H.B. 213 Enrolled

CHANGES TO INVESTMENT ADVISORY
COMMITTEE
2004 GENERAL SESSION
STATE OF UTAH
Sponsor: David Clark

LONG TITLE
General Description:
This bill modifies provisions governing membership and meetings of the investment
advisory committee for investment of permanent land grant trust funds.
Highlighted Provisions:
This bill:
. adds a member appointed by the Board of Trustees of the School and Institutional
Trust Lands Administration to the committee;
. requires that the investment advisory committee meet at least quarterly;
. requires the investment advisory committee to elect a chair and vice-chair; and
. makes technical corrections.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
51-7-12, as last amended by Chapter 237, Laws of Utah 2000

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 51-7-12 is amended to read:
51-7-12. Deposit or investment of permanent land grant trust funds -- Authorized
deposits and investments -- Asset manager -- Investment Advisory Committee.

(1) The principal of the permanent land grant trust funds established pursuant to the Utah
Enabling Act and the Utah Constitution shall be deposited or invested only in the following:
(a) any deposit or investment authorized by Section 51-7-11 ;
(b) equity securities, including common and preferred stock issued by corporations listed
on a major securities exchange, in accordance with the following criteria applied at the time of
investment:
(i) the treasurer may not invest more than 5%, determined on a cost basis, of the total
fund assets in the securities of any one issuer;
(ii) the treasurer may not invest more than 25%, determined on a cost basis, of total fund
assets in a particular industry;
(iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
fund assets in securities of corporations that have been in continuous operation for less than three
years;
(iv) the fund may not hold in excess of 5% of the outstanding voting securities of any one
corporation; and
(v) at least 75% of the corporations in which investments are made under Subsection
(1)(b) must appear on the Standard and Poor's 500 Composite Stock Price Index;
(c) fixed-income securities, including bonds, notes, mortgage securities, zero coupon
securities and convertible securities issued by domestic corporations rated A or higher by Moody's
Investor's Service, Inc. or by Standard and Poor's Corporation in accordance with the following
criteria applied at the time of investment:
(i) the treasurer may not invest more than 5%, determined on a cost basis, of the total
fund assets in the securities of any one issuer;
(ii) the treasurer may not invest more than 25%, determined on a cost basis, of the total
fund assets in a particular industry;
(iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
fund assets in securities of corporations that have been in continuous operation for less than three
years; and

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(iv) the dollar-weighted average maturity of fixed-income securities acquired under
Subsection (1)(c) may not exceed ten years;
(d) fixed-income securities issued by agencies of the United States and
government-sponsored organizations, including mortgage-backed pass-through certificates and
mortgage-backed bonds;
(e) shares of an open-end diversified management investment company established under
the Investment Companies Act of 1940; and
(f) shares of or deposits in a pooled-investment program.
(2) (a) No more than 80% of the total fund assets of any of these funds, on a cost basis,
may be invested in common or preferred stocks at any one time.
(b) At least 20% of the total assets of these funds shall be invested in fixed-income
securities authorized by Subsections (1)(a), (c), and (d).
(3) The state treasurer shall use appropriate investment strategies to protect the principal
of the funds administered under this section during periods of financial market volatility.
(4) (a) The state treasurer may employ professional asset managers to assist in the
investment of assets of the permanent trust funds.
(b) The treasurer may provide compensation to asset managers from earnings generated
by the funds' investments.
(5) This section applies only to permanent trust funds in which the principal is prudently
invested and held by the state in perpetuity.
(6) (a) There is established an investment advisory committee to give suggestions, advice,
and opinions to the state treasurer in regard to this section.
(b) The committee shall consist of the following:
(i) one member appointed by the president of the University of Utah;
(ii) one member appointed by the president of Utah State University;
(iii) one member appointed by the state superintendent of public instruction;
(iv) one member appointed by the president of the Utah Education Association;
(v) one member appointed by the president of the Utah Parent Teachers Association;

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[and]
(vi) one member appointed by the director of the Department of Human Services[.]; and
(vii) one member appointed by the Board of Trustees of the School and Institutional
Trust Lands Administration.
(c) (i) Except as required by Subsection (6)(c)(ii), as terms of current committee members
expire, the appointing authority shall appoint each new member or reappointed member to a
four-year term.
(ii) Notwithstanding the requirements of Subsection (6)(c)(i), the appointing authority
shall, at the time of appointment or reappointment, adjust the length of terms to ensure that the
terms of committee members are staggered so that approximately half of the committee is
appointed every two years.
(d) When a vacancy occurs in the membership for any reason, the replacement shall be
appointed for the unexpired term.
(e) The investment advisory committee shall meet at least [annually] quarterly and review
investment reports prepared by the state treasurer, including information on portfolio composition
and investment performance.
(f) The investment advisory committee shall elect a chair and vice-chair.
(7) (a) (i) Members who are not government employees shall receive no compensation or
benefits for their services, but may receive per diem and expenses incurred in the performance of
the member's official duties at the rates established by the Division of Finance under Sections
63A-3-106 and 63A-3-107 .
(ii) Members may decline to receive per diem and expenses for their service.
(b) (i) State government officer and employee members who do not receive salary, per
diem, or expenses from their agency for their service may receive per diem and expenses incurred
in the performance of their official duties from the committee at the rates established by the
Division of Finance under Sections 63A-3-106 and 63A-3-107 .
(ii) A state government member who is a member because of their state government
position may not receive per diem or expenses for their service.

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(iii) State government officer and employee members may decline to receive per diem and
expenses for their service.
(c) (i) Local government members who do not receive salary, per diem, or expenses from
the entity that they represent for their service may receive per diem and expenses incurred in the
performance of their official duties at the rates established by the Division of Finance under
Sections 63A-3-106 and 63A-3-107 .
(ii) Local government members may decline to receive per diem and expenses for their
service.

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