Compare versions
--- version:Edition 1+++ version:Filed@@ -1,27 +1,27 @@GENERAL ASSEMBLY OF NORTH CAROLINASESSION 2025-S 1-SENATE BILL 709+S D+SENATE BILL DRS45360-MRp-94DShort Title: 2025 State Investment Modernization Act.-AB (Public)Sponsors: Senators Hise, Craven, and Lee (Primary Sponsors).-Referred to: Rules and Operations of the Senate-March 26, 2025-*S709-v-1*+Referred to:++*DRS45360-MRp-94D*A BILL TO BE ENTITLED 1-AN ACT TO ENACT THE 2025 STATE INVESTMEN T MODERNIZATION ACT, AS 2+AN ACT TO ENACT THE 2025 STATE INVESTMENT MODERNIZATION ACT , AS 2RECOMMENDED BY THE STATE TREASURER. 3The General Assembly of North Carolina enacts: 45-PART I. TECHNICAL RE ORGANIZATION OF ARTI CLE 6 OF CHAPTER 147 OF 6+PART I. TECHNICAL REORGANIZATION OF ARTICLE 6 OF CHAPTER 147 OF 6THE GENERAL STATUTES 7SECTION 1.1. Article 6 of Chapter 147 of the General Statutes is amended to add 8the following new Parts: 9-(1) Part 1, to be entitled "General" and consisting of G.S. 147-65 through 10+(1) Part 1, to be entitled "General" and consisting of G.S. 147-65 through 10G.S. 147-69. 11(2) Part 2, to be entitled "Investments and Funds" and consisting of G.S. 147-69.1 12through G.S. 147-69.7. 13-(3) Part 3, to be entitled "Reports and Audits" and consisting of G.S. 147-69.8 14+(3) Part 3, to be entitled "Reports and Audits " and consisting of G.S. 147-69.8 14through G.S. 147-69.70. 15(4) Part 4, to be entitled "North Carolina Investment Authority" and consisting of 16G.S. 147-70.1 through G.S. 147-73.2. 17@@ -38,13 +38,17 @@SECTION 1.2.(i) G.S. 147-75 is recodified as G.S. 147-66.2. 28SECTION 1.2.(j) G.S. 147-75.1 is recodified as G.S. 147-68.5. 29SECTION 1.2.(k) G.S. 147-86.2 is recodified as G.S. 147-68.6. 30-SECTION 1.3. Subsection (i2) of G.S. 147-69.3 is recodified as subsection (b) of 31+SECTION 1.3. Subsection (i2) of G.S. 147-69.3 is recodified as subsection (b) of 31G.S. 147-65.2, as created by Section 1.2(a) of this Part. 32SECTION 1.4. This Part is effective when it becomes law. 3334PART II. CREATION OF THE NORTH CAROLINA INVESTMENT AUTHORITY 35-General Assembly Of North Carolina Session 2025-Page 2 Senate Bill 709-First Edition+FILED SENATE+Mar 25, 2025+S.B. 709+PRINCIPAL CLERK+General Assembly Of North Carolina Session 2025+Page 2 DRS45360-MRp-94DSECTION 2.1. Part 1 of Article 6 of Chapter 147 of the General Statutes, as created 1and amended by Part I of this act, is amended by adding a new section to read: 2"§ 147-65.1. Definitions. 3@@ -71,7 +75,7 @@under Article 3 of Chapter 128 of the General Statutes. 24e. The Legislative Retirement System of North Carolina, established 25under Article 1A of Chapter 120 of the General Statutes. 26-f. The North Carolina National Guard Pensio n Fund, established under 27+f. The North Carolina National Guard Pension Fund , established under 27Article 3 of Chapter 127A of the General Statutes. 28g. The Registers of Deeds ' Supplemental Pension Fund , established 29under Article 3 of Chapter 161 of the General Statutes. 30@@ -88,7 +92,7 @@The Investment Authority is a State agency for the performance of essential governmental and 41public functions. The Investment Authority is located within, but independent from the control 42of, the Department of State Treasurer. The Investment Authority shall have perpetual succession. 43-(b) Independence. – The Investment Authority, in carrying out its statutory 44+(b) Independence. – The Investment Authority, in carrying out its statutory 44responsibilities, shall be independent of any fiscal control exercised by the Director of the 45Budget, the Department of Administration, and the Department of State Treasurer, including for 46organizational, staffing, procurement, and budgetary purposes. Except as provided under 47@@ -96,7 +100,7 @@Authority is exempt from the State Budget Act , and the provisions of Chapter 143C of the 49General Statutes do not apply to the Investment Authority. 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 3+DRS45360-MRp-94D Page 3(c) Fiduciary Funds. – In order for the Investment Authority to effectively operate the 1investment programs under its management, all funds while under management of the Investment 2Authority are Fiduciary Funds described under subdivisions (8) through (10) of G.S. 143C-1-3(a) 3@@ -110,7 +114,7 @@necessary and proper for its purposes. 11(3) To bargain, sell, grant, alienate, or dispose of all real and personal property as 12it may lawfully acquire. 13-(b) The Investment Authority shall have the right to acquire fi delity bonds, fiduciary 14+(b) The Investment Authority shall have the right to acquire fidelity bonds, fiduciary 14insurance, directors' and officers' insurance, or errors and omissions coverage, as determined by 15the Investment Authority board. This right is independent of any purchase of insurance by the 16State Treasurer under G.S. 147-67.1. 17@@ -126,12 +130,12 @@Any record or other information received or generated by the Investment Authority in order 27to negotiate at arm 's length investment transactions that constitute a trade secret , as defined in 28G.S. 66-152, is not public record and is exempt from the requirements of Chapter 132 of the 29-General Statutes until the applicable negotiation is completed and unless the record or 30+General Statutes until the applicable negotiation is completed and unless the record or 30information substantiates a conflict with the duties of the Investment Authority under 31G.S. 147-70.6(a). 32"§ 147-70.5. Criminal record checks. 33(a) The Investment Authority may obtain from the State and National Repositories of 34-Criminal Histories or from any other law ful source the criminal history of any of the following 35+Criminal Histories or from any other lawful source the criminal history of any of the following 35individuals: 36(1) A current or prospective permanent or temporary employee of the Investment 37Authority. 38@@ -148,7 +152,7 @@information required by the State or National Repositories of Criminal Histories. Any refusal 49shall constitute just cause for the employment denial or the dismissal from employment. 50General Assembly Of North Carolina Session 2025-Page 4 Senate Bill 709-First Edition+Page 4 DRS45360-MRp-94D(c) The Investment Authority may extend a conditional offer of employment pending the 1results of a criminal history record check authorized by this section. 2… 3@@ -185,7 +189,7 @@guilty or nolo contendere to, or forfeited bail concerning a felony , or a 34misdemeanor involving fraud, theft, or dishonesty under the laws of any 35jurisdiction in the United States. 36-(2) The individual has had a judgment entered against him or her by a court of 37+(2) The individual has had a judgment entered against him or her by a court of 37competent jurisdiction in a civil matter involving a breach of fiduciary duties. 38(3) The individual has been the subject of an adverse action by the Securities and 39Exchange Commission which resulted in any sanction, payment of a fine, 40@@ -200,7 +204,7 @@endorser, obligor, or provider of surety for , or is a borrower of, any money 49loaned to or borrowed from the assets overseen by the Board of Directors. 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 5+DRS45360-MRp-94D Page 5(e) Vacancies. – Any vacancy in a position held by an appointive member shall be filled 1by a new appointment made by the applicable appointing authority for the vacant seat . If a seat 2on the Board of Directors is vacant or held over for six months or more without an appointment 3@@ -226,7 +230,7 @@members of the Board of Directors. The term of the vice-chair extends to the 23earlier of either three years or the date of expiration of the vice-chair's then 24current term as a member of the Board of Directors. In the absence of the State 25-Treasurer o r the Treasurer 's designee, the vice -chair shall preside over the 26+Treasurer or the Treasurer 's designee, the vice -chair shall preside over the 26proceedings of the Board of Directors. 27(3) The Board of Directors shall appoint and prescribe the duties of a secretary , 28who need not be a member of the Board of Directors . The secretary is the 29@@ -243,7 +247,7 @@members of the Board of Directors shall receive per diem, subsistence, and travel allowances in 40accordance with G.S. 138-5 or G.S. 138-6, as appropriate. 41(k) Meetings and Voting . – The Board of Directors shall meet at least quarterly. A 42-meeting may be call ed by the State Treasurer or by a majority of the Board of Directors . The 43+meeting may be called by the State Treasurer or by a majority of the Board of Directors . The 43State Treasurer or the Treasurer 's designee shall establish the agenda for each meeting. A 44minimum of three members of the Board of Directors is required for quorum . The affirmative 45vote of a majority of the members of the Board of Directors present at a meeting of the Board of 46@@ -253,7 +257,7 @@(a) Investment-Related Powers and Duties. – The Board of Directors has all of the 50following investment-related powers and duties: 51General Assembly Of North Carolina Session 2025-Page 6 Senate Bill 709-First Edition+Page 6 DRS45360-MRp-94D(1) The Board of Directors has the authority to approve all of the following: 1a. Investment policy statements to include investment objectives, 2strategic asset allocation, and policy benchmarks. 3@@ -289,7 +293,7 @@Systems and each of the Retirement Systems ' ability to meet its 33financial obligations. 34(5) The Board of Directors shall utilize the approved absolute risk operating range 35-under subdivision ( 4) of this sub section to recommend investment return 36+under subdivision ( 4) of this subsection to recommend investment return 36assumptions to (i) the Board of Trustees of the Local Governmental 37Retirement System, (i i) the Board of Trustees of the Teachers ' and State 38Employees' Retirement System, and (iii) the actuaries engaged to prepare 39@@ -303,21 +307,21 @@of this section and employee compensation and benefits. The Investment Authority's approved 47annual internal budget as well as the Investment Authority 's actual spending for the prior fiscal 48year shall be annually reported to the Joint Legislative Commission on Governmental Operations, 49-the House of Representative s Appropriations Committee, the Senate Appropriations/Ba se 50+the House of Representative s Appropriations Committee, the Senate Appropriations/Base 50Budget Committee, and the Fiscal Research Division. 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 7+DRS45360-MRp-94D Page 7(c) Authority to Contract for Services. – Notwithstanding Article 3 of Chapter 143 of the 1General Statutes , G.S. 114-2.3, and G.S. 147-17, the Investment Authority is authorized to 2independently retain the services of appraisers, auditors, actuaries, attorneys, investment 3consultants, statisticians, custodians, information technology professionals, or other persons or 4-firms possessing spe cialized skills or knowledge necessary for the proper administration of 5+firms possessing specialized skills or knowledge necessary for the proper administration of 5investment programs created pursuant to this section. 6(d) Setting of Compensation Plans . – In order to promote achievement of long -term 7-investment objectives and to retain key public e mployees with investment functions, the 8+investment objectives and to retain key public employees with investment functions, the 8Investment Authority is authorized to establish, consistent with the Investment Authority 's 9fiduciary duties, market-oriented compensation plans, including salaries and performance-related 10-bonuses, for employees poss essing specialized skills or knowledge necessary for the proper 11+bonuses, for employees possessing specialized skills or knowledge necessary for the proper 11administration of investment programs . The design and administration of those compensation 12plans shall be based on compensation studies conducted by a nationally recognized firm 13specializing in public fund investment compensation. The compensation and other associated 14@@ -328,7 +332,7 @@An individual serving on the Board of Directors shall be immune individually from civil 19liability for monetary damages, except to the extent covered by insurance, for any act or failure 20to act arising out of that service, except where any of the following apply: 21-(1) The individual was not acting within the scope of that individual 's official 22+(1) The individual was not acting within the scope of that individual 's official 22duties. 23(2) The individual was not acting in good faith. 24(3) The individual committed gross negligence or willful or wanton misconduct 25@@ -359,7 +363,7 @@(d) Contract Negotiation. – The CIO may negotiate, renegotiate , and execute contracts 50with third parties in the performance of the CIO's duties and responsibilities under this Article . 51General Assembly Of North Carolina Session 2025-Page 8 Senate Bill 709-First Edition+Page 8 DRS45360-MRp-94DAny delegation of authority by the Board of Directors shall require Board of Directors approval 1and shall reserve certain strategic decisions and extraordinary investment decisions to the Board 2of Directors. Contract execution with master global custodian banks and external auditors shall 3@@ -369,7 +373,7 @@To ensure that the State Treasurer's Investment Authority investment programs operate under 7a strong governance framework with rigorous internal controls and a high degree of operational 8transparency and are managed with the highest ethical and professional standards and in the most 9-efficient and effective manner possible, the State Treasurer, after consultation with the 10+efficient and effective manner possible, the State Treasurer, after consultation with the 10Investment Advisory Committee, is authorized and required to Board of Directors shall adopt 11policies and procedures on the following topics: 12(1) Requiring that the Department of State Treasurer's Investment Management 13@@ -379,39 +383,39 @@with respect to the discharge of their duties and responsibilities to the funds. 17(3) Governing gifts to employees of the Department Investment Authority who 18have responsibility for matters related to investments. 19-(4) Imposing limitations on external investment managers' use of placement 20+(4) Imposing limitations on external investment managers ' use of placement 20agents and other persons that appear before the Department Investment 21Authority to ensure that these persons play only a proper role in investment 22opportunities. 23(5) As a component of the investment due diligence, negotiations, and contracting 24process, requiring an independent assessment of whether circumstances exist 25that create a material risk that professional judgement or actions regarding a 26-potential investment arrangement's recomme ndation, approval, or execution 27+potential investment arrangement 's recommendation, approval, or execution 27have been or will be unduly influenced by a direct or indirect personal 28interest." 29-SECTION 2.3.(a) Rules, codes of ethics, policies, and procedures adopted by the 30+SECTION 2.3.(a) Rules, codes of ethics, policies , and procedures adopted by the 30State Treasurer in effect on June 30, 2025, that are impacted by the change in authority from the 31State Treasurer or Department of State Treasurer to the Investment Authority under this Part shall 32remain in effect until amended by law, amended by the Investment Authority, or repealed. 33-SECTION 2.3.(b) Before Januar y 1, 2026, when the Investment Authority shall 34+SECTION 2. 3.(b) Before January 1, 202 6, when the Investment Authority shall 34begin to manage investments under Part III of this act, funds appropriated to the Department of 35-State Treasurer and funds available to the Department of State Treasurer under G.S. 147-69.3 36+State Treasurer and funds available to the Department of State Treasurer under G.S. 147-69.3 36may be used to pay any expenses of the Investment Authority. 37SECTION 2.4. This Part is effective July 1, 2025. 3839-PART III. NORTH CARO LINA INVESTMENT AUTH ORITY TO MANAGE 40-INVESTMENTS AND BEGI N CARRYING OUT STATU TORY DUTIES JANUARY 1, 41+PART III. NORTH CAROLINA INVESTMENT AUTHORITY TO MANAGE 40+INVESTMENTS AND BEGIN CARRYING OUT STATUTORY DUTIES JANUARY 1, 412026 42-SECTION 3.1.(a) Part 2 of Article 6 of Chapter 147 of the General Statutes, as 43+SECTION 3. 1.(a) Part 2 of Article 6 of Chapter 147 of the General Statutes, as 43created and amended by Part I of this act, reads as rewritten: 44"Part 2. Investments and Funds 45"§ 147-69.1. Investments authorized for General Fund and Highway Funds assets. 46(a) The Governor and Council of State, with the advice and assistance of the State 47Treasurer, shall Treasurer and the Investment Authority, may adopt such rules and regulations as 48-shall be necessary and appropriate to implement the provisions for the implement ation of this 49+shall be necessary and appropriate to implement the provisions for the implementation of this 49section. 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 9+DRS45360-MRp-94D Page 9(b) This section applies to funds held by deposited with the State Treasurer to the credit 1of:of all of the following: 2(1) The General Fund;Fund. 3@@ -431,7 +435,7 @@a. Securities issued or guaranteed by the United States government or its 17agencies. 18b. Securities eligible for investment by this section executed by a bank 19-or trust company or by primary or other reporting d ealers to the 20+or trust company or by primary or other reporting dealers to the 20Federal Reserve Bank of New York. 21c. Securities eligible for investment by this section executed by a 22registered broker-dealer that is subject to the rules and regulations of 23@@ -448,7 +452,7 @@of return or investment yield may not be less than that available in the 34market on United States government or agency obligations of 35comparable maturity. 36-b. With financial institutions wit h a physical presence inside or outside 37+b. With financial institutions with a physical presence inside or outside 37the State, in accordance with all of the following conditions: 381. The funds are initially deposited through a bank or savings and 39loan association in the State that is an official depository and 40@@ -463,7 +467,7 @@shall be deposited in a bank or savings and loan association 49that at the time holds other deposits from the State. 50General Assembly Of North Carolina Session 2025-Page 10 Senate Bill 709-First Edition+Page 10 DRS45360-MRp-94D3. The full amount of principal and any accrued interest of each 1deposit account are covered by federal deposit insurance. 24. The selected bank or savings and loan association acts as 3@@ -484,14 +488,14 @@recognized rating service which rates the particular obligation. 18(8) Bills of exchange or time drafts drawn on and accepted by a commercial bank 19and eligible for use as collateral by member banks in borrowing from a federal 20-reserve bank, provided that when bills or drafts are acquired, t he accepting 21+reserve bank, provided that when bills or drafts are acquired, the accepting 21bank or its holding company is either (i) incorporated in the State of North 22Carolina or (ii) has outstanding publicly held obligations that bear the highest 23rating, such as a minimum of "P1," "A1," or "F1," of at least one nationally 24recognized rating service designated by the U.S. Securities and Exchange 25Commission, and do not bear a rating below the highest by any nationally 26recognized rating service which rates the particular obligations. 27-(9) Asset-backed securities (whether considered debt or equity) provided, when 28+(9) Asset-backed securities (whether considered debt or equity) provided, when 28acquired, the securities bear the highest rating, such as "AAA" or "Aaa," of at 29least one nationally recognized rating service designated by the U.S. 30Securities and Exchange Commission, and do not bear a rating below the 31@@ -503,9 +507,9 @@not bear a rating below the highest by any nationally recognized rating service 37which rates the particular obligation. 38(d) Unless otherwise provided by law, the interest or income received and accruing from 39-all deposits or investments of such cash balances shall be paid into the State's General Fund, 40+all deposits or investments of such cash balances shall be paid into the State 's General Fund, 40except that all interest or income received and accruing on the monthly balance of the Highway 41-Fund and Highway Trust Fund shall be paid into the S tate Highway Fund and Highway Trust 42+Fund and Highway Trust Fund shall be paid into the State Highway Fund and Highway Trust 42Fund. The cash balances of the several funds may be combined for deposit or investment 43purposes; and when such combined deposits or investments are made, the interest or income 44received and accruing from all deposits or investments shall be prorated among the funds in 45@@ -516,7 +520,7 @@(a) This section applies to funds held by the State Treasurer to the credit of each of the 50following: 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 11+DRS45360-MRp-94D Page 11(1) The Teachers' and State Employees' Retirement System of North Carolina. 1(2) The Consolidated Judicial Retirement System of North Carolina. 2(3) The State Health Plan for Teachers and State Employees. 3@@ -545,7 +549,7 @@G.S. 159-39(g). 26(17g) Funds deposited with the State Treasurer by Local Government Other 27Post-Employment Benefits Trusts pursuant to G.S. 159-30.1. 28-(17h) The Local Government Law Enfor cement Special Separation Allowance 29+(17h) The Local Government Law Enforcement Special Separation Allowance 29Fund. 30(17i) The North Carolina Conservation Easement Endowment Fund. 31(17j) The Conservation Grant Fund. 32@@ -569,11 +573,11 @@the funds enumerated in subsection (a) of this section in excess of the amount required to meet 50the current needs and demands on these funds. The State Treasurer Investment Authority may 51General Assembly Of North Carolina Session 2025-Page 12 Senate Bill 709-First Edition+Page 12 DRS45360-MRp-94Dinvest the funds as provided in this subsection in the manner authorized by subsection (e) of this 1section. If an investment was authorized by this subsection at the time the investment was made 2or contractually committed to be made, then that investment shall continue to be authorized by 3-this subsection, and none of the percentage or other limitation on investments set forth in this 4+this subsection, and none of the percentage or other limitation on investments set forth in this 4subsection shall be construed to require the State Treasurer Investment Authority to subsequently 5dispose of the investment or fail to honor any contractual commitments as a result of changes in 6market values, ratings, or other investment qualifications. For purposes of computing market 7@@ -581,7 +585,7 @@investments shall be valued as of the last date of the most recent fiscal quarter. Notwithstanding 9anything in this section to the contrary, the State Treasurer Investment Authority shall categorize 10investment management arrangements according to the primary investment type or primary 11-strategy utilized under the a rrangement authorized under subsection (e) of this section. No 12+strategy utilized under the arrangement authorized under subsection (e) of this section. No 12investment management arrangement may be categorized in more than one of the subdivisions 13of this section. The State Treasurer Investment Authority shall select from among the following 14investments subject to the following any stipulated limitations and requirements:requirements: 15@@ -590,15 +594,15 @@(3) General obligations of cities, counties and special districts in North Carolina. 18(4) Obligations of any company, other organization or legal entity incorporated 19or otherwise created or located within or outside the United States, including 20-obligations that are convertible into equity securities, if, when acquired, the 21+obligations that are convertible into equity securities, if, when acquired, the 21obligations are within one of the four highest rating categories regardless of 22gradations, such as ratings beginning with "AAA," "AA," "A," or either 23"BBB" or "Baa," of at least one nationally recognized rating service 24designated by the U.S. Securities and Exchange Commission. 25… 26-(6) Asset-backed securities (whether securities, whether considered debt or 27+(6) Asset-backed securities (whether securities, whether considered debt or 27equity), equity, if, when acquired, the obligations are within one of the four 28-highest ratings categories regardless of gradations, such as ratings beginning 29+highest ratings categories regardless of gradations, such as ratings beginning 29with "AAA," "AA," "A," or either "BBB" or "Baa," of at least one nationally 30recognized rating service designated by the U.S. Securities and Exchange 31Commission. 32@@ -617,20 +621,20 @@not meet the requirements of any of subdivisions (b)(1) (1) through (6) of this 45section subsection nor subdivision (b)(7) (7) of this section. The amount 46invested under this subdivision shall not exceed seven and one -half percent 47-(7.5%) of the market value of all invested assets of the Retirement 48+(7.5%) of the market value of all invested assets of the Retirement 48Systems.subsection. 49(7) Retirement Systems' assets referred to in subdivision (8) of this subsection 50may be invested in strategies managed primarily for the purpose of owning 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 13-real estate or related debt financing, excluding asset -backed fin ancing and 1+DRS45360-MRp-94D Page 13+real estate or related debt financing, excluding asset -backed financing and 1timberlands, located within or outside the United States. The amount invested 2under this subdivision shall not exceed ten percent (10%) of the market value 3of all invested assets of the Retirement Systems. 4(8) With respect to assets of the Teachers' and State Employees' Retirement 5System, the Consolidated Judicial Retirement System, the Firefighters' and 6Rescue Workers' Pension Fund, the Local Governmental Employees' 7-Retirement System, the Legislative Retirement System, the North Carolina 8+Retirement System, the Legislative Retirement System, the North Carolina 8National Guard Pension Fund, the Registers of Deeds' Supplemental Pension 9Fund, and the Retiree Health Benefit Fund (hereinafter referred to collectively 10as the Retirement Systems), they Retirement Systems' assets may be invested 11@@ -642,11 +646,11 @@investments authorized for the Retirement Systems under this subdivision are 17subject to the following limitations: 18… 19-a1. The aggregate am ount of the investments cannot exceed sixty -five 20+a1. The aggregate amount of the investments cannot exceed sixty -five 20percent (65%) of the market value of all invested assets of the 21Retirement Systems. 22b. The aggregate amount of the investment invested through investment 23-companies described in sub -subdivision (e)(4)b. of th is section shall 24+companies described in sub -subdivision (e)(4)b. of this section shall 24not exceed eight and one -half percent (8.5%) of the market value of 25all invested assets of the Retirement Systems, except that the market 26value of group trusts and individual, common, or collective trust funds 27@@ -664,7 +668,7 @@of this subsection, they assets may be invested, within or outside the United 39States, in obligations, debt securities, asset -backed securities, whether 40considered debt or equity, and other investments that are acquired by the 41-Treasurer Investment Authority for the prim ary purpose of providing 42+Treasurer Investment Authority for the primary purpose of providing 42protection against risks associated with inflation, along with owning real 43assets or related debt financing , including, but not limited to, timberland, 44natural resources, commodities, infrastructure, transportation, agriculture, and 45@@ -672,10 +676,10 @@subdivision shall not exceed seven and one-half percent (7.5%) of the market 47value of all invested assets of the Retirement Systems. 48… 49-(10a) With respect to Retirement Systems' ass ets, as defined in subdivision (8) of 50+(10a) With respect to Retirement Systems' assets, as defined in subdivision (8) of 50this subsection, the market value of any of subdivision (6c) or (7), 51General Assembly Of North Carolina Session 2025-Page 14 Senate Bill 709-First Edition+Page 14 DRS45360-MRp-94Dsub-subdivision b. of subdivision (8), or subdivision (9) or (9a) of this 1subsection shall not exceed ten percent (10%) of the market value of all 2invested assets of the Retirement Systems; and the The aggregate market value 3@@ -713,7 +717,7 @@selected from among the members of the boards of trustees of the Retirement Systems; and four 35members selected from the general public. All appointed members must have experience in areas 36relevant to the administration of a large, diversified investment program, including, but not 37-limited to, investm ent management, securities law, real estate development, or absolute return 38+limited to, investment management, securities law, real estate development, or absolute return 38strategies. The State Treasurer shall also appoint a Secretary of the Investment Advisory 39Committee who need not be a member of the committee. Members of the committee shall receive 40for their services the same per diem and allowances granted to members of the State boards and 41@@ -722,14 +726,14 @@North Carolina or G.S. 128-1.1. 44(b2) The State Treasurer Investment Authority may invest funds deposited pursuant to 45subdivision (a)(17f) of this section in any of the investments authorized under subdivisions (b)(1) 46-through (6) , subdivision (b)(6c), and subdivision (b)(8) of this section, notwithstanding the 47+through (6), subdivision (b)(6c), and subdivision (b)(8) of this section, notwithstanding the 47percentage limitations imposed on the Retirement Systems' investments therein. section. The 48-State Treasurer Investment Authority may require a minimum deposit, up to one hun dred 49+State Treasurer Investment Authority may require a minimum deposit, up to one hundred 49thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 50annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 15-this subsection by a hospital shall remain the funds of that hospital, and interest or other 1+DRS45360-MRp-94D Page 15+this subsection by a hospital shall remain the funds of that hospital, and interest or other 1investment income earned thereon shall be prorated and credited to the contributing hospital on 2the basis of the amounts thereof contributed, figured according to sound accounting principles. 3Fees assessed by the State Treasurer Investment Authority may be used to defray the cost of 4@@ -738,12 +742,12 @@(b3) The State Treasurer Investment Authority may invest funds deposited pursuant to 7subdivision (a)(16a) of this section in any of the investments authorized under subdivisions (1) 8through (6), subdivision (6c) and subdivision (b)(8) of this section, notwithstanding the 9-percentage limitations imposed on the Retirement Systems' investments therein. section. The 10+percentage limitations imposed on the Retirement Systems' investments therein. section. The 10State Treasurer Investment Authority may require a minimum deposit, up to one hundred 11thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 12-annum, as a c ondition of participation pursuant to this subsection. Funds deposited pursuant to 13+annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to 13this subsection by the University of North Carolina Hospitals at Chapel Hill shall remain the 14-funds of the University of North Carolina Hospitals at Chapel Hill, and interes t or other 15+funds of the University of North Carolina Hospitals at Chapel Hill, and interest or other 15investment income earned thereon shall be prorated and credited to the University of North 16Carolina Hospitals at Chapel Hill on the basis of the amounts thereof contributed, figured 17according to sound accounting principles. Fees assessed by the State Treasurer Investment 18@@ -752,7 +756,7 @@(b4) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 21section, the State Treasurer Investment Authority may invest funds deposited pursuant to 22subdivision (17g) of subsection (a) of this section in any of the investments authorized under 23-subdivisions (b)(6c) and (b)(8) of this section, notwithstandi ng the percentage limitations 24+subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage limitations 24imposed on the Retirement Systems' investments therein. section. Funds deposited pursuant to 25this subsection by a Local Government Other Post -Employment Benefits Trust and interest or 26other investment income earned from those funds shall be prorated and credited to the 27@@ -775,13 +779,13 @@expenditures authorized under this section. 44(b6) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 45section, the State Treasurer Investment Authority may invest funds deposited in the Catawba 46-Unit No. 1 Decommissioning Trust F und and the Catawba Unit No. 2 Decommissioning Trust 47+Unit No. 1 Decommissioning Trust Fund and the Catawba Unit No. 2 Decommissioning Trust 47Fund in any of the investments authorized under subdivisions (b)(6c) and (b)(8) of this section, 48notwithstanding the percentage limitations imposed on the Retirement Systems' investments 49therein. section. For investments from the Funds made under subdivisions (b)(6c) and (b)(8) of 50this section, the State Treasurer Investment Authority may require a minimum deposit of up to 51General Assembly Of North Carolina Session 2025-Page 16 Senate Bill 709-First Edition+Page 16 DRS45360-MRp-94Done hundred thousand dollars ($100,000) and may assess reasonable fees of up to 15 basis points 1per annum as a condition of making the investment. The fee may be used to defray the costs of 2administering the Fund and expenditures authorized under this section. 3@@ -805,7 +809,7 @@fee may be used to defray the costs of administering investments and expenditures authorized 21under this section. 22… 23-(d) The State Treasurer Investment Authority may invest f unds deposited pursuant to 24+(d) The State Treasurer Investment Authority may invest funds deposited pursuant to 24subdivisions (17i), (17j), (17k), (17 l), and (17n) of subsection (a) of this section in any of the 25investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) 26of this section. The State Treasurer Investment Authority may require a minimum deposit, up to 27@@ -813,10 +817,10 @@points, as a condition of participation pursuant to this subsection. Fees assessed by the State 29Treasurer Investment Authority may be used to defray the costs of administering the funds and 30expenditures authorized under this section. Funds deposited pursuant to this subsection shall 31-remain the funds of the North Carolina Conservation Easement Endowment Fund, the 32+remain the funds of the North Carolina Conservation Easement Endowment Fund, the 32Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian Buffer Restoration 33Fund, or the Wildlife Endowment Fund, as applicable, and interest or other investment income 34-earned thereon shall be prorated and credited to the North Caro lina Conservation Easement 35+earned thereon shall be prorated and credited to the North Carolina Conservation Easement 35Endowment Fund, the Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian 36Buffer Restoration Fund, or the Wildlife Endowment Fund on the basis of the amounts 37contributed to the respective Funds, figured according to sound accounting principles. 38@@ -826,14 +830,14 @@(1) Internally managed portfolios shall be subject to industry standard portfolio 42guidelines developed with periodic consultation by the Investment Advisory 43Committee.guidelines. 44-(2) In assessing whether to invest directly or to utilize indi rect third -party 45+(2) In assessing whether to invest directly or to utilize indirect third -party 45investment management arrangements, the State Treasurer Investment 46Authority shall consider all relevant material factors he or she considers 47relevant to the decision consistent with the Treasurer's Investment Authority's 48fiduciary duties under G.S. 147-69.7, G.S. 147-70.6, including financial, 49operational, and investment expertise and resources, alignment of interests 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 17+DRS45360-MRp-94D Page 17and investor protections, transparency and repeatability of investment process, 1risk controls, and cost-effectiveness. 2(3) For any third -party investment management arrangements, the investment 3@@ -843,7 +847,7 @@(4) Third-party investment management arrangements may be with persons and 7legal entities located within or outside the United States, including through 8any of the following: 9-a. Contractual arrangements in which the investment manager ha s 10+a. Contractual arrangements in which the investment manager has 10delegated discretion and authority to invest assets. 11b. Investment companies as defined under United States generally 12accepted accounting principles as promulgated by the Financial 13@@ -851,7 +855,7 @@registered under the Investment Company Act of 1940; individual, 15common, or collective trust funds of banks and trust companies; 16limited partnerships; limited liability companies or other limited 17-liability investment vehicles; and insurance contracts that provide for 18+liability investment vehicles; and insurance contracts that provide for 18participation in individual or pooled separate accounts of insurance 19companies. 20Any limited liability investment vehicles organized by the State Treasurer 21@@ -885,7 +889,7 @@concerning the Fund are public records governed by Chapter 132 of the General Statutes and any 49applicable provisions of the General Statutes protecting confidential information. 50General Assembly Of North Carolina Session 2025-Page 18 Senate Bill 709-First Edition+Page 18 DRS45360-MRp-94DThe State Treasurer and the Governor shall jointly The Investment Authority shall develop 1and adopt an investment policy statement for the Venture Capital Multiplier Fund. 2The State Treasurer and Governor shall jointly adopt a common policy to prevent conflicts 3@@ -923,7 +927,7 @@committees of each chamber. The annual report shall evaluate include all of the following: 35(1) An evaluation of claims by owners upon the Escheat Fund, current and 36projected investment returns, and projected contributions to the Escheat Fund, 37-current and projected legislative appropriations, and au thorized expenses. In 38+current and projected legislative appropriations, and authorized expenses. In 38the report, the State Treasurer shall assess 39(2) An assessment of the State Treasurer, with the assistance of the Investment 40Authority of the status of utilizing the Escheat Fund as an endowment fund 41@@ -938,7 +942,7 @@stablecoin, nonfungible token, or any other asset that is only digital and that 50confers economic, proprietary, or access rights or powers. 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 19+DRS45360-MRp-94D Page 19(3) Private key. – A unique element of cryptographic data used for signing 1transactions on a blockchain that is known to the owner of the unique element. 2(4) Secure custody solution. – A technological product or a blended product and 3@@ -967,14 +971,14 @@investment of assets pursuant to the provisions of G.S. 147-69.1 and G.S. 147-69.2. Different of 26the funds under G.S. 147-69.1 and the special funds under G.S. 147-69.2. Funds of each of the 27Retirement Systems and other funds held by the State Treasurer Investment Authority may be 28-invested co llectively or separately in the State Treasurer's Investment Authority 's discretion 29+invested collectively or separately in the State Treasurer's Investment Authority 's discretion 29consistent with the fiduciary duties stated in G.S. 147-69.7.under G.S. 147-70.6. 30(b) Any official, board, commission, other public authority, local government, school 31administrative unit, charter school, local ABC board, or community college of the State having 32custody of any funds not required by law to be deposited with and invested by the State Treasurer 33or the Investment Authority may deposit all or any portion of those funds with the State Treasurer 34Investment Authority for investment in one of the investment programs established pursuant to 35-authorized under this section, subject to an y provisions of law with respect to eligible 36+authorized under this section, subject to any provisions of law with respect to eligible 36investments, provided that any investments. Any occupational licensing board as defined in 37G.S. 93B-1 may participate in one of the investment programs established pursuant to authorized 38under this section regardless of whether or not the funds were required by law to be deposited 39@@ -982,7 +986,7 @@of specific statutory provisions to the contrary, any of those funds described in this subsection 41may be invested by the Investment Authority in accordance with the provisions of G.S. 147-69.2 42and 147-69.3. Upon request from any depositor eligible under this subsection, the State Treasurer 43-may authorize moneys invested purs uant to this subsection to be withdrawn by warrant on the 44+may authorize moneys invested pursuant to this subsection to be withdrawn by warrant on the 44State Treasurer. 45(c) The State Treasurer's Investment Authority 's investment programs shall be so 46managed that that, in the judgment of the State Treasurer Investment Authority, funds may be 47@@ -991,22 +995,22 @@accrue pro rata to the fund whose assets are invested according to the formula prescribed by the 50State Treasurer with the approval of the Governor and Council of State.invested. 51General Assembly Of North Carolina Session 2025-Page 20 Senate Bill 709-First Edition+Page 20 DRS45360-MRp-94D(e) The State Treasurer Investment Authority has full powers as a fiduciary to hold, 1purchase, sell, assign, transfer, lend and dispose of any of the securities or investments in which 2any of the investment programs created pursuant to this section have been invested, and may 3reinvest the proceeds from the sale of those securities or investments and any other investable 4assets of the program. 5-(f) The cost of administration, management, and operation of invest ment programs 6+(f) The cost of administration, management, and operation of investment programs 6established pursuant to this section shall be apportioned and paid equitably among the programs 7in a manner prescribed by the State Treasurer. Investment Authority, including through 8administrative fees if approved by the Board of Directors. To the extent not otherwise chargeable 9directly to the income or assets of a specific investment program or pooled investment vehicle, 10the cost of administration, management, and operation of investment programs established 11-pursuant to this section shall b e paid from the income and assets of the investment programs. 12+pursuant to this section shall be paid from the income and assets of the investment programs. 12Any apportionment and payment under this section shall be accounted for in a manner determined 13by the State Treasurer.Investment Authority. 14-(g) The State Treasurer is authorized to retain the se rvices of independent appraisers, 15+(g) The State Treasurer is authorized to retain the services of independent appraisers, 15auditors, actuaries, attorneys, investment counseling firms, statisticians, custodians, or other 16persons or firms possessing specialized skills or knowledge necessary for the proper 17administration of investment programs created pursuant to this section. 18@@ -1041,10 +1045,10 @@Sudan to the extent not prohibited by the United States Government, or to the extent that such 47investment is part of an index or index replication strategy, a commingled fund, limited 48partnership, or similar investment vehicle, or a derivative instrument. 49-(j) Subject to the provisions of G.S. 147-69.1(d), the State Treasurer shall Investment 50+(j) Subject to the provisions of G.S. 147-69.1(d), the State Treasurer shall Investment 50Authority may adopt any rules necessary to carry out the provisions of this section. 51General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 21+DRS45360-MRp-94D Page 21… 1"§ 147-69.4A. Support and assistance; Supplemental Retirement Board of Trustees. 2(a) The Supplemental Retirement Board of Trustees, as established under G.S. 135-96, 3@@ -1064,27 +1068,27 @@to the Fund and interest and other investment income earned by the Fund. Contributions to the 17Fund are irrevocable. Assets of the Fund may be used only to provide law enforcement special 18separation allowance benefits to individuals who are former employees of a unit of local 19-government that contributes to the Fund and are entitled to law enforcement spe cial separation 20+government that contributes to the Fund and are entitled to law enforcement special separation 20allowance payable by the unit. The assets of the Fund are not subject to the claims of creditors 21of an entity that contributes to the Fund. 22"§ 147-69.6. Swain County Settlement Trust Fund. 23(a) The Swain County Settlement Trust Fund is established as a special fund in the Office 24of the State Treasurer under the management of the Treasurer. The Treasurer Investment 25Authority. The Investment Authority may invest the assets of the Fund in any of the investments 26-authorized under subdivisions (b) (1) through (6) and subdivision (b)(8) of G.S. 147-69.2. The 27+authorized under subdivisions (b)(1) through (6) and subdivision (b)(8) of G.S. 147-69.2. The 27Fund shall consist of the proceeds of any payments made by the United States in settlement of 28the 1943 agreement between Swain County and the United States Department of Interior, such 29other contributions as Swain County or other entities may choose to make to the Fund, and the 30interest and other investment income earned by the Fund. For the purposes of this section, the 31initial balance of the Fund shall be defined as fifty-two million dollars ($52,000,000). 32…." 33-SECTION 3.1.(b) Part 3 of Article 6 of Chapter 147 of the General Statutes, as 34+SECTION 3. 1.(b) Part 3 of Article 6 of Chapter 147 of the General Statutes , as 34created and amended by Part I of this act, reads as rewritten: 35"Part 3. Reports and Audits. 36"§ 147-69.8. Annual report on new investment authority. 37Whenever the General Assembly broadens the investment authority of the State Treasurer 38-Investment Authority as to the General Fund, the Teachers' and State Employees' Retirement 39-System, the Consolidated Judicial Retirement System, the Firefighters' and Rescue Squad 40+Investment Authority as to the General Fund, the Teachers ' and State Employees ' Retirement 39+System, the Consolidated Judicial Retirement System, the Firefighters ' and Rescue Squad 40Workers' Pension Fund, the Local Governmental Employees' Retirement System, the Legislative 41Retirement System, the North Carolina National Guard Pension Fund, or any idle funds, the State 42Treasurer Investment Authority shall annually report in detail to the General Assembly the 43@@ -1097,27 +1101,27 @@cross-reference to those reports. 50"§ 147-69.9. Third-party audit of State Treasurer's investments. 51General Assembly Of North Carolina Session 2025-Page 22 Senate Bill 709-First Edition+Page 22 DRS45360-MRp-94D(a) In addition to all other audits and reports required by the law, the State Treasurer 1Treasurer, with the active assistance of the Investment Authority, shall prepare and issue, at the 2end of each fiscal year beginning with the 2015 -2016 fiscal year, year, a set of consolidated 3-stand-alone financial statements regarding investments authorized in G.S. 147-69.1 and 4-G.S. 147-69.2. These financial statements shall be audi ted by a commercial independent 5+stand-alone financial statements regarding investments authorized in G.S. 147-69.1 and 4+G.S. 147-69.2. These financial statements shall be audited by a commercial independent 5third-party audit firm selected and engaged by the State Treasurer. Treasurer, in consultation with 6the Investment Authority. The audit firm's report and the financial statement shall be provided to 7the Joint Legislative Commission on Governmental Operations, the House of Representative 8Appropriations Committee, the Senate Appropriations/Base Budget Committee, and the Fiscal 9Research Division within six months after the closing of the reporting period. 10-(b) The management d iscussion and analysis section of the report accompanying the 11+(b) The management discussion and analysis section of the report accompanying the 11financial statements shall be prepared by the Investment Authority and shall include a discussion 12-of the investment programs' risk and returns compared to benchmarks, total management fees 13+of the investment programs ' risk and returns compared to benchmarks, total management fees 13and incentives paid, and comparison to peer cost benchmarks. 14"§ 147 -69.10. Investment policies and performance reviews of Retirement Systems 15investment programs. 16(a) On at least a biennial basis, the State Treasurer Chief Investment Officer shall present 17an investment policy statement to the Investment Advisory Committee Board of Directors for the 18Committee's consultation. approval. The investment policy statement must include descriptions 19-of investment objectives and strategy, roles and responsibilities, permi ssible asset classes, asset 20+of investment objectives and strategy, roles and responsibilities, permissible asset classes, asset 20allocation targets and ranges, risk management and compliance guidelines, and evaluation 21criteria necessary to measure investment performance. 22(b) At least once every four years, the State Treasurer Investment Authority shall engage 23@@ -1137,7 +1141,7 @@provided in G.S. 147-69.2A. This report shall be made for the Escheat Fund in lieu of the report 37required by G.S. 147-69.8. The State Treasurer's quarterly report shall include each of the 38following: 39-(1) A specific listing of all direct and indirect placement fees, asset fees, 40+(1) A specific listing of all direct and indirect placement fees, asset fees, 40performance fees, and any other money management fees incurred by the 41State in the management of the Retirement Systems defined in 42G.S. 147-69.2(b)(8). In the event that the market value of any of subdivision 43@@ -1149,8 +1153,8 @@G.S. 147-69.7 and the consequent expected impact on the risk profile of the 49Retirement Systems' assets. 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 23-(2) A specific listing of all investments made with cert ified green managers and 1+DRS45360-MRp-94D Page 23+(2) A specific listing of all investments made with certified green managers and 1companies and funds that support sustainable practices, including the names 2of the companies, managers, and funds, the amount invested, and the State's 3return on investment. 4@@ -1174,7 +1178,7 @@limitation, if any, on the percentage under G.S. 147-69.2(b). 22(6) For each investment program created under G.S. 147-69.3: 23a. The financial condition of each investment program. 24-b. A full and complete statement of all moneys invested by virtue of the 25+b. A full and complete statement of all moneys invested by virtue of the 25provisions of G.S. 147-69.1 and G.S. 147-69.2. 26c. The nature and character of the investments. 27d. The revenues derived from the investments, net of fees and expenses. 28@@ -1187,22 +1191,22 @@results. 35h. Any other information requested by the House of Representatives and 36Senate Finance Committees. 37-i. The location on the State Treasurer's Web site where the public ma y 38+i. The location on the State Treasurer's Web site where the public may 38find a list of new commitments to external investment managers. 39j. The location on the State Treasurer's Web site where the public may 40find information on the use of placement agents by investment 41managers. 42-(7) For all other investments with or on behalf of the State or any of its agencies 43+(7) For all other investments with or on behalf of the State or any of its agencies 43or institutions: 44a. The particular agency or institution, fund, rate of return, and duration 45of the investment. 46b. The amount of deposit on all noninterest bearing accounts. 47-(a1) On a monthly basis, the Investment Autho rity shall report on the performance of all 48+(a1) On a monthly basis, the Investment Authority shall report on the performance of all 48investments for which the Investment Authority is in any way responsible. The monthly report 49shall include all of the following information: 50General Assembly Of North Carolina Session 2025-Page 24 Senate Bill 709-First Edition-(1) The beginning and ending market value of each investment program an d 1+Page 24 DRS45360-MRp-94D+(1) The beginning and ending market value of each investment program and 1deposits or withdrawals. 2(2) The rate of return, net of all fees , and expenses for various time periods, 3including comparisons to an appropriate benchmark, if available. For the 4@@ -1214,17 +1218,17 @@a. The location on the Investment Authority 's website where the public 10may find a statement of the investment policies. 11b. The location on the Department 's or Investment Authority 's website 12-where the public may find a list of n ew commitments to external 13+where the public may find a list of new commitments to external 13investment managers and on the use of placement agents by 14investment managers. 15c. Any other information that may be helpful in understanding the 16Investment Authority's investment policies, investment practices, and 17investment results. 18-(b) No later than the date set by G.S. 147-69.9 for the submission of consolidated 19+(b) No later than the date set by G.S. 147-69.9 for the submission of consolidated 19stand-alone financial statements, the State Treasurer Investment Authority shall report annually 20on the fees and performance of all externally and internally managed investments for the 21Retirement Systems defined in G.S. 147-69.2(b)(8). Systems. Externally managed investments 22-shall be reported on the basis of each investment vehi cle or investment manager, as applicable. 23+shall be reported on the basis of each investment vehicle or investment manager, as applicable. 23Internally managed investments shall be reported on a portfolio -by-portfolio basis. The State 24Treasurer's Investment Authority's annual report shall include all of the following, as applicable, 25reported separately for each investment: 26@@ -1235,7 +1239,7 @@(3) Value The value of the investment. 31(4) Dollar The dollar amount of the management fees and incentive fees. 32(5) For investment-grade fixed income or public equity investments, public 33-market i nvestment manager accounts, the periodic net annualized 34+market investment manager accounts, the periodic net annualized 34time-weighted rate of return for that fiscal year and since inception, reported 35net of fees. 36(6) For all investments other than investment-grade fixed income or public equity 37@@ -1247,13 +1251,13 @@c. The total distribution received by the State Treasurer with respect to 43that investment since inception, reported net of fees. 44(7) For any fund of funds investment vehicles, the aggregate management fees 45-and incentive fees for the underlying investment mana gers or investment 46+and incentive fees for the underlying investment managers or investment 46vehicles used by the external investment manager. 47(8) If any placement agent fees relating to the investment were directly or 48indirectly borne by the State Treasurer Investment Authority or Retirement 49Systems, a list of the amount and type of those fees. 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 25+DRS45360-MRp-94D Page 25(c) The Treasurer shall report to the Governor annually the exact balance in the treasury 1to the credit of the State, with a summary of the receipts and payments of the treasury during the 2preceding fiscal year, and so far as practicable an account of the same down to the termination 3@@ -1262,7 +1266,7 @@Commission on Governmental Operations, chairs of the House of Representatives and Senate 6Appropriations Committees, chairs of the House of Representative and Senate Finance 7Committees, Fiscal Research Division, Governor, Council of State, and State Auditor. The 8-reports shall also be made available for public review, including by posting on the Stat e 9+reports shall also be made available for public review, including by posting on the State 9Treasurer's Web site. 10A copy of a report on any State Treasurer investment program shall be sent to review by the 11official, institution, board, commission, or other agency investing in that program.the programs, 12@@ -1280,12 +1284,12 @@providing benefits to participants and beneficiaries, and paying reasonable 24expenses of administering the fund. 25(3) With the care, skill, and caution that a prudent investor would use after 26-considering the purposes, distribution requirements, and other cir cumstances 27+considering the purposes, distribution requirements, and other circumstances 27then prevailing. 28(4) Impartially, taking into account any differing interests of participants and 29beneficiaries. 30(5) Incurring only costs that are appropriate and reasonable. 31-(6) In accordance with a good -faith interpretation of the provisions o f 32+(6) In accordance with a good -faith interpretation of the provisions of 32G.S. 147-69.2 and any other applicable law governing the fund. 33(b) In investing and managing assets of the any fund or investment program pursuant to 34subsection (a) of this section, the State Treasurer: Investment Authority shall do all of the 35@@ -1299,14 +1303,14 @@e. Needs for liquidity, regularity of income, and preservation or 43appreciation of capital. 44f. With respect to the Retirement Systems defined in G.S. 147-69.2(b)(8) 45-and any other pension pla ns, the adequacy of funding for the 46+and any other pension plans, the adequacy of funding for the 46Retirement Systems or other pension plan based on reasonable 47actuarial factors. 48g. The purpose of the fund, if established. 49(2) Shall diversify Diversify the investments of the fund fund, unless the State 50Treasurer Investment Authority reasonably determines that, because of 51General Assembly Of North Carolina Session 2025-Page 26 Senate Bill 709-First Edition+Page 26 DRS45360-MRp-94Dspecial circumstances, including applicable investment restrictions, it is 1clearly prudent not to do so. 2(3) Shall make Make a reasonable effort to verify facts relevant to the investment 3@@ -1336,7 +1340,7 @@Investment Authority's decision or action and not by hindsight. 27(d) The State Treasurer's Investment Authority's investment and management decisions 28must be evaluated not in isolation but in the context of the portfolio of the fund as a whole and 29-as part of an overal l investment strategy having risk and return objectives reasonably suited to 30+as part of an overall investment strategy having risk and return objectives reasonably suited to 30the fund. 31(e) Notwithstanding any of the foregoing, the State Treasurer other provision of this 32section to the contrary, the Investment Authority shall have no duty to assist or advise any 33@@ -1358,11 +1362,11 @@by adding a new subdivision to read: 49"(6) The Board of Directors has the following liquidity monitoring duties: 50General Assembly Of North Carolina Session 2025-Senate Bill 709-First Edition Page 27+DRS45360-MRp-94D Page 27a. Upon the quarterly receipt of liquidity monitoring requirements from 1the Chief Investment Officer, the Board of Directors shall ensure that 2a portion of the Retirement Systems ' invested assets are at all times 3-available to be converted in an orderly fashio n to cash proceeds 4+available to be converted in an orderly fashion to cash proceeds 4sufficient to meet projected net benefit payments and highly probable 5contractual obligations. 6b. The Board of Directors shall annually certify the allocation of illiquid 7@@ -1373,7 +1377,7 @@activities." 12SECTION 3.1.(e) G.S. 147-72.1, as enacted by Section 2.2 of this act, is amended 13by adding a new subsection to read: 14-"(e) Management of Retirement Systems Investments. – The Chief Investment Officer 15+"(e) Management of Retirement Systems Investments. – The Chief Investment Officer 15shall manage the Retirement Systems investments to remain within the approved absolute risk 16operating range set by the Board of Directors in accordance with G.S. 147-71.2(a)(4)." 17SECTION 3.2. Rules adopted by the State Treasurer in effect as of December 31, 18@@ -1382,7 +1386,7 @@SECTION 3.3. This Part is effective January 1, 2026. 2122PART IV. TECHNICAL AND CONFORMING CHANGES 23-SECTION 4.1.(a) G.S. 147-65.2, as created by Section 1.2(a) of this act, reads as 24+SECTION 4.1.(a) G.S. 147-65.2, as created by Section 1 .2(a) of this act, reads as 24rewritten: 25"§ 147-65.2. Salary of State Treasurer.Treasurer and certain Department employees. 26(a) State Treasurer. – The salary of the State Treasurer shall be as established in the 27@@ -1393,12 +1397,12 @@public employees with investment functions, the Certain Departmental Employees. – The State 32Treasurer is authorized to establish, consistent with the duties of the State Treasurer's fiduciary 33duties, Treasurer as prescribed by law, market-oriented compensation plans, including salaries 34-and performance -related bonuses, for employees possessing specialized skills or knowledge 35+and performance-related bonuses, for employees possessing specialized skills or knowledge 35necessary for the proper administration of investment programs, who shall be programs. In 36accordance with G.S. 126-5(c12), these employees are exempt from the classification and 37compensation rules established by the Office of State Human Resources. The design and 38administration of those compensation plans shall be based on compensation studies conducted 39-by a nationally recognized firm specializing in public fund investment compensation. The 40+by a nationally recognized firm specializing in public fund investment compensation. The 40compensation and other associated employee benefits shall be apportioned directly from the 41investment program. and paid equitably among the funds and programs utilizing the services of 42these employees in a manner prescribed by the State Treasurer. The Treasurer shall report the 43@@ -1411,7 +1415,7 @@following: 50… 51General Assembly Of North Carolina Session 2025-Page 28 Senate Bill 709-First Edition+Page 28 DRS45360-MRp-94D(23) The Executive Administrator of the State Health Plan for Teachers and State 1Employees. 2(24) Employees of the State Health Plan for Teachers and State Employees as 3@@ -1422,20 +1426,20 @@(41) Employees of the North Carolina Investment Authority established under Part 85 of Article 6 of Chapter 147 of the General Statutes who possess specialized 9skills or knowledge necessary for the proper administration of investment 10-programs and who are employe d in a position designated by the Chief 11+programs and who are employed in a position designated by the Chief 11Investment Officer as exempt in accordance with G.S. 147-72.1. 12… 13(c12) Except as to G.S. 126-13, 126-14, 126-14.1, and Articles 6, 7, 14, 15, and 16 of this 14-Chapter, this Chapter does not apply to employees of the De partment of State Treasurer 15+Chapter, this Chapter does not apply to employees of the Department of State Treasurer 15possessing specialized skills or knowledge necessary for the proper administration of investment 16programs and compensated pursuant to G.S. 147-69.3(i2).G.S. 147-65.2(b). 17…." 18-SECTION 4.1.(c) This section is effective July 1, 202 5, and applies to employees 19+SECTION 4.1.(c) This section is effective July 1, 2025 , and applies to employees 19hired on or after that date. 20SECTION 4.2.(a) G.S. 128-29(c) reads as rewritten: 21"(c) Custodian of Funds. – The State Treasurer shall be the custodian of the several funds 22-and shall deposit these funds with the Investment Author ity to invest their these assets in 23-accordance with the provisions of G.S. 147-69.2 and 147-69.3. Article 6 of Chapter 147 of the 24+and shall deposit these funds with the Investment Authority to invest their these assets in 23+accordance with the provisions of G.S. 147-69.2 and 147-69.3. Article 6 of Chapter 147 of the 24General Statutes. All payments from said funds shall be made by him the State Treasurer only 25upon vouchers signed by two persons designated by the Board of Trustees. The secretary of the 26Board of Trustees shall furnish said Board a surety bond in a company authorized to do business 27
Diffs are computed deterministically from extracted bill text and show additions, deletions, and section moves. Scanned-PDF text extracted via OCR is flagged where confidence is low; see methodology.