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H.B. 7 Enrolled

             1     

STATE POST-RETIREMENT BENEFITS TRUST FUND

             2     
2007 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Keith Grover

             5     
Senate Sponsor: Margaret Dayton

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill establishes a trust fund to accumulate monies to pay post-retirement benefits.
             10      Highlighted Provisions:
             11          This bill:
             12          .    creates a trust fund to pay for post-retirement benefits;
             13          .    creates a board of trustees to act as the trustee of the trust;
             14          .    establishes investment criteria for the state treasurer in investing the trust assets; and
             15          .    directs the Division of Finance to transfer certain monies into the fund.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          51-7-2, as last amended by Chapter 277, Laws of Utah 2006
             23      ENACTS:
             24          67-19d-101, Utah Code Annotated 1953
             25          67-19d-102, Utah Code Annotated 1953
             26          67-19d-201, Utah Code Annotated 1953
             27          67-19d-202, Utah Code Annotated 1953
             28          67-19d-301, Utah Code Annotated 1953
             29          67-19d-302, Utah Code Annotated 1953


             30      Uncodified Material Affected:
             31      ENACTS UNCODIFIED MATERIAL
             32     
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 51-7-2 is amended to read:
             35           51-7-2. Exemptions from chapter.
             36          The following funds are exempt from this chapter:
             37          (1) funds invested in accordance with the participating employees' designation or
             38      direction pursuant to a public employees' deferred compensation plan established and operated
             39      in compliance with Section 457 of the Internal Revenue Code of 1986, as amended;
             40          (2) funds of the Workers' Compensation Fund;
             41          (3) funds of the Utah State Retirement Board;
             42          (4) funds of the Utah Housing Corporation;
             43          (5) endowment funds of higher education institutions; [and]
             44          (6) permanent and other land grant trust funds established pursuant to the Utah
             45      Enabling Act and the Utah Constitution[.]; and
             46          (7) the State Post-Retirement Benefits Trust Fund.
             47          Section 2. Section 67-19d-101 is enacted to read:
             48     
CHAPTER 19d. STATE POST-RETIREMENT BENEFITS TRUST FUND ACT

             49     
Part 1. General Provisions

             50          67-19d-101. Title.
             51          This chapter is known as the "State Post-Retirement Benefits Trust Fund Act."
             52          Section 3. Section 67-19d-102 is enacted to read:
             53          67-19d-102. Definitions.
             54          As used in this chapter:
             55          (1) "Board of trustees" or "board" means the board of trustees created in Section
             56      67-19d-202 .
             57          (2) "Income" means the revenues received by the state treasurer from investments of


             58      the trust fund principal.
             59          (3) "Trust fund" means the State Post-Retirement Benefits Trust Fund created by
             60      Section 67-19d-201 .
             61          Section 4. Section 67-19d-201 is enacted to read:
             62     
Part 2. Creation and Governance of the Post-Retirement Benefits Trust Fund

             63          67-19d-201. Trust fund -- Creation -- Oversight -- Dissolution.
             64          (1) There is created a post-retirement benefits trust fund entitled the "State
             65      Post-Retirement Benefits Trust Fund."
             66          (2) The trust fund consists of:
             67          (a) revenue provided from an ongoing labor additive as defined in Subsection
             68      67-19d-202 (2)(g);
             69          (b) appropriations made to the fund by the Legislature, if any;
             70          (c) income as defined in Section 67-19d-102 ; and
             71          (d) other revenues received from other sources.
             72          (3) The Division of Finance shall account for the receipt and expenditures of trust fund
             73      monies.
             74          (4) (a) The state treasurer shall invest trust fund monies by following the procedures
             75      and requirements of Part 3, Trust Fund Investments.
             76          (b) (i) The trust fund shall earn interest.
             77          (ii) The state treasurer shall deposit all interest or other income earned from investment
             78      of the trust fund back into the trust fund.
             79          (5) The board of trustees created in Section 67-19d-202 may expend monies from the
             80      trust fund for:
             81          (a) the employer portion of the costs of the programs established in Sections 67-19-14
             82      through 67-19-14.4 ; and
             83          (b) reasonable administrative costs that the board of trustees incurs in performing their
             84      duties as trustees of the trust fund.
             85          (6) The board of trustees shall ensure that:


             86          (a) monies deposited into the trust fund are irrevocable and are expended only for the
             87      employer portion of the costs of post-retirement benefits;
             88          (b) assets of the trust fund are dedicated to providing benefits to retirees and their
             89      beneficiaries according to the terms of the post-retirement benefit plans established by statute
             90      and rule; and
             91          (c) creditors of the board of trustees and of employers liable for the post-retirement
             92      benefits may not seize, attach, or otherwise obtain assets of the trust fund.
             93          (7) When all of the liabilities for which the trust fund was created are paid, the
             94      Division of Finance shall transfer any assets remaining in the state trust fund into the
             95      appropriate fund.
             96          Section 5. Section 67-19d-202 is enacted to read:
             97          67-19d-202. Board of trustees of the State Post-Retirement Benefits Trust Fund.
             98          (1) (a) There is created a board of trustees of the State Post-Retirement Benefits Trust
             99      Fund composed of three members:
             100          (i) the state treasurer;
             101          (ii) the director of the Division of Finance; and
             102          (iii) the director of the Governor's Office of Planning and Budget.
             103          (b) The state treasurer is chair of the board.
             104          (c) Three members of the board are a quorum.
             105          (d) (i) State government officer and employee members who do not receive salary, per
             106      diem, or expenses from their agency for their service may receive per diem and expenses
             107      incurred in the performance of their official duties from the board at the rates established by the
             108      Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             109          (ii) State government officer and employee members may decline to receive per diem
             110      and expenses for their service.
             111          (e) (i) Except as provided in Subsection (1)(e)(ii), the state treasurer shall staff the
             112      board of trustees.
             113          (ii) The Division of Finance shall provide accounting services for the trust fund.


             114          (2) The board shall:
             115          (a) on behalf of the state, act as trustee of the trust fund and exercise the state's
             116      fiduciary responsibilities;
             117          (b) meet at least twice per year;
             118          (c) review and approve all policies, projections, rules, criteria, procedures, forms,
             119      standards, performance goals, and actuarial reports;
             120          (d) review and approve the trust fund budget;
             121          (e) review financial records of the trust fund, including trust fund receipts,
             122      expenditures, and investments;
             123          (f) commission and obtain actuarial studies of the trust fund liabilities;
             124          (g) establish labor additive rates to charge all federal, state, and other programs to
             125      cover:
             126          (i) the annual required contribution as determined by actuary; and
             127          (ii) the administrative expenses of the trust fund; and
             128          (h) do any other things necessary to perform the state of Utah's fiduciary obligations
             129      under the trust fund.
             130          (3) The attorney general shall:
             131          (a) act as legal counsel and provide legal representation to the board of trustees; and
             132          (b) attend, or direct an attorney from the Office of the Attorney General to attend, each
             133      meeting of the board of trustees.
             134          Section 6. Section 67-19d-301 is enacted to read:
             135     
Part 3. Trust Fund Investments

             136          67-19d-301. Investment of State Post-Retirement Benefits Trust Fund.
             137          (1) The state treasurer shall invest the assets of the State Post-Retirement Benefits
             138      Trust Fund with the primary goal of providing for the stability, income, and growth of the
             139      principal.
             140          (2) Nothing in this section requires a specific outcome in investing.
             141          (3) The state treasurer may deduct any administrative costs incurred in managing trust


             142      fund assets from earnings before distributing them.
             143          (4) (a) The state treasurer may employ professional asset managers to assist in the
             144      investment of assets of the trust fund.
             145          (b) The treasurer may only provide compensation to asset managers from earnings
             146      generated by the trust fund's investments.
             147          Section 7. Section 67-19d-302 is enacted to read:
             148          67-19d-302. State treasurer to follow "prudent investor" rule -- Standard of care.
             149          (1) The state treasurer shall invest and manage the trust fund assets as a prudent
             150      investor would, by:
             151          (a) considering the purposes, terms, distribution requirements, and other circumstances
             152      of the trust fund; and
             153          (b) exercising reasonable care, skill, and caution in order to meet the standard of care
             154      of a prudent investor.
             155          (2) In determining whether or not the state treasurer has met the standard of care of a
             156      prudent investor, the judge or finder of fact shall:
             157          (a) consider the state treasurer's actions in light of the facts and circumstances existing
             158      at the time of the investment decision or action, and not by hindsight; and
             159          (b) evaluate the state treasurer's investment and management decisions respecting
             160      individual assets:
             161          (i) not in isolation, but in the context of a trust fund portfolio as a whole; and
             162          (ii) as a part of an overall investment strategy that has risk and return objectives
             163      reasonably suited to the trust fund.
             164          Section 8. Transfer of earmarked funds.
             165          The Division of Finance shall:
             166          (1) calculate interest on the net assets designated and set aside by the Legislature as of
             167      April 30, 2007, for the payment of post-retirement benefits for qualified retirees; and
             168          (2) deposit both the net assets and interest income on these monies into the State
             169      Post-Retirement Benefits Trust Fund as a beginning balance to the fund as of May 1, 2007.


             170     


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