


             59          (v) needs for liquidity, regularity of income, and preservation or appreciation of capital;
             60      and
             61          (c) diversify the investments of the permanent state trust fund, unless the state treasurer
             62      reasonably determines that the purposes of the permanent state trust fund are better served
             63      without diversifying.
             64          (2) Nothing in this section requires a specific outcome in investing.
             65          (3) The state treasurer may deduct any administrative costs incurred in managing
             66      permanent state trust fund assets from earnings before distributing them.
             67          (4) (a) The state treasurer may employ professional asset managers to assist in the
             68      investment of assets of the permanent state trust fund.
             69          (b) The treasurer may provide compensation to asset managers only from earnings
             70      generated by the permanent state trust fund's investments.
             71          Section 4. Section 51-7b-202 is enacted to read:
             72          51-7b-202. Prudent investor standard -- Determining whether standard met.
             73          (1) The state treasurer shall invest and manage the permanent state trust fund assets as
             74      a prudent investor would, by:
             75          (a) considering the purposes, terms, distribution requirements, and other circumstances
             76      of the permanent state trust fund; and
             77          (b) exercising reasonable care, skill, and caution in order to meet the standard of care
             78      of a prudent investor.
             79          (2) In determining whether the state treasurer has met the standard of care of a prudent
             80      investor, a finder of fact shall:
             81          (a) consider the state treasurer's investment decision or action in light of the facts and
             82      circumstances existing at the time of the decision or action, and not by hindsight; and
             83          (b) evaluate the state treasurer's investment and management decisions respecting
             84      individual assets:
             85          (i) not in isolation, but in the context of the permanent state trust fund portfolio as a
             86      whole; and
             87          (ii) as a part of an overall investment strategy that has risk and return objectives
             88      reasonably suited to the permanent state trust fund.
             89          Section 5. Section 51-9-202 is amended to read:


             90           51-9-202. Permanent state trust fund.
             91          (1) Until July 1, 2003, 50% of all funds of every kind that are received by the state that
             92      are related to the settlement agreement that the state entered into with leading tobacco
             93      manufacturers on November 23, 1998, shall be deposited into the permanent state trust fund
             94      created by and operated under Utah Constitution Article XXII, Section 4.
             95          (2) On and after July 1, 2003 and until July 1, 2004 20% of the funds of any kind
             96      received by the state that are related to the settlement agreement that the state entered into with
             97      leading tobacco manufacturers shall be deposited into the permanent state trust fund created by
             98      and operated under Utah Constitution Article XXII, Section 4.
             99          (3) On and after July 1, 2004 and until July 1, 2005, 30% of all funds of any kind
             100      received by the state that are related to the settlement agreement that the state entered into with
             101      leading tobacco manufacturers shall be deposited into the General Fund Budget Reserve
             102      Account created in Section 63J-1-312 .
             103          (4) On and after July 1, 2005 and until July 1, 2007, 25% of all funds of any kind
             104      received by the state that are related to the settlement agreement that the state entered into with
             105      leading tobacco manufacturers shall be deposited into the permanent state trust fund created by
             106      and operated under Utah Constitution Article XXII, Section 4.
             107          (5) On and after July 1, 2007, 40% of all funds of every kind that are received by the
             108      state that are related to the settlement agreement that the state entered into with leading tobacco
             109      manufacturers on November 23, 1998, shall be deposited into the General Fund and the
             110      remaining funds deposited as directed.
             111          (6) Funds in the permanent state trust fund shall be deposited or invested pursuant to
             112      [Section 51-7-12.1 ] Chapter 7b, Investment of Permanent State Trust Fund Money.
             113          (7) (a) In accordance with Utah Constitution Article XXII, Section 4, the interest and
             114      dividends earned annually from the permanent state trust fund shall be deposited in the General
             115      Fund. There shall be transferred on an ongoing basis from the General Fund to the permanent
             116      state trust fund created under Utah Constitution Article XXII, Section 4, an amount equal to
             117      50% of the interest and dividends earned annually from the permanent state trust fund. The
             118      amount transferred into the fund under this Subsection (7)(a) shall be treated as principal.
             119          (b) Any annual interest or dividends earned from the permanent state trust fund that
             120      remain in the General Fund after Subsection (7)(a) may be appropriated by the Legislature.


             121          (c) Any realized or unrealized gains or losses on investments in the permanent state
             122      trust fund shall remain in the permanent state trust fund.
             123          (8) This section does not apply to funds deposited under Chapter 9, Part 3,
             124      Infrastructure and Economic Diversification Investment Account and Deposit of Certain
             125      Severance Taxes into Permanent State Trust Fund Act, into the permanent state trust fund.
             126          Section 6. Repealer.
             127          This bill repeals:
             128          Section 51-7-12.1, Deposit or investment of Tobacco Settlement Endowment --
             129      Authorized deposits and investments -- Asset manager.




Legislative Review Note
    as of 1-25-13 1:06 PM


Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]