§ 147-69.2. Investments authorized for special funds held by State Treasurer. - North Carolina Statutes

§ 147‑69.2.  Investmentsauthorized for special funds held by State Treasurer.

(a)        This sectionapplies to funds held by the State Treasurer to the credit of each of thefollowing:

(1)        The Teachers' andState Employees' Retirement System.

(2)        The ConsolidatedJudicial Retirement System.

(3)        The State HealthPlan for Teachers and State Employees.

(4)        The General AssemblyMedical and Hospital Care Plan.

(5)        The DisabilitySalary Continuation Plan.

(6)        The Firemen's andRescue Workers' Pension Fund.

(7)        The LocalGovernmental Employees' Retirement System.

(8)        The LegislativeRetirement System.

(9)        The Escheat Fund.

(10)      The LegislativeRetirement Fund.

(11)      The State EducationAssistance Authority.

(12)      The State PropertyFire Insurance Fund.

(13)      The Stock Workers'Compensation Fund.

(14)      The Mutual Workers'Compensation Fund.

(15)      The Public SchoolInsurance Fund.

(16)      The LiabilityInsurance Trust Fund.

(16a)    The University ofNorth Carolina Hospitals at Chapel Hill funds, except appropriated funds,deposited with the State Treasurer pursuant to G.S. 116‑37.2.

(17)      Trust funds of TheUniversity of North Carolina and its constituent institutions deposited withthe State Treasurer pursuant to G.S. 116‑36.1.

(17a)    North CarolinaVeterans Home Trust Fund.

(17b)    North CarolinaNational Guard Pension Fund.

(17c)    Retiree Health PremiumReserve Account.

(17d)    The Election Fund.

(17e)    The North CarolinaState Lottery Fund.

(17f)     Funds deposited withthe State Treasurer by public hospitals pursuant to G.S. 159‑39(g).

(17g)    The Local GovernmentOther Post‑Employment Benefits Fund.

(17h)    The Local GovernmentLaw Enforcement Special Separation Allowance Fund.

(17i)     The North CarolinaConservation Easement Endowment Fund.

(17j)     The ConservationGrant Fund.

(18)      Any other specialfund created by or pursuant to law for purposes other than meetingappropriations made pursuant to the Executive Budget Act.

(19)      The Swain CountySettlement Trust Fund.

(b)        It shall be theduty of the State Treasurer to invest the cash of the funds enumerated insubsection (a) of this section in excess of the amount required to meet thecurrent needs and demands on such funds, selecting from among the following:

(1)        Any of theinvestments authorized by G.S. 147‑69.1(c)(1)‑(7).

(2)        General obligationsof other states of the United States.

(3)        General obligationsof cities, counties and special districts in North Carolina.

(4)        Obligations of anycompany, other organization or legal entity incorporated or otherwise createdor located within or outside the United States, including obligations that areconvertible into equity securities, if the obligations bear one of the fourhighest ratings of at least one nationally recognized rating service whenacquired.

(5)        Repealed by SessionLaws 2001‑444, s. 2, effective October 1, 2001.

(6)        Asset‑backedsecurities (whether considered debt or equity) provided they bear ratings bynationally recognized rating services as provided in G.S. 147‑69.2(b)(4).

(6a)      In addition to thelimitations and requirements with respect to the investments of the RetirementSystems set forth in this subsection, the State Treasurer shall selectinvestments of the assets of the Retirement Systems such that investments madepursuant to subdivisions (b)(1) through (6) of this section shall at all timesequal or exceed twenty percent (20%) of the market value of all invested assetsof the Retirement Systems.

(6b)      Investments pursuantto subdivisions (b)(1) through (6) of this section may be made directly by theState Treasurer or through contractual arrangements in which the investmentmanager has full and complete discretion and authority to invest assetsspecified in such arrangements in investments authorized by subdivisions (b)(1)through (6) of this section, provided for each indirect investment, theinvestment manager has assets under management of at least one hundred milliondollars ($100,000,000).

(6c)      With respect toRetirement Systems' assets referred to in subdivision (b)(8), they may beinvested in obligations and other debt securities, including debt securitiesconvertible into other securities, that do not meet the requirements of any ofsubdivisions (b)(1) through (6) of this section nor subdivision (b)(7) of thissection, provided such investments are made through investment companiesregistered under the Investment Company Act of 1940, individual, commoncollective trust funds of banks and trust companies, group trusts and limitedpartnerships, limited liability companies or other limited liability investmentvehicles that invest primarily in investments authorized by this subdivisionand through contractual arrangements in which the investment manager has fulland complete discretion and authority to invest assets specified in sucharrangements in investments authorized by this subdivision, provided theinvestment manager for each investment pursuant to this subdivision has assetsunder management of at least one hundred million dollars ($100,000,000) andprovided that the investments authorized under this subdivision shall not exceedfive percent (5%) of the market value of all invested assets of the RetirementSystems.

(7)        With respect toRetirement Systems' assets referred to in subdivision (8) of this subsection,(i) insurance contracts that provide for participation in individual or pooledseparate accounts of insurance companies, (ii) group trusts, (iii) individual,common, or collective trust funds of banks and trust companies, (iv) realestate investment trusts, (v) investment companies registered under theInvestment Company Act of 1940, and (vi) limited partnerships, limitedliability companies, or other limited liability investment vehicles; providedthe investment manager has assets under management of at least one hundredmillion dollars ($100,000,000); provided such investment assets are managedprimarily for the purpose of investing in or owning real estate or related debtfinancing located within or outside the United States; and provided that theinvestments authorized by this subdivision shall not exceed ten percent (10%)of the market value of all invested assets of the Retirement Systems.

(8)        With respect toassets of the Teachers' and State Employees' Retirement System, theConsolidated Judicial Retirement System, the Firemen's and Rescue Workers'Pension Fund, the Local Governmental Employees' Retirement System, theLegislative Retirement System, the North Carolina National Guard Pension Fund(hereinafter referred to collectively as the Retirement Systems), and assetsinvested pursuant to subdivision (b2) of this section, they may be invested inequity securities traded on a public securities exchange or market organizedand regulated pursuant to the laws of the jurisdiction of such exchange ormarket and issued by any company incorporated or otherwise created or locatedwithin or outside the United States; provided the investments meet theconditions of this subdivision.

Theinvestments authorized for the Retirement Systems under this subdivision cannotexceed sixty‑five percent (65%) of the market value of all investedassets of the Retirement Systems. So long as each investment manager has assetsunder management of at least one hundred million dollars ($100,000,000), theassets authorized under this subdivision can be invested through (i) investmentcompanies registered under the Investment Company Act of 1940; (ii) individual,common, or collective trust funds of banks and trust companies, (iii) grouptrusts, and (iv) contractual arrangements in which investment managers havefull and complete discretion and authority to invest assets specified in suchcontractual arrangements.

Theassets authorized under this subdivision can also be invested directly by theState Treasurer in any equity securities represented in the S&P 500 Indexor that have been publicly announced to be included in the S&P 500 Index.No more than one and one‑half percent (11/2%) of the market value of theRetirement Systems' assets that may be invested directly under this subdivisioncan be invested in the stock of a single corporation, and the total number ofshares in that single corporation cannot exceed eight percent (8%) of theissued and outstanding stock of that corporation.

(9)        With respect toRetirement Systems' assets, as defined in subdivision (b)(8) of thissubsection, they may be invested in interests in limited partnerships, limitedliability companies, or other limited liability investment vehicles that arenot publicly traded if the primary purpose of the limited partnership, limitedliability company, or other limited liability investment vehicle is to investin public or private equity, or corporate buyout transactions, within oroutside the United States. The amount invested under this subdivision shall notexceed five percent (5%) of the market value of all invested assets of the RetirementSystems.

(9a)      With respect toRetirement Systems' assets, as defined in subdivision (b)(8) of thissubsection, they may be invested in inflation‑linked bonds, timberlands,commodities, and other assets that are acquired for the primary purpose ofproviding protection against risks associated with inflation, provided suchinvestments are made through investment companies registered under theInvestment Company Act of 1940, individual, common or collective trust funds ofbanks and trust companies, group trusts and limited partnerships, limitedliability companies or other limited liability investment vehicles that investprimarily in investments authorized by this subdivision and through contractualarrangements in which the investment manager has full and complete discretionand authority to invest assets specified in such arrangements in investmentsauthorized by this subdivision, provided the investment manager for eachinvestment pursuant to this subdivision has assets under management of at leastone hundred million dollars ($100,000,000) and provided that the investmentsauthorized under this subdivision shall not exceed five percent (5%) of themarket value of all invested assets of the Retirement Systems. Notwithstandinganything in this subsection to the contrary, the investments authorized by thissubdivision shall not be included in any subdivision other than thissubdivision for purposes of the percentage investment limitations therein orotherwise.

(10)      Recodified as part ofsubdivision (b)(9) by Session Laws 2000‑160, s. 2.

(11)      With respect toassets of the Escheat Fund, obligations of the North Carolina Global TransParkAuthority authorized by G.S. 63A‑4(a)(22), not to exceed twenty‑fivemillion dollars ($25,000,000), that have a final maturity not later thanOctober 1, 2011. The obligations shall bear interest at the rate set by theState Treasurer. No commitment to purchase obligations may be made pursuant tothis subdivision after September 1, 1993, and no obligations may be purchased afterSeptember 1, 1994. In the event of a loss to the Escheat Fund by reason of aninvestment made pursuant to this subdivision, it is the intention of theGeneral Assembly to hold the Escheat Fund harmless from the loss byappropriating to the Escheat Fund funds equivalent to the loss.

Ifany part of the property owned by the North Carolina Global TransPark Authoritynow or in the future is divested, proceeds of the divestment shall be used tofulfill any unmet obligations on an investment made pursuant to thissubdivision.

(12)      With respect toassets of the Escheat Fund, in addition to those investments authorized bysubdivisions (1) through (6) of this subsection, up to twenty percent (20%) ofsuch assets may be invested in the investments authorized under subdivisions(7) through (9) of this subsection, notwithstanding the percentage limitationsimposed on the Retirement Systems' investments under those subdivisions.

(b1)      With respect toinvestments authorized by subdivisions (b)(7), (b)(8), and (b)(9) of thissection, the State Treasurer shall appoint an Investment Advisory Committee,which shall consist of seven members: the State Treasurer, who shall bechairman ex officio; two members selected from among the members of the boardsof trustees of the Retirement Systems; and four members selected from thegeneral public. The four public members must have experience in areas relevantto the administration of a large, diversified investment program, including,but not limited to, investment management, securities law, real estatedevelopment, or absolute return strategies. The State Treasurer shall alsoappoint a Secretary of the Investment Advisory Committee who need not be amember of the committee. Members of the committee shall receive for theirservices the same per diem and allowances granted to members of the Stateboards and commissions generally. The committee shall have advisory powers onlyand membership shall not be deemed a public office within the meaning ofArticle VI, Section 9 of the Constitution of North Carolina or G.S. 128‑1.1.

(b2)      The State Treasurermay invest funds deposited pursuant to subdivision (a)(17f) of this section inany of the investments authorized under subdivisions (b)(1) through (6),subdivision (b)(6c), and subdivision (b)(8) of this section, notwithstandingthe percentage limitations imposed on the Retirement Systems' investmentstherein. The State Treasurer may require a minimum deposit, up to one hundredthousand dollars ($100,000), and may assess reasonable fees, not to exceed 15basis points per annum, as a condition of participation pursuant to thissubsection. Funds deposited pursuant to this subsection by a hospital shallremain the funds of that hospital, and interest or other investment incomeearned thereon shall be prorated and credited to the contributing hospital onthe basis of the amounts thereof contributed, figured according to soundaccounting principles. Fees assessed by the State Treasurer may be used todefray the cost of administering investments pursuant to this subsection.

(b3)      The State Treasurermay invest funds deposited pursuant to subdivision (a)(16a) of this section inany of the investments authorized under subdivisions (1) through (6),subdivision (6c) and subdivision (b)(8) of this section, notwithstanding thepercentage limitations imposed on the Retirement Systems' investments therein.The State Treasurer may require a minimum deposit, up to one hundred thousanddollars ($100,000), and may assess reasonable fees, not to exceed 15 basis pointsper annum, as a condition of participation pursuant to this subsection. Fundsdeposited pursuant to this subsection by the University of North CarolinaHospitals at Chapel Hill shall remain the funds of the University of NorthCarolina Hospitals at Chapel Hill, and interest or other investment incomeearned thereon shall be prorated and credited to the University of NorthCarolina Hospitals at Chapel Hill on the basis of the amounts thereofcontributed, figured according to sound accounting principles. Fees assessed bythe State Treasurer may be used to defray the cost of administering investmentspursuant to this subsection.

(b4)      In addition to theinvestments authorized under subdivisions (b)(1) through (6) of this section,the State Treasurer may invest funds deposited in the Local Government OtherPost‑Employment Benefits Fund in any of the investments authorized undersubdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentagelimitations imposed on the Retirement Systems' investments therein. Forinvestments from that Fund made under subdivisions (b)(6c) and (b)(8) of thissection, the State Treasurer may require a minimum deposit of up to one hundredthousand dollars ($100,000) and may assess fees of up to 15 basis points perannum as a condition of making the investment. The fee may be used to defraythe costs of administering the Fund.

(b5)      In addition to theinvestments authorized under subdivisions (b)(1) through (6) of this section,the State Treasurer may invest funds deposited in the Local Government LawEnforcement Special Separation Allowance Fund in any of the investmentsauthorized under subdivisions (b)(6c) and (b)(8) of this section,notwithstanding the percentage limitations imposed on the Retirement Systems'investments therein. For investments from that Fund made under subdivisions(b)(6c) and (b)(8) of this section, the State Treasurer may require a minimumdeposit of up to one hundred thousand dollars ($100,000) and may assess fees ofup to 15 basis points per annum as a condition of making the investment. Thefee may be used to defray the costs of administering the Fund.

(c)        Repealed by SessionLaws 1995, c. 501, s. 2.

(d)        The State Treasurermay invest funds deposited pursuant to subdivision (a)(17i) of this section inany of the investments authorized under subdivisions (1) through (6) andsubdivision (8) of subsection (b) of this section. The State Treasurer mayrequire a minimum deposit, up to one hundred thousand dollars ($100,000), andmay assess a reasonable fee, not to exceed 15 basis points, as a condition ofparticipation pursuant to this subsection. Funds deposited pursuant to thissubsection shall remain the funds of the North Carolina Conservation EasementEndowment Fund, and interest or other investment income earned thereon shall beprorated and credited to the North Carolina Conservation Easement EndowmentFund on the basis of the amounts thereof contributed, figured according tosound accounting principles.  (1979, c. 467, s. 2; 1983, c. 702, ss. 1‑9; 1987,c. 446, s. 1; c. 751, s. 5; 1987 (Reg. Sess., 1988), c. 1070; 1989, c. 770, s.54; 1989 (Reg. Sess., 1990), c. 813, s. 11; c. 848, s. 5; 1991, c. 542, s. 16;c. 636, s. 3; c. 749, s. 8; 1993 (Reg. Sess., 1994), c. 777, s. 4(i); 1995, c.346, s. 2; c. 501, s. 2; 1997‑456, s. 27; 1999‑237, s. 27.16; 1999‑251,s. 2; 2000‑160, s. 2; 2001‑444, ss. 2, 3; 2003‑12, s. 2; 2004‑124,s. 30.22(b); 2005‑144, s. 7; 2005‑201, s. 2; 2005‑252, s. 1;2005‑276, s. 28.17; 2005‑344, s. 10; 2005‑417, s. 2; 2007‑323,s. 27.7; 2007‑384, ss. 2, 3, 7, 8; 2008‑13, s. 2; 2008‑107,ss. 12.9(b), (c), 12.13; 2009‑98, s. 1; 2009‑283, s. 2; 2009‑451,s. 25.2(a).)