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Regular Session, 2012
HOUSE BILL NO. 545
BY REPRESENTATIVE PEARSON
HOSPITALS: Provides relative to investments made by hospital service districts
AN ACT1
To enact R.S. 33:2957 and R.S. 46:1073.1, relative to hospital service districts and certain2
hospitals; to authorize and provide relative to investments of hospital service3
districts, including certain hospitals; to provide for limitations and procedures; and4
to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 33:2957 is hereby enacted to read as follows:7
§2957. Investments of hospital service districts8
Any hospital service district may invest its funds as provided by R.S.9
46:1073.1, except as provided therein.10
Section 2. R.S. 46:1073.1 is hereby enacted to read as follows: 11
§1073.1. Hospital service districts; investments12
A. Notwithstanding any provision of law to the contrary, a hospital service13
district may invest its funds as provided by law for investment of funds of the14
Louisiana State Employees Retirement System, including but not limited to R.S.15
11:263; however, any such investment may be made only in compliance with rules16
and regulations established by the hospital service district commission and in17
compliance with the provisions of R.S. 11:263 and any other law which provides for18
investments in which funds of the Louisiana State Employees Retirement System19
may be invested.20 HLS 12RS-944 ENGROSSED
HB NO. 545
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B. This Section shall be applicable to a hospital service district as defined1
in R.S. 46:1072, other than a hospital owned by the state.2
Section 3. This Act shall become effective on July 1, 2012; if vetoed by the governor3
and subsequently approved by the legislature, this Act shall become effective on July 1,4
2012, or on the day following such approval by the legislature, whichever is later.5
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pearson HB No. 545
Abstract: Authorizes hospital service districts, including certain hospitals, to invest their
funds in investments in which funds of LASERS may be invested.
Present law (R.S. 33:2955) provides relative to investments of municipalities, parishes,
school boards, and other political subdivisions of the state. Authorizes investment in
specified obligations, including various U.S. bonds, obligations, and instruments, certificates
and accounts of specified financial institutions, certain mutual or trust fund investments,
certain guaranteed investment contracts, investment grade (A-1/P-1) commercial paper of
domestic U.S. corporations, BIDCOs as authorized by law, and bonds, debentures, notes, or
other evidence of indebtedness issued by the state of La. or any of its political subdivisions,
and certain debt instruments issued by other states and their political subdivisions, all subject
to certain limitations. Requires political subdivisions to develop and adopt an investment
policy that details and clarifies investment objectives and the procedures and constraints
necessary to reach those objectives subject to certain requirements. Provides that making
an investment in violation of present law is an intentional performance of a duty in an
unlawful manner and may be prosecuted as provided in present law relative to malfeasance
in office (R.S. 14:134).
Present law (R.S. 33:2956) authorizes a foundation created by a hospital service district
governing body for the purpose of providing financial support of the district's facilities and
programs to invest as provided by law for investment by LASERS, provided the investment
is made in compliance with rules and regulations of the foundation's governing board, in
compliance with rules and regulations of the board of the district, and in compliance with
laws governing LASERS investments. Limits such investment authority to certain
foundation funds, excluding funds donated or provided to the foundation by the hospital
service district or any of its facilities or programs.
Proposed law authorizes a hospital service district to invest its funds as provided by law for
investment of funds of LASERS. Requires such an investment to be made only in
compliance with rules and regulations established by the hospital service district commission
and in compliance with the provisions of R.S. 11:263 and any other law which provides for
investments in which LASERS funds may be invested. Present law defines a hospital
service district as: a political subdivision of the state organized pursuant to an act of the
legislature or pursuant to R.S. 46:1051 et seq., or a hospital owned by a city, parish, or other
political subdivision of the state of La., or a hospital owned or operated by the LSU board
of supervisors. Proposed law is applicable to such hospital service districts except a hospital
owned or operated by the state. HLS 12RS-944 ENGROSSED
HB NO. 545
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Present law (R.S. 11:263), relative to LASERS' and other retirement systems' investments,
makes the prudent-man rule applicable to retirement systems. Specifies that such rule
requires retirement system fiduciaries and boards acting collectively to act with the care,
skill, prudence, and diligence under the circumstances prevailing that a prudent institutional
investor acting in a like capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims. Further specifies that this standard
requires the exercise of reasonable care, skill, and caution, and is to be applied to
investments not in isolation, but in the context of the trust portfolio, and as part of an overall
investment strategy, which shall include an asset allocation study and plan for
implementation thereof, incorporating risk and return objectives reasonably suitable to that
trust. Provides that the asset allocation study and implementation plan shall include an
examination of market value risk, credit risk, interest rate risk, inflation risk, counterparty
risk, and concentration risk. Further adds that the investment policy of each system shall
preserve and enhance principal over the long term and provide adequate liquidity and cash
flow for the payment of benefits. Also provides that the investments shall be diversified to
minimize the risk of significant losses unless it is clearly prudent not to do so. Limits
LASERS and other systems' investments in equities to 55% of the total portfolio; however,
authorizes LASERS and the other state systems to invest up to 65% of the total portfolio in
equities, provided an amount equal to at least 10% of the system's total equity portfolio is
invested in one or more index funds which seek to replicate the performance of the chosen
index or indices. Includes a list of considerations to be taken into account before any
investment decision is made. These considerations include: pricing, liquidity, transparency,
legal jurisdiction, currency fluctuations, experience of professional managers, financial
soundness of money management companies, diversification, leverage, and expected returns.
Effective July 1, 2012.
(Adds R.S. 33:2957 and R.S. 46:1073.1)