Connecticut Seal

General Assembly



February Session, 2016

LCO No. 5417



Offered by:


SEN. FASANO, 34th Dist.


To: Senate Bill No. 391

File No. 387

Cal. No. 267


After the last section, add the following and renumber sections and internal references accordingly:

"Sec. 501. Section 3-13b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There is created an Investment Advisory Council which shall consist of the following: (1) The Secretary of the Office of Policy and Management who shall serve as an ex-officio member of said council; (2) the State Treasurer who shall serve as an ex-officio member of said council; (3) five public members all of whom shall be experienced in matters relating to investments. The Governor, the president pro tempore of the Senate, the Senate minority leader, the speaker of the House of Representatives and the minority leader of the House of Representatives shall each appoint one such public member to serve for a term of four years. No such public member or such member's business organization or affiliate shall directly or indirectly contract with or provide any services for the investment of trust funds of the state of Connecticut during the time of such member's service on said council and for one year thereafter. The term of each public member in office on June 30, 1983, shall end on July 1, 1983. The appointing authority shall fill all vacancies of the public members; (4) three representatives of the teachers' unions, and two representatives of the state employees' unions. On or before July 15, 1983, the teachers' unions shall jointly submit to the State Treasurer a list of three nominees, and the state employees' unions or a majority thereof who represent a majority of state employees shall jointly submit to the Treasurer a list of two nominees. On or before July 30, 1983, the Governor shall appoint five members of the council from such lists, for terms of two years. Any person appointed to fill a vacancy or to be a new member at the expiration of a given term, whose predecessor in that position was either a representative of one of the teachers' unions or one of the state employees' unions, shall also be a representative of such respective union group. Any such appointee shall be appointed by the Governor from a list of nominees submitted to the Treasurer by the teachers' unions or state employees' unions or such majority thereof, as the case may be, within thirty days of notification by the Treasurer of the existence of a vacancy or a prospective vacancy, or the expiration or prospective expiration of a term. All members of the council shall serve until their respective successors are appointed and have qualified. No public member of the council shall serve more than two consecutive terms which commence on or after July 1, 1983.

(b) The Governor shall designate one of the members to be chairperson of the council to serve as such at the Governor's pleasure. The Treasurer shall serve as secretary of said council. A majority of the members of the council then in office shall constitute a quorum for the transaction of any business, and action shall be by the vote of a majority of the members present at a meeting. Votes by members on investment policies shall be recorded in the minutes of each meeting. Members of said council shall not be compensated for their services but shall be reimbursed for all necessary expenses incurred in the performance of their duties as members of said council. The council shall meet at least once during each calendar quarter and at such other times as the chairperson deems necessary or upon the request of a majority of the members in office. Special meetings shall be held at the request of such majority after notice in accordance with the provisions of section 1-225. Any member who fails to attend three consecutive meetings or who fails to attend fifty per cent of all meetings held during any calendar year shall be deemed to have resigned from office.

(c) (1) The Treasurer shall recommend to the Investment Advisory Council an investment policy statement which shall set forth the standards governing investment of trust funds by the Treasurer. Such statement shall include, with respect to each trust fund, without limitation, (A) investment objectives; (B) asset allocation policy and risk tolerance; (C) asset class definitions, including specific types of permissible investments within each asset class and any specific limitations or other considerations governing the investment of any funds; (D) investment manager guidelines; (E) investment performance evaluation guidelines; (F) guidelines for the selection and termination of providers of investment-related services who shall include, but not be limited to, investment advisors, external money managers, investment consultants, custodians, broker-dealers, legal counsel, and similar investment industry professionals; and (G) proxy voting guidelines. A draft of the statement shall be submitted to the Investment Advisory Council at a meeting of said council and shall be made available to the public. Notice of such availability shall be published in at least one newspaper having a general circulation in each municipality in the state which publication shall be not less than two weeks prior to such meeting. Said council shall review the draft statement and shall publish any recommendations it may have for changes to such statement in the manner provided for publication of the statement by the Treasurer. The Treasurer shall thereafter adopt the statement, including any such changes the Treasurer deems appropriate, with the approval of a majority of the members appointed to said council. If a majority of the members appointed to said council fail to approve such statement, said majority shall provide the reasons for its failure to approve to the Treasurer who may submit an amended proposed statement at a subsequent regular or special meeting of said council. Such revised proposed statement shall be made available to the public in accordance with the provisions of the Freedom of Information Act, as defined in section 1-200. Any revisions or additions to the investment policy statement shall be made in accordance with the procedures set forth in this subdivision for the adoption of the statement. The Treasurer shall annually review the investment policy statement and shall consult with the Investment Advisory Council regarding possible revisions to such statement.

(2) All trust fund investments by the State Treasurer shall be reviewed by said Investment Advisory Council. The Treasurer shall provide to the council all information regarding such investments which the Treasurer deems relevant to the council's review and such other information as may be requested by the council. The Treasurer shall provide a report at each regularly scheduled meeting of the Investment Advisory Council as to the status of the trust funds and any significant changes which may have occurred or which may be pending with regard to the funds. The council shall promptly notify the Auditors of Public Accounts and the Comptroller of any unauthorized, illegal, irregular or unsafe handling or expenditure of trust funds or breakdowns in the safekeeping of trust funds or contemplated action to do the same within their knowledge. The Governor may direct the Treasurer to change any investments made by the Treasurer when in the judgment of said council such action is for the best interest of the state. Said council shall, at the close of the fiscal year, make a complete examination of the security investments of the state and determine as of June thirtieth, the value of such investments in the custody of the Treasurer and report thereon to the Governor, the General Assembly and beneficiaries of trust funds administered, held or invested by the Treasurer. With the approval of the Treasurer and the council, said report may be included in the Treasurer's annual report.

(d) The Investment Advisory Council shall be within the office of the State Treasurer for administrative purposes only.

(e) Notwithstanding any provision of chapter 66, the Investment Advisory Council shall establish the anticipated rate of return for the state employees retirement system, the municipal employees' retirement system established by part II of chapter 113, the teachers' retirement system and all other state retirement and pension plans. Such established rate shall be used for the purpose of conducting actuarial analyses for the valuation of such retirement systems and plans, including, but not limited to, as required in section 5-156a.

[(e)] (f) For the purposes of this section, "teachers' union" means a representative organization for certified professional employees, as defined in section 10-153b, and "state employees' union" means an organization certified to represent state employees, pursuant to section 5-275. "

This act shall take effect as follows and shall amend the following sections:

Sec. 501

from passage