CHAPTER 21-10 STATE INVESTMENT BOARD council

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21-10-01. State investment board - Membership - Term - Compensation - Advisory The North Dakota state investment board consists of: a

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The governor; The state treasurer; The commissioner of university and school lands; The director of workforce safety and insurance; The insurance commissioner; Three members of the teachers' fund for retirement board or the board's designees who need not be members of the fund as selected by that board; Two of the elected members of the public employees retirement system board as selected by that board; h. One member of the public employees retirement system board as selected by g

that board; and i. One member of the legacy and budget stabilization fund advisory board, as selected by that board, to serve as a nonvoting member

The director of workforce safety and insurance may appoint a designee, subject to approval by the workforce safety and insurance board of directors, to attend the meetings, participate, and vote when the director is unable to attend. The teachers' fund for retirement board may appoint an alternate designee with full voting privileges to attend meetings of the state investment board when a selected member is unable to attend. The public employees retirement system board may appoint an alternate designee with full voting privileges from the public employees retirement system board to attend meetings of the state investment board when a selected member is unable to attend. The members of the state investment board, except elected and appointed officials and the director of workforce safety and insurance or the director's designee, are entitled to receive as compensation one hundred forty-eight dollars per day and necessary mileage and travel expenses as provided in sections 44-08-04 and 54-06-09 for attending meetings of the state investment board

The state investment board may establish an advisory council composed of individuals who are experienced and knowledgeable in the field of investments. The state investment board shall determine the responsibilities of the advisory council. Members of the advisory council are entitled to receive the same compensation as provided the members of the advisory board of the Bank of North Dakota and necessary mileage and travel expenses as provided in sections 44-08-04 and 54-06-09

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21-10-02. Board - Powers and duties

The board is charged with the investment of the funds enumerated in section 21-10-06. It shall approve general types of securities for investment by these funds and set policies and procedures regulating securities transactions on behalf of the various funds. Representatives of the funds enumerated in section 21-10-06 may make recommendations to the board in regard to investments. The board or its designated agents must be custodian of securities purchased on behalf of funds under the management of the board. The board may appoint an investment director or advisory service, or both, who must be experienced in, and hold considerable knowledge of, the field of investments. The investment director or advisory service shall serve at the pleasure of the board. The investment director or advisory service may be an individual, corporation, limited liability company, partnership, or any legal entity which meets the qualifications established herein. The board may authorize the investment director to lend securities held by the funds. These securities must be collateralized as directed by the board. The board may create investment fund pools in which the funds identified in section 21-10-06 may invest

Page No. 1 21-10-02.1. Board - Policies on investment goals and objectives and asset allocation

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The governing body of each fund enumerated in section 21-10-06 shall establish policies on investment goals and objectives and asset allocation for each respective fund. The policies must provide for: a

The definition and assignment of duties and responsibilities to advisory services and persons employed by the board

b. Rate of return objectives, including liquidity requirements and acceptable levels of risk

Long-range asset allocation goals

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d. Guidelines for the selection and redemption of investments

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Investment diversification, investment quality, qualification of advisory services, and amounts to be invested by advisory services

The type of reports and procedures to be used in evaluating performance

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The asset allocation and any subsequent allocation changes for each fund must be approved by the governing body of that fund and the state investment board. The governing body of each fund shall use the staff and consultants of the retirement and investment office in developing asset allocation and investment policies

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21-10-03. Cooperation with Bank of North Dakota

Repealed by S.L. 1987, ch. 190, ยง 14

21-10-04. Board - Meetings

The state investment board shall select one of its members to serve as chair, one to serve as vice chair, and shall meet at the call of the chair or upon written notice signed by two members of the board

21-10-05. Investment director - Powers and duties

Subject to the limitations contained in the law or the policymaking regulations or resolutions adopted by the board, the investment director may sign and execute all contracts and agreements to make purchases, sales, exchanges, investments, and reinvestments relating to the funds under the management of the board. This section is a continuing appropriation of all moneys required for the making of investments of funds under the management of the board. The investment director shall see that moneys invested are at all times handled in the best interests of the funds. Securities or investments may be sold or exchanged for other securities or investments

The investment director shall formulate and recommend to the investment board for approval investment regulations or resolutions pertaining to the kind or nature of investments and limitations, conditions, and restrictions upon the methods, practices, or procedures for investment, reinvestment, purchase, sale, or exchange transactions that should govern the investment of funds under this chapter

21-10-06. Funds under management of board - Accounts

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State bonding fund

Teachers' fund for retirement

State fire and tornado fund

Subject to the provisions of section 21-10-02, the board shall invest the following funds: a

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d. Workforce safety and insurance fund

Public employees retirement system

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Insurance regulatory trust fund

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State risk management fund

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Budget stabilization fund

i. Health care trust fund

j. Cultural endowment fund

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Petroleum tank release compensation fund

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Legacy fund

A fund under contract with the board pursuant to subsection 3

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Separate accounting must be maintained for each of the funds listed in subsection 1. The moneys of the individual funds may be commingled for investment purposes when determined advantageous

The state investment board may provide investment services to, and manage the money of, any agency, institution, or political subdivision of the state, subject to agreement with the industrial commission. The scope of services to be provided by the state investment board to the agency, institution, or political subdivision must be specified in a written contract. The state investment board may charge a fee for providing investment services and any revenue collected must be deposited in the state retirement and investment fund

21-10-06.1. Board - Investment reports

The board shall annually prepare reports on the investment performance of each fund under its control. The reports must be uniform and must include: 1

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A list of the advisory services managing investments for the board

A list of investments at market value, compared to previous reporting period, of each fund managed by each advisory service

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Earnings, percentage earned, and change in market value of each fund's investments

4. Comparison of the performance of each fund managed by each advisory service to other funds under the board's control and to generally accepted market indicators

21-10-06.2. Investment costs

The amounts necessary to pay for investment costs, such as investment counseling fees, trustee fees, custodial fees, performance measurement fees, expenses associated with money manager searches, expenses associated with onsite audits and reviews of investment managers, and asset allocation expenses, incurred by the state investment board are hereby appropriated and must be paid directly out of the funds listed in section 21-10-06 by the fund incurring the expense

21-10-07. Legal investments

The state investment board shall apply the prudent investor rule in investing for funds under its supervision. The "prudent investor rule" means that in making investments the fiduciaries shall exercise the judgment and care, under the circumstances then prevailing, that an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of large investments entrusted to it, not in regard to speculation but in regard to the permanent disposition of funds, considering probable safety of capital as well as probable income. The retirement funds belonging to the teachers' fund for retirement and the public employees retirement system must be invested exclusively for the benefit of their members and in accordance with the respective funds' investment goals and objectives

21-10-08. Reserves - Percentage limitations

In order to meet claims and liabilities, reserves must be established and maintained in each of the funds in accordance with the investment policy and asset allocation established for each fund

21-10-09. Personal profit prohibited - Penalty

No member, officer, agent, or employee of the state investment board may profit in any manner from transactions on behalf of the funds. Any person violating any of the provisions of this section is guilty of a class A misdemeanor

21-10-10. State investment board fund - Cost of operation of board

Repealed by S.L. 1989, ch. 667, ยง 13

Page No. 3 21-10-11. Legacy and budget stabilization fund advisory board

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The legacy and budget stabilization fund advisory board is created to develop recommendations for the investment of funds in the legacy fund and the budget stabilization fund to present to the state investment board. The goal of investment for the legacy fund is principal preservation while maximizing total return. The board consists of two members of the senate appointed by the senate majority leader, two members of the house of representatives appointed by the house majority leader, the director of the office of management and budget or designee, the president of the Bank of North Dakota or designee, and the tax commissioner or designee. The board shall select a chairman and must meet at the call of the chairman. The board shall report at least semiannually to the budget section. Legislative members are entitled to receive compensation and expense reimbursement as provided under section 54-03-20 and reimbursement for mileage as provided by law for state officers. The legislative council shall pay the compensation and expense reimbursement for the legislative members. The legislative council shall provide staff services to the legacy and budget stabilization fund advisory board. The staff and consultants of the state retirement and investment office shall advise the board in developing asset allocation and investment policies

The board shall develop a process to select a member of the board to serve on the state investment board in a nonvoting capacity

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21-10-12. Legacy fund - Earnings defined

For the purposes of section 26 of article X of the Constitution of North Dakota, the term "earnings" means net income in accordance with generally accepted accounting principles, excluding any unrealized gains or losses

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