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North Carolina Senate Bill S709

North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S709 Compare Versions

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11 GENERAL ASSEMBLY OF NORTH CAROLINA
22 SESSION 2025
3-S 1
4-SENATE BILL 709
3+S D
4+SENATE BILL DRS45360-MRp-94D
5+
56
67
78 Short Title: 2025 State Investment Modernization Act.-AB (Public)
89 Sponsors: Senators Hise, Craven, and Lee (Primary Sponsors).
9-Referred to: Rules and Operations of the Senate
10-March 26, 2025
11-*S709 -v-1*
10+Referred to:
11+
12+*DRS45360 -MRp-94D*
1213 A BILL TO BE ENTITLED 1
1314 AN ACT TO ENACT THE 2025 STATE INVESTMENT MODERNIZATION ACT , AS 2
1415 RECOMMENDED BY THE STATE TREASURER . 3
1516 The General Assembly of North Carolina enacts: 4
1617 5
1718 PART I. TECHNICAL REORGANIZATION OF ARTICLE 6 OF CHAPTER 147 OF 6
1819 THE GENERAL STATUTES 7
1920 SECTION 1.1. Article 6 of Chapter 147 of the General Statutes is amended to add 8
2021 the following new Parts: 9
2122 (1) Part 1, to be entitled "General" and consisting of G.S. 147-65 through 10
2223 G.S. 147-69. 11
2324 (2) Part 2, to be entitled "Investments and Funds" and consisting of G.S. 147-69.1 12
2425 through G.S. 147-69.7. 13
2526 (3) Part 3, to be entitled "Reports and Audits" and consisting of G.S. 147-69.8 14
2627 through G.S. 147-69.70. 15
2728 (4) Part 4, to be entitled "North Carolina Investment Authority" and consisting of 16
2829 G.S. 147-70.1 through G.S. 147-73.2. 17
2930 (5) Part 5, to be entitled "Department Bookkeeping and Deposits" and consisting 18
3031 of G.S. 147-74 through G.S. 147-86.2. 19
3132 SECTION 1.2.(a) G.S. 147-65 is recodified as G.S. 147-65.2. 20
3233 SECTION 1.2.(b) G.S. 147-69.3A is recodified as G.S. 147-67.1. 21
3334 SECTION 1.2.(c) G.S. 147-69.11 is recodified as G.S. 147-73.2. 22
3435 SECTION 1.2.(d) G.S. 147-69.7 is recodified as G.S. 147-70.6. 23
3536 SECTION 1.2.(e) G.S. 147-70 is recodified as G.S. 147-68.3. 24
3637 SECTION 1.2.(f) G.S. 147-71 is recodified as G.S. 147-68.4. 25
3738 SECTION 1.2.(g) G.S. 147-72 is repealed. 26
3839 SECTION 1.2.(h) G.S. 147-73 is repealed. 27
3940 SECTION 1.2.(i) G.S. 147-75 is recodified as G.S. 147-66.2. 28
4041 SECTION 1.2.(j) G.S. 147-75.1 is recodified as G.S. 147-68.5. 29
4142 SECTION 1.2.(k) G.S. 147-86.2 is recodified as G.S. 147-68.6. 30
4243 SECTION 1.3. Subsection (i2) of G.S. 147-69.3 is recodified as subsection (b) of 31
4344 G.S. 147-65.2, as created by Section 1.2(a) of this Part. 32
4445 SECTION 1.4. This Part is effective when it becomes law. 33
4546 34
46-PART II. CREATION OF THE NORTH CAROLINA INVESTMENT AUTHORITY 35 General Assembly Of North Carolina Session 2025
47-Page 2 Senate Bill 709-First Edition
47+PART II. CREATION OF THE NORTH CAROLINA INVESTMENT AUTHORITY 35
48+FILED SENATE
49+Mar 25, 2025
50+S.B. 709
51+PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
52+Page 2 DRS45360-MRp-94D
4853 SECTION 2.1. Part 1 of Article 6 of Chapter 147 of the General Statutes, as created 1
4954 and amended by Part I of this act, is amended by adding a new section to read: 2
5055 "§ 147-65.1. Definitions. 3
5156 The following definitions apply in this Article: 4
5257 (1) Board of Directors. – The Board of Directors of the North Carolina Investment 5
5358 Authority. 6
5459 (2) Chief Investment Officer or CIO. – The Chief Investment Officer of the 7
5560 Investment Authority. 8
5661 (3) Department. – The Department of State Treasurer. 9
5762 (4) Escheats Fund. – The Escheats Fund established under Article 1A of Chapter 10
5863 116B of the General Statutes. 11
5964 (5) Investment Authority. – The North Carolina Investment Authority, 12
6065 established under Part 4 of this Article. 13
6166 (6) Reserved for future codification purposes. 14
6267 (7) Retirement Systems. – This term includes all of the following retirement 15
6368 systems: 16
6469 a. The Teachers' and State Employees' Retirement System, established 17
6570 under Article 1 of Chapter 135 of the General Statutes. 18
6671 b. The Consolidated Judicial Retirement System, established under 19
6772 Article 4 of Chapter 135 of the General Statutes. 20
6873 c. The North Carolina Firefighters' and Rescue Workers' Pension Fund, 21
6974 established under Article 86 of Chapter 58 of the General Statutes. 22
7075 d. The Local Governmental Employees' Retirement System, established 23
7176 under Article 3 of Chapter 128 of the General Statutes. 24
7277 e. The Legislative Retirement System of North Carolina, established 25
7378 under Article 1A of Chapter 120 of the General Statutes. 26
7479 f. The North Carolina National Guard Pension Fund, established under 27
7580 Article 3 of Chapter 127A of the General Statutes. 28
7681 g. The Registers of Deeds' Supplemental Pension Fund, established 29
7782 under Article 3 of Chapter 161 of the General Statutes. 30
7883 h. The Retiree Health Benefit Fund, established under G.S. 135-7(f). 31
7984 i. The North Carolina Teachers' and State Employees' Benefit Trust, 32
8085 established under G.S. 135-7(g). 33
8186 (8) Treasurer. – The State Treasurer." 34
8287 SECTION 2.2. Part 4 of Article 6 of Chapter 147 of the General Statutes, as created 35
8388 and amended by Part I of this act, reads as rewritten: 36
8489 "Part 4. North Carolina Investment Authority. 37
8590 "§ 147-70.1. Creation of Investment Authority. 38
8691 (a) Creation. – The North Carolina Investment Authority is created as a body corporate 39
8792 and politic having the powers and jurisdiction as provided under this Article or any other law. 40
8893 The Investment Authority is a State agency for the performance of essential governmental and 41
8994 public functions. The Investment Authority is located within, but independent from the control 42
9095 of, the Department of State Treasurer. The Investment Authority shall have perpetual succession. 43
9196 (b) Independence. – The Investment Authority, in carrying out its statutory 44
9297 responsibilities, shall be independent of any fiscal control exercised by the Director of the 45
9398 Budget, the Department of Administration, and the Department of State Treasurer, including for 46
9499 organizational, staffing, procurement, and budgetary purposes. Except as provided under 47
95100 subsection (c) of this section and unless otherwise explicitly provided by law, the Investment 48
96101 Authority is exempt from the State Budget Act, and the provisions of Chapter 143C of the 49
97102 General Statutes do not apply to the Investment Authority. 50 General Assembly Of North Carolina Session 2025
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99104 (c) Fiduciary Funds. – In order for the Investment Authority to effectively operate the 1
100105 investment programs under its management, all funds while under management of the Investment 2
101106 Authority are Fiduciary Funds described under subdivisions (8) through (10) of G.S. 143C-1-3(a) 3
102107 and shall be accounted for as specified in G.S. 147-69.3(f). 4
103108 "§ 147-70.2. Powers and duties of the Investment Authority. 5
104109 (a) In addition to the authority granted to the Investment Authority under this Article or 6
105110 any other law, the Investment Authority shall have all of the powers necessary to execute the 7
106111 provisions of this Part, including, at a minimum, the following powers: 8
107112 (1) The right to sue and be sued. 9
108113 (2) To take, demand, receive, and possess all kinds of real and personal property 10
109114 necessary and proper for its purposes. 11
110115 (3) To bargain, sell, grant, alienate, or dispose of all real and personal property as 12
111116 it may lawfully acquire. 13
112117 (b) The Investment Authority shall have the right to acquire fidelity bonds, fiduciary 14
113118 insurance, directors' and officers' insurance, or errors and omissions coverage, as determined by 15
114119 the Investment Authority board. This right is independent of any purchase of insurance by the 16
115120 State Treasurer under G.S. 147-67.1. 17
116121 (c) Pursuant to G.S. 143B-1320(b), the Investment Authority shall be exempt from the 18
117122 provisions of Article 15 of Chapter 143B of the General Statutes. 19
118123 "§ 147-70.3. Taxation of Investment Authority. 20
119124 (a) Property owned or acquired by the Authority is exempt from all taxes imposed by the 21
120125 State or any political subdivision of the State. 22
121126 (b) The Investment Authority shall not be subject to State income taxes. 23
122127 (c) This section shall not be construed to apply in any way to individual members of the 24
123128 Board of Directors or any employee of the Investment Authority. 25
124129 "§ 147-70.4. Confidentiality of Investment Authority records. 26
125130 Any record or other information received or generated by the Investment Authority in order 27
126131 to negotiate at arm's length investment transactions that constitute a trade secret, as defined in 28
127132 G.S. 66-152, is not public record and is exempt from the requirements of Chapter 132 of the 29
128133 General Statutes until the applicable negotiation is completed and unless the record or 30
129134 information substantiates a conflict with the duties of the Investment Authority under 31
130135 G.S. 147-70.6(a). 32
131136 "§ 147-70.5. Criminal record checks. 33
132137 (a) The Investment Authority may obtain from the State and National Repositories of 34
133138 Criminal Histories or from any other lawful source the criminal history of any of the following 35
134139 individuals: 36
135140 (1) A current or prospective permanent or temporary employee of the Investment 37
136141 Authority. 38
137142 (2) A contractor with the Investment Authority. 39
138143 (3) An employee or agent of a contractor with the Investment Authority who is 40
139144 performing or will perform work for the Investment Authority. 41
140145 (4) A volunteer of the Investment Authority. 42
141146 (5) Any other individual otherwise engaged by the Investment Authority who will 43
142147 have access to health or financial information or data maintained by the 44
143148 Investment Authority that is confidential or otherwise nonpublic. 45
144149 (b) The Investment Authority may deny employment to or dismiss any individual 46
145150 identified under subdivisions (1), (2), (4), and (5) of subsection (a) of this section who refuses to 47
146151 consent to a criminal history record check or to the use of fingerprints or other identifying 48
147152 information required by the State or National Repositories of Criminal Histories. Any refusal 49
148153 shall constitute just cause for the employment denial or the dismissal from employment. 50 General Assembly Of North Carolina Session 2025
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150155 (c) The Investment Authority may extend a conditional offer of employment pending the 1
151156 results of a criminal history record check authorized by this section. 2
152157 … 3
153158 "§ 147-71.1. Board of Directors. 4
154159 (a) Membership. – The Investment Authority shall be governed by a Board of Directors. 5
155160 The Board of Directors shall consist of the following voting members: 6
156161 (1) The State Treasurer, who shall serve as an ex officio member. 7
157162 (2) One member appointed by the General Assembly upon the recommendation 8
158163 of the Speaker of the House of Representatives in accordance with 9
159164 G.S. 120-121. 10
160165 (3) One member appointed by the General Assembly upon the recommendation 11
161166 of the President Pro Tempore of the Senate in accordance with G.S. 120-121. 12
162167 (4) One member appointed by the Governor. 13
163168 (5) One member appointed by the State Treasurer. 14
164169 (b) Terms. – The four appointive directors of the Board of Directors shall be appointed 15
165170 for staggered six‑year terms, except for the initial term. The initial term of the director appointed 16
166171 by the President Pro Tempore of the Senate is one year. The initial term of the director appointed 17
167172 by the Speaker of the House of Representatives is two years. The initial term of the director 18
168173 appointed by the State Treasurer is three years. The initial term of the director appointed by the 19
169174 Governor is four years. An appointive director whose term has expired but whose qualified 20
170175 successor has not been appointed shall continue to serve on the Board of Directors until a 21
171176 qualified successor is duly appointed, including by the State Treasurer after a holdover period of 22
172177 six months or more as provided for under subsection (e) of this section. 23
173178 (c) Qualifications to Serve. – No appointed director of the Board of Directors shall hold 24
174179 any other public office in North Carolina, except that an appointed director may also have 25
175180 membership on either or both of the Boards of Trustees under G.S. 128-28 and G.S. 135-6. All 26
176181 appointed members of the Board of Directors shall have expert knowledge of investments and a 27
177182 minimum of a 10-year track record of successful management in pension, endowment, or other 28
178183 relevant investment management fields. The State Treasurer shall determine the sufficiency of a 29
179184 prospective member's expert knowledge. 30
180185 (d) Disqualifications to Serve. – An individual is not eligible to serve on the Board of 31
181186 Directors if any of the following apply to that individual: 32
182187 (1) The individual has been indicted or charged with, been convicted of, pleaded 33
183188 guilty or nolo contendere to, or forfeited bail concerning a felony, or a 34
184189 misdemeanor involving fraud, theft, or dishonesty under the laws of any 35
185190 jurisdiction in the United States. 36
186191 (2) The individual has had a judgment entered against him or her by a court of 37
187192 competent jurisdiction in a civil matter involving a breach of fiduciary duties. 38
188193 (3) The individual has been the subject of an adverse action by the Securities and 39
189194 Exchange Commission which resulted in any sanction, payment of a fine, 40
190195 injunction, or other negative finding, whether individually or as a partner, 41
191196 principal member, managing director, or other position of leadership of any 42
192197 entity subject to the penalty or finding. 43
193198 (4) The individual, or the individual's spouse or immediate family member, is or 44
194199 becomes employed by the Department of State Treasurer or by a service 45
195200 provider engaged to invest or assist in the oversight of assets overseen by the 46
196201 Investment Authority. 47
197202 (5) The individual, or the individual's spouse or immediate family member, is an 48
198203 endorser, obligor, or provider of surety for, or is a borrower of, any money 49
199204 loaned to or borrowed from the assets overseen by the Board of Directors. 50 General Assembly Of North Carolina Session 2025
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201206 (e) Vacancies. – Any vacancy in a position held by an appointive member shall be filled 1
202207 by a new appointment made by the applicable appointing authority for the vacant seat. If a seat 2
203208 on the Board of Directors is vacant or held over for six months or more without an appointment 3
204209 by the applicable appointing authority of an individual meeting the qualifications in this section, 4
205210 then the State Treasurer may nominate a member for approval by the Board of Directors. Any 5
206211 individual appointed to fill a vacancy shall serve only for the unexpired term. A vacancy 6
207212 automatically occurs upon the death or resignation of a member of the Board of Directors or upon 7
208213 the failure of a member of the Board of Directors to do any of the following: 8
209214 (1) Attend meetings for three consecutive meetings unless excused by majority 9
210215 vote of the other Board of Directors members. 10
211216 (2) Cure a conflict of interest within 30 days of identification of the conflict. 11
212217 (3) Agree to abide by the ethics policy adopted by the Board of Directors. 12
213218 (f) Reappointment. – Any member of the Board of Directors is eligible for 13
214219 reappointment, except that no appointive member of the Board of Directors may serve for more 14
215220 than two consecutive, full, six-year terms without at least a one-year break in membership on the 15
216221 Board of Directors. 16
217222 (g) Oath. – Each appointive member of the Board of Directors shall take an oath of office 17
218223 to administer the duties of office faithfully and impartially, and a record of the oath shall be filed 18
219224 in the office of the Secretary of State. 19
220225 (h) Officers. – The following shall apply to officers of the Board of Directors: 20
221226 (1) The State Treasurer shall serve as chair of the Board of Directors. 21
222227 (2) The State Treasurer shall designate a vice-chair from among the remaining 22
223228 members of the Board of Directors. The term of the vice-chair extends to the 23
224229 earlier of either three years or the date of expiration of the vice-chair's then 24
225230 current term as a member of the Board of Directors. In the absence of the State 25
226231 Treasurer or the Treasurer's designee, the vice-chair shall preside over the 26
227232 proceedings of the Board of Directors. 27
228233 (3) The Board of Directors shall appoint and prescribe the duties of a secretary, 28
229234 who need not be a member of the Board of Directors. The secretary is the 29
230235 custodian of all books, documents, and papers filed with the Board of 30
231236 Directors and the minute book or journal of the Board of Directors. The 31
232237 secretary shall keep a record of the proceedings of the Board of Directors. The 32
233238 secretary has the authority to make copies of all minutes and other records and 33
234239 documents of the Board of Directors. 34
235240 (i) Designees. – The State Treasurer is authorized to appoint a designee. No other 35
236241 member of the Board of Directors is authorized to appoint a designee. 36
237242 (j) Compensation and Reimbursement. – Members of the Board of Directors shall 37
238243 receive no compensation for their services. For attendance at meetings of the Board of Directors 38
239244 or any committee of the Board of Directors, and for other services for the Investment Authority, 39
240245 members of the Board of Directors shall receive per diem, subsistence, and travel allowances in 40
241246 accordance with G.S. 138-5 or G.S. 138-6, as appropriate. 41
242247 (k) Meetings and Voting. – The Board of Directors shall meet at least quarterly. A 42
243248 meeting may be called by the State Treasurer or by a majority of the Board of Directors. The 43
244249 State Treasurer or the Treasurer's designee shall establish the agenda for each meeting. A 44
245250 minimum of three members of the Board of Directors is required for quorum. The affirmative 45
246251 vote of a majority of the members of the Board of Directors present at a meeting of the Board of 46
247252 Directors that has been duly called and held is required for any action taken by the Investment 47
248253 Authority, except that the State Treasurer's vote shall prevail in the event of a tied vote. 48
249254 "§ 147-71.2. Duties of the Board of Directors. 49
250255 (a) Investment-Related Powers and Duties. – The Board of Directors has all of the 50
251256 following investment-related powers and duties: 51 General Assembly Of North Carolina Session 2025
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253258 (1) The Board of Directors has the authority to approve all of the following: 1
254259 a. Investment policy statements to include investment objectives, 2
255260 strategic asset allocation, and policy benchmarks. 3
256261 b. Risk budgets, including related limits for key risk indicators. 4
257262 c. The appointment of a master global custodian bank. 5
258263 d. Annual operating budgets for investment programs. 6
259264 e. Market-oriented compensation plans. 7
260265 (2) The Board of Directors shall periodically review all of the following: 8
261266 a. Investment performance and investment manager appointment and 9
262267 termination activities. 10
263268 b. Investment strategies, policies, and tactical considerations. 11
264269 c. Asset liability studies. 12
265270 d. Performance benchmarks and key risk indicators. 13
266271 e. Audited investment financial statements and audit reports pursuant to 14
267272 G.S. 147-69.9. 15
268273 f. Independent evaluation of governance, operations, and investment 16
269274 practices. 17
270275 g. Periodic cost-effectiveness studies of the investment programs. 18
271276 (3) The Board of Directors shall appoint a Chief Investment Officer of the 19
272277 Investment Authority. 20
273278 (4) With respect to Retirement Systems' assets, at least biennially, the Board of 21
274279 Directors shall approve an absolute risk operating range. The absolute risk 22
275280 operating range shall be expressed in equity and debt allocation equivalency 23
276281 terms and shall meet all of the following criteria: 24
277282 a. The range is deemed appropriate in seeking to maximize long-term 25
278283 returns. 26
279284 b. The risk is not considered undue relative to other similarly situated 27
280285 U.S. public pension funds. An assessment of compliance with this 28
281286 requirement related to undue risk shall be construed in a manner 29
282287 consistent with subsections (c) and (d) of G.S. 147-70.6. 30
283288 c. In setting the range, the Board of Directors has taken into 31
284289 consideration all of the factors affecting the funding of the Retirement 32
285290 Systems and each of the Retirement Systems' ability to meet its 33
286291 financial obligations. 34
287292 (5) The Board of Directors shall utilize the approved absolute risk operating range 35
288293 under subdivision (4) of this subsection to recommend investment return 36
289294 assumptions to (i) the Board of Trustees of the Local Governmental 37
290295 Retirement System, (ii) the Board of Trustees of the Teachers' and State 38
291296 Employees' Retirement System, and (iii) the actuaries engaged to prepare 39
292297 annual actuarial valuations. 40
293298 (b) Annual Internal Budget. – The Board of Directors shall not approve an annual internal 41
294299 budget for the Investment Authority that exceeds three basis points of a rolling three-year average 42
295300 of total assets invested by the Investment Authority, unless the Investment Authority reasonably 43
296301 determines that, because of special circumstances, including applicable investment restrictions, 44
297302 it is clearly not prudent to do so. The annual internal budget includes expenditures directly 45
298303 associated with services retained by the Investment Authority in accordance with subsection (c) 46
299304 of this section and employee compensation and benefits. The Investment Authority's approved 47
300305 annual internal budget as well as the Investment Authority's actual spending for the prior fiscal 48
301306 year shall be annually reported to the Joint Legislative Commission on Governmental Operations, 49
302307 the House of Representatives Appropriations Committee, the Senate Appropriations/Base 50
303308 Budget Committee, and the Fiscal Research Division. 51 General Assembly Of North Carolina Session 2025
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305310 (c) Authority to Contract for Services. – Notwithstanding Article 3 of Chapter 143 of the 1
306311 General Statutes, G.S. 114-2.3, and G.S. 147-17, the Investment Authority is authorized to 2
307312 independently retain the services of appraisers, auditors, actuaries, attorneys, investment 3
308313 consultants, statisticians, custodians, information technology professionals, or other persons or 4
309314 firms possessing specialized skills or knowledge necessary for the proper administration of 5
310315 investment programs created pursuant to this section. 6
311316 (d) Setting of Compensation Plans. – In order to promote achievement of long-term 7
312317 investment objectives and to retain key public employees with investment functions, the 8
313318 Investment Authority is authorized to establish, consistent with the Investment Authority's 9
314319 fiduciary duties, market-oriented compensation plans, including salaries and performance-related 10
315320 bonuses, for employees possessing specialized skills or knowledge necessary for the proper 11
316321 administration of investment programs. The design and administration of those compensation 12
317322 plans shall be based on compensation studies conducted by a nationally recognized firm 13
318323 specializing in public fund investment compensation. The compensation and other associated 14
319324 employee benefits shall be apportioned directly from the investment program. The Investment 15
320325 Authority shall report the salaries and bonuses paid to the Joint Legislative Oversight Committee 16
321326 on General Government annually. 17
322327 "§ 147-71.3. Liability of Board of Directors. 18
323328 An individual serving on the Board of Directors shall be immune individually from civil 19
324329 liability for monetary damages, except to the extent covered by insurance, for any act or failure 20
325330 to act arising out of that service, except where any of the following apply: 21
326331 (1) The individual was not acting within the scope of that individual's official 22
327332 duties. 23
328333 (2) The individual was not acting in good faith. 24
329334 (3) The individual committed gross negligence or willful or wanton misconduct 25
330335 that resulted in the damages or injury. 26
331336 (4) The individual derived an improper personal financial benefit, either directly 27
332337 or indirectly, from the transaction. 28
333338 (5) The individual incurred the liability from the operation of a motor vehicle. 29
334339 … 30
335340 "§ 147-72.1. Chief Investment Officer. 31
336341 (a) Principal Executive Officer. – The Chief Investment Officer is the Investment 32
337342 Authority's principal executive officer and is responsible to the Board of Directors. 33
338343 (b) Appointment and Term. – The CIO shall be appointed by a majority vote of the Board 34
339344 of Directors, and any vacancy may be so filled by the Board of Directors. An individual appointed 35
340345 as the CIO shall have expert knowledge of investments and a minimum of a 15-year track record 36
341346 of successful management in pension, endowment, or other relevant investment management 37
342347 arenas. The term of employment and compensation of the CIO is set by the Board of Directors, 38
343348 except that each term of employment shall be limited to five years or less. The CIO is eligible 39
344349 for multiple terms of employment without interruption. The CIO may be removed from office by 40
345350 the Board of Directors. 41
346351 (c) Employment of Staff. – The Chief Investment Officer shall employ staff necessary to 42
347352 assist the CIO and the Board of Directors in carrying out duties and responsibilities under this 43
348353 Article or as prescribed in any other law. Unless otherwise provided by law, Investment Authority 44
349354 employees shall serve at the pleasure of the CIO and any vacancies in these positions may be 45
350355 filled by the CIO. The CIO may designate managerial, professional, and policy-making positions 46
351356 as exempt from the North Carolina Human Resources Act, in accordance with G.S. 126-5(c1). 47
352357 Compensation of employees is set by the CIO within the limits set by the compensation plan 48
353358 approved by the Board of Directors under G.S. 147-71.2. 49
354359 (d) Contract Negotiation. – The CIO may negotiate, renegotiate, and execute contracts 50
355360 with third parties in the performance of the CIO's duties and responsibilities under this Article. 51 General Assembly Of North Carolina Session 2025
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357362 Any delegation of authority by the Board of Directors shall require Board of Directors approval 1
358363 and shall reserve certain strategic decisions and extraordinary investment decisions to the Board 2
359364 of Directors. Contract execution with master global custodian banks and external auditors shall 3
360365 be done only after approved by the Board of Directors. 4
361366 … 5
362367 "§ 147-73.2. Ethics policies. 6
363368 To ensure that the State Treasurer's Investment Authority investment programs operate under 7
364369 a strong governance framework with rigorous internal controls and a high degree of operational 8
365370 transparency and are managed with the highest ethical and professional standards and in the most 9
366371 efficient and effective manner possible, the State Treasurer, after consultation with the 10
367372 Investment Advisory Committee, is authorized and required to Board of Directors shall adopt 11
368373 policies and procedures on the following topics: 12
369374 (1) Requiring that the Department of State Treasurer's Investment Management 13
370375 Division Investment Authority adopt a code of ethics. 14
371376 (2) Requiring all employees of the Department Investment Authority who have 15
372377 responsibility for matters related to investments to be provided with training 16
373378 with respect to the discharge of their duties and responsibilities to the funds. 17
374379 (3) Governing gifts to employees of the Department Investment Authority who 18
375380 have responsibility for matters related to investments. 19
376381 (4) Imposing limitations on external investment managers' use of placement 20
377382 agents and other persons that appear before the Department Investment 21
378383 Authority to ensure that these persons play only a proper role in investment 22
379384 opportunities. 23
380385 (5) As a component of the investment due diligence, negotiations, and contracting 24
381386 process, requiring an independent assessment of whether circumstances exist 25
382387 that create a material risk that professional judgement or actions regarding a 26
383388 potential investment arrangement's recommendation, approval, or execution 27
384389 have been or will be unduly influenced by a direct or indirect personal 28
385390 interest." 29
386391 SECTION 2.3.(a) Rules, codes of ethics, policies, and procedures adopted by the 30
387392 State Treasurer in effect on June 30, 2025, that are impacted by the change in authority from the 31
388393 State Treasurer or Department of State Treasurer to the Investment Authority under this Part shall 32
389394 remain in effect until amended by law, amended by the Investment Authority, or repealed. 33
390395 SECTION 2.3.(b) Before January 1, 2026, when the Investment Authority shall 34
391396 begin to manage investments under Part III of this act, funds appropriated to the Department of 35
392397 State Treasurer and funds available to the Department of State Treasurer under G.S. 147-69.3 36
393398 may be used to pay any expenses of the Investment Authority. 37
394399 SECTION 2.4. This Part is effective July 1, 2025. 38
395400 39
396401 PART III. NORTH CAROLINA INVESTMENT AUTHORITY TO MANAGE 40
397402 INVESTMENTS AND BEGIN CARRYING OUT STATUTORY DUTIES JANUARY 1, 41
398403 2026 42
399404 SECTION 3.1.(a) Part 2 of Article 6 of Chapter 147 of the General Statutes, as 43
400405 created and amended by Part I of this act, reads as rewritten: 44
401406 "Part 2. Investments and Funds 45
402407 "§ 147-69.1. Investments authorized for General Fund and Highway Funds assets. 46
403408 (a) The Governor and Council of State, with the advice and assistance of the State 47
404409 Treasurer, shall Treasurer and the Investment Authority, may adopt such rules and regulations as 48
405410 shall be necessary and appropriate to implement the provisions for the implementation of this 49
406411 section. 50 General Assembly Of North Carolina Session 2025
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408413 (b) This section applies to funds held by deposited with the State Treasurer to the credit 1
409414 of:of all of the following: 2
410415 (1) The General Fund;Fund. 3
411416 (2) The Highway Fund and Highway Trust Fund. 4
412417 (c) It shall be is the duty of the State Treasurer Investment Authority to invest the cash 5
413418 of the funds enumerated in subsection (b) of this section in excess of the amount required to meet 6
414419 the current needs and demands on such those funds, selecting from among the following: 7
415420 (1) Obligations of the United States or obligations fully guaranteed both as to 8
416421 principal and interest by the United States. 9
417422 (2) Obligations of the Federal Farm Credit Bank, the Federal Home Loan Banks, 10
418423 the Federal Home Loan Mortgage Corporation, Fannie Mae, the Government 11
419424 National Mortgage Association, the International Bank for Reconstruction 12
420425 and Development, the International Finance Corporation, the Inter-American 13
421426 Development Bank, the Asian Development Bank, and the African 14
422427 Development Bank. 15
423428 (3) Repurchase Agreements with respect to one or more of the following: 16
424429 a. Securities issued or guaranteed by the United States government or its 17
425430 agencies. 18
426431 b. Securities eligible for investment by this section executed by a bank 19
427432 or trust company or by primary or other reporting dealers to the 20
428433 Federal Reserve Bank of New York. 21
429434 c. Securities eligible for investment by this section executed by a 22
430435 registered broker-dealer that is subject to the rules and regulations of 23
431436 the U.S. Securities and Exchange Commission and is a member in 24
432437 good standing of the Financial Industry Regulatory Authority. 25
433438 (4) Obligations of the State of North Carolina. 26
434439 (5) Certificates of deposit and other deposit accounts of financial institutions 27
435440 under any of the following conditions: 28
436441 a. With financial institutions with a physical presence in the State for the 29
437442 purpose of receiving commercial or retail deposits; provided that any 30
438443 principal amount of such deposit in excess of the amount insured by 31
439444 the federal government or any agency thereof, be fully secured by 32
440445 surety bonds, or be fully collateralized; provided further that the rate 33
441446 of return or investment yield may not be less than that available in the 34
442447 market on United States government or agency obligations of 35
443448 comparable maturity. 36
444449 b. With financial institutions with a physical presence inside or outside 37
445450 the State, in accordance with all of the following conditions: 38
446451 1. The funds are initially deposited through a bank or savings and 39
447452 loan association in the State that is an official depository and 40
448453 that is selected by the State Treasurer, provided that the rate of 41
449454 return or investment yield shall not be less than that available 42
450455 in the market on United States government or agency 43
451456 obligations of comparable maturity. 44
452457 2. The selected bank or savings and loan association arranges for 45
453458 the redeposit of the funds in deposit accounts of the State in 46
454459 one or more federally insured banks or savings and loan 47
455460 associations wherever located, provided that no State funds 48
456461 shall be deposited in a bank or savings and loan association 49
457462 that at the time holds other deposits from the State. 50 General Assembly Of North Carolina Session 2025
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459464 3. The full amount of principal and any accrued interest of each 1
460465 deposit account are covered by federal deposit insurance. 2
461466 4. The selected bank or savings and loan association acts as 3
462467 custodian for the State with respect to the deposit in the State's 4
463468 account. 5
464469 5. On the same date that the State funds are redeposited, the 6
465470 selected bank or savings and loan association receives an 7
466471 amount of federally insured deposits from customers of other 8
467472 financial institutions wherever located equal to or greater than 9
468473 the amount of the funds invested by the State through the 10
469474 selected bank or savings and loan association pursuant to this 11
470475 sub-subdivision. 12
471476 … 13
472477 (7) Prime quality commercial paper that, when acquired, bears the highest rating, 14
473478 such as a minimum of "P1," "A1," or "F1," of at least one nationally 15
474479 recognized rating service designated by the U.S. Securities and Exchange 16
475480 Commission, and does not bear a rating below the highest by any nationally 17
476481 recognized rating service which rates the particular obligation. 18
477482 (8) Bills of exchange or time drafts drawn on and accepted by a commercial bank 19
478483 and eligible for use as collateral by member banks in borrowing from a federal 20
479484 reserve bank, provided that when bills or drafts are acquired, the accepting 21
480485 bank or its holding company is either (i) incorporated in the State of North 22
481486 Carolina or (ii) has outstanding publicly held obligations that bear the highest 23
482487 rating, such as a minimum of "P1," "A1," or "F1," of at least one nationally 24
483488 recognized rating service designated by the U.S. Securities and Exchange 25
484489 Commission, and do not bear a rating below the highest by any nationally 26
485490 recognized rating service which rates the particular obligations. 27
486491 (9) Asset-backed securities (whether considered debt or equity) provided, when 28
487492 acquired, the securities bear the highest rating, such as "AAA" or "Aaa," of at 29
488493 least one nationally recognized rating service designated by the U.S. 30
489494 Securities and Exchange Commission, and do not bear a rating below the 31
490495 highest rating by any nationally recognized rating service which rates the 32
491496 particular securities. 33
492497 (10) Corporate bonds and notes provided they, when acquired, bear the highest 34
493498 rating, such as "AAA" or "Aaa," of at least one nationally recognized rating 35
494499 service designated by the U.S. Securities and Exchange Commission, and do 36
495500 not bear a rating below the highest by any nationally recognized rating service 37
496501 which rates the particular obligation. 38
497502 (d) Unless otherwise provided by law, the interest or income received and accruing from 39
498503 all deposits or investments of such cash balances shall be paid into the State's General Fund, 40
499504 except that all interest or income received and accruing on the monthly balance of the Highway 41
500505 Fund and Highway Trust Fund shall be paid into the State Highway Fund and Highway Trust 42
501506 Fund. The cash balances of the several funds may be combined for deposit or investment 43
502507 purposes; and when such combined deposits or investments are made, the interest or income 44
503508 received and accruing from all deposits or investments shall be prorated among the funds in 45
504509 conformity with applicable law and the rules and regulations adopted by the Governor and 46
505510 Council of State. 47
506511 … 48
507512 "§ 147-69.2. Investments authorized for special funds held by State Treasurer. 49
508513 (a) This section applies to funds held by the State Treasurer to the credit of each of the 50
509514 following: 51 General Assembly Of North Carolina Session 2025
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511516 (1) The Teachers' and State Employees' Retirement System of North Carolina. 1
512517 (2) The Consolidated Judicial Retirement System of North Carolina. 2
513518 (3) The State Health Plan for Teachers and State Employees. 3
514519 … 4
515520 (5) The Disability Salary Continuation Income Plan of North Carolina. 5
516521 (6) The North Carolina Firefighters' and Rescue Squad Workers' Pension Fund. 6
517522 (7) The North Carolina Local Governmental Employees' Retirement System. 7
518523 (8) The Legislative Retirement System of North Carolina. 8
519524 (9) The Escheat Fund. 9
520525 (10) The Legislative Retirement Fund. 10
521526 (11) The State Education Assistance Authority. 11
522527 (12) The State Property Fire Insurance Fund. 12
523528 … 13
524529 (16) The Liability Insurance Trust Fund. 14
525530 (16a) The University of North Carolina Hospitals at Chapel Hill funds, except 15
526531 appropriated funds, deposited with the State Treasurer pursuant to 16
527532 G.S. 116-350.40. 17
528533 (17) Trust funds of The University of North Carolina and its constituent institutions 18
529534 deposited with the State Treasurer pursuant to G.S. 116-36.1. 19
530535 (17a) North Carolina Veterans Home Trust Fund. 20
531536 (17b) North Carolina National Guard Pension Fund. 21
532537 (17c) Retiree Health Benefit Fund. 22
533538 (17d) The Election Fund. 23
534539 (17e) The North Carolina State Lottery Fund. 24
535540 (17f) Funds deposited with the State Treasurer by public hospitals pursuant to 25
536541 G.S. 159-39(g). 26
537542 (17g) Funds deposited with the State Treasurer by Local Government Other 27
538543 Post-Employment Benefits Trusts pursuant to G.S. 159-30.1. 28
539544 (17h) The Local Government Law Enforcement Special Separation Allowance 29
540545 Fund. 30
541546 (17i) The North Carolina Conservation Easement Endowment Fund. 31
542547 (17j) The Conservation Grant Fund. 32
543548 (17k) The Wildlife Endowment Fund. 33
544549 (17l) The Ecosystem Restoration Fund. 34
545550 (17m) The Needs-Based Public School Capital Fund. 35
546551 (17n) The Riparian Buffer Restoration Fund. 36
547552 (18) Any other special fund created by or pursuant to law for purposes other than 37
548553 meeting appropriations made pursuant to the Executive Budget Act. 38
549554 (19) The Swain County Settlement Trust Fund. 39
550555 (20) Institutional funds of the colleges of the North Carolina Community College 40
551556 System. 41
552557 (21) The Disability Income Plan of North Carolina. 42
553558 … 43
554559 (23) The Catawba Unit No. 1 Decommissioning Trust Fund and the Catawba Unit 44
555560 No. 2 Decommissioning Trust Fund established by North Carolina Municipal 45
556561 Power Agency Number 1, as described in G.S. 159B-18(b)(6). 46
557562 (24) Funds deposited with the State Treasurer by charter schools pursuant to 47
558563 G.S. 115C-218.15(f). 48
559564 (b) It shall be the duty of the State Treasurer Investment Authority to invest the cash of 49
560565 the funds enumerated in subsection (a) of this section in excess of the amount required to meet 50
561566 the current needs and demands on these funds. The State Treasurer Investment Authority may 51 General Assembly Of North Carolina Session 2025
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563568 invest the funds as provided in this subsection in the manner authorized by subsection (e) of this 1
564569 section. If an investment was authorized by this subsection at the time the investment was made 2
565570 or contractually committed to be made, then that investment shall continue to be authorized by 3
566571 this subsection, and none of the percentage or other limitation on investments set forth in this 4
567572 subsection shall be construed to require the State Treasurer Investment Authority to subsequently 5
568573 dispose of the investment or fail to honor any contractual commitments as a result of changes in 6
569574 market values, ratings, or other investment qualifications. For purposes of computing market 7
570575 values on which percentage limitations on investments in this subsection are based, all 8
571576 investments shall be valued as of the last date of the most recent fiscal quarter. Notwithstanding 9
572577 anything in this section to the contrary, the State Treasurer Investment Authority shall categorize 10
573578 investment management arrangements according to the primary investment type or primary 11
574579 strategy utilized under the arrangement authorized under subsection (e) of this section. No 12
575580 investment management arrangement may be categorized in more than one of the subdivisions 13
576581 of this section. The State Treasurer Investment Authority shall select from among the following 14
577582 investments subject to the following any stipulated limitations and requirements:requirements: 15
578583 (1) Investments authorized by G.S. 147-69.1(c)(1)-(7). 16
579584 (2) General obligations of other states of the United States. 17
580585 (3) General obligations of cities, counties and special districts in North Carolina. 18
581586 (4) Obligations of any company, other organization or legal entity incorporated 19
582587 or otherwise created or located within or outside the United States, including 20
583588 obligations that are convertible into equity securities, if, when acquired, the 21
584589 obligations are within one of the four highest rating categories regardless of 22
585590 gradations, such as ratings beginning with "AAA," "AA," "A," or either 23
586591 "BBB" or "Baa," of at least one nationally recognized rating service 24
587592 designated by the U.S. Securities and Exchange Commission. 25
588593 … 26
589594 (6) Asset-backed securities (whether securities, whether considered debt or 27
590595 equity), equity, if, when acquired, the obligations are within one of the four 28
591596 highest ratings categories regardless of gradations, such as ratings beginning 29
592597 with "AAA," "AA," "A," or either "BBB" or "Baa," of at least one nationally 30
593598 recognized rating service designated by the U.S. Securities and Exchange 31
594599 Commission. 32
595600 (6a) In addition to the limitations and requirements with respect to the investments 33
596601 of the Retirement Systems set forth in under this subsection, the State 34
597602 Treasurer Investment Authority shall select investments of the assets of the 35
598603 Retirement Systems such that investments made pursuant to subdivisions 36
599604 (b)(1) (1) through (6) of this section subsection shall at all times equal or 37
600605 exceed twenty percent (20%) of the market value of all invested assets of the 38
601606 Retirement Systems. 39
602607 … 40
603608 (6c) With respect to Retirement Systems' assets referred to in subdivision (b)(8), 41
604609 they may be invested, within or outside the United States, in obligations, debt 42
605610 securities, and asset-backed securities, whether considered debt or equity, 43
606611 including obligations and securities convertible into other securities, that do 44
607612 not meet the requirements of any of subdivisions (b)(1) (1) through (6) of this 45
608613 section subsection nor subdivision (b)(7) (7) of this section. The amount 46
609614 invested under this subdivision shall not exceed seven and one-half percent 47
610615 (7.5%) of the market value of all invested assets of the Retirement 48
611616 Systems.subsection. 49
612617 (7) Retirement Systems' assets referred to in subdivision (8) of this subsection 50
613618 may be invested in strategies managed primarily for the purpose of owning 51 General Assembly Of North Carolina Session 2025
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615620 real estate or related debt financing, excluding asset-backed financing and 1
616621 timberlands, located within or outside the United States. The amount invested 2
617622 under this subdivision shall not exceed ten percent (10%) of the market value 3
618623 of all invested assets of the Retirement Systems. 4
619624 (8) With respect to assets of the Teachers' and State Employees' Retirement 5
620625 System, the Consolidated Judicial Retirement System, the Firefighters' and 6
621626 Rescue Workers' Pension Fund, the Local Governmental Employees' 7
622627 Retirement System, the Legislative Retirement System, the North Carolina 8
623628 National Guard Pension Fund, the Registers of Deeds' Supplemental Pension 9
624629 Fund, and the Retiree Health Benefit Fund (hereinafter referred to collectively 10
625630 as the Retirement Systems), they Retirement Systems' assets may be invested 11
626631 in a strategy composed primarily of equity securities traded on a public 12
627632 securities exchange or market organized and regulated pursuant to the laws of 13
628633 the jurisdiction of the exchange or market and issued by any company 14
629634 incorporated or otherwise created or located within or outside the United 15
630635 States as long as the investments meet the conditions of this subdivision. The 16
631636 investments authorized for the Retirement Systems under this subdivision are 17
632637 subject to the following limitations: 18
633638 … 19
634639 a1. The aggregate amount of the investments cannot exceed sixty-five 20
635640 percent (65%) of the market value of all invested assets of the 21
636641 Retirement Systems. 22
637642 b. The aggregate amount of the investment invested through investment 23
638643 companies described in sub-subdivision (e)(4)b. of this section shall 24
639644 not exceed eight and one-half percent (8.5%) of the market value of 25
640645 all invested assets of the Retirement Systems, except that the market 26
641646 value of group trusts and individual, common, or collective trust funds 27
642647 of banks and trust companies shall not be applied against this limit. 28
643648 … 29
644649 (9) With respect to Retirement Systems' assets, as defined in subdivision (b)(8) 30
645650 of this subsection, they assets may be invested in (i) a strategy composed 31
646651 primarily of private equity, or corporate buyout transactions, within or outside 32
647652 the United States or (ii) an arrangement authorized under subsection (e) of this 33
648653 section with the primary purpose to engage in other strategies not expressly 34
649654 authorized by any other subdivision of this subsection. The amount invested 35
650655 under this subdivision shall not exceed eight and three-quarters percent 36
651656 (8.75%) of the market value of all invested assets of the Retirement Systems. 37
652657 (9a) With respect to Retirement Systems' assets, as defined in subdivision (b)(8) 38
653658 of this subsection, they assets may be invested, within or outside the United 39
654659 States, in obligations, debt securities, asset-backed securities, whether 40
655660 considered debt or equity, and other investments that are acquired by the 41
656661 Treasurer Investment Authority for the primary purpose of providing 42
657662 protection against risks associated with inflation, along with owning real 43
658663 assets or related debt financing, including, but not limited to, timberland, 44
659664 natural resources, commodities, infrastructure, transportation, agriculture, and 45
660665 other tangible and intangible real assets. The amount invested under this 46
661666 subdivision shall not exceed seven and one-half percent (7.5%) of the market 47
662667 value of all invested assets of the Retirement Systems. 48
663668 … 49
664669 (10a) With respect to Retirement Systems' assets, as defined in subdivision (8) of 50
665670 this subsection, the market value of any of subdivision (6c) or (7), 51 General Assembly Of North Carolina Session 2025
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667672 sub-subdivision b. of subdivision (8), or subdivision (9) or (9a) of this 1
668673 subsection shall not exceed ten percent (10%) of the market value of all 2
669674 invested assets of the Retirement Systems; and the The aggregate market value 3
670675 of all assets invested pursuant to subdivisions (6c) and (7), sub-subdivision b. 4
671676 of subdivision (8), and subdivisions (9) and (9a) (6c), (7), (8), (9), and (9a) of 5
672677 this subsection shall not exceed thirty-five percent (35%) eighty percent 6
673678 (80%) of the market value of all invested assets of the Retirement 7
674679 Systems.Systems, including any digital assets invested pursuant to 8
675680 G.S. 147-69.2E(c). 9
676681 (10b) The market value of illiquid investments, as determined by the Board of 10
677682 Directors, shall not exceed forty percent (40%) of the market value of all 11
678683 invested assets of the Retirement System. 12
679684 … 13
680685 (12) It is the intent of the General Assembly that the Escheat Fund provide a 14
681686 perpetual and sustainable source of funding for the purposes authorized by the 15
682687 State Constitution. Accordingly, the following provisions apply:apply to the 16
683688 assets of the Escheat Fund: 17
684689 a. With respect to The Investment Authority may invest the assets of the 18
685690 Escheat Fund, in addition to Fund in those investments authorized by 19
686691 subdivisions (1) through (6) of this subsection, up to ten percent (10%) 20
687692 subsection. Up to eighty percent (80%) of the assets may be invested 21
688693 in the investments authorized under subdivisions (6c) through (9a) of 22
689694 this subsection, notwithstanding the percentage limitations imposed on 23
690695 the Retirement Systems' investments under those subdivisions, and 24
691696 provided that the State Treasurer subsection. The Investment 25
692697 Authority may invest the assets as provided in subsection (e) of this 26
693698 section. 27
694699 … 28
695700 c. The State Treasurer shall The Investment Authority may invest, in 29
696701 addition to those investments authorized by sub-subdivision a. ten 30
697702 percent (10%) of the net assets of the Escheat Fund as authorized under 31
698703 G.S. 147-69.2A. 32
699704 (b1) The State Treasurer shall appoint an Investment Advisory Committee, which shall 33
700705 consist of seven members: the State Treasurer, who shall be chairman ex officio; two members 34
701706 selected from among the members of the boards of trustees of the Retirement Systems; and four 35
702707 members selected from the general public. All appointed members must have experience in areas 36
703708 relevant to the administration of a large, diversified investment program, including, but not 37
704709 limited to, investment management, securities law, real estate development, or absolute return 38
705710 strategies. The State Treasurer shall also appoint a Secretary of the Investment Advisory 39
706711 Committee who need not be a member of the committee. Members of the committee shall receive 40
707712 for their services the same per diem and allowances granted to members of the State boards and 41
708713 commissions generally. The committee shall have advisory powers only and membership shall 42
709714 not be deemed a public office within the meaning of Article VI, Section 9 of the Constitution of 43
710715 North Carolina or G.S. 128-1.1. 44
711716 (b2) The State Treasurer Investment Authority may invest funds deposited pursuant to 45
712717 subdivision (a)(17f) of this section in any of the investments authorized under subdivisions (b)(1) 46
713718 through (6), subdivision (b)(6c), and subdivision (b)(8) of this section, notwithstanding the 47
714719 percentage limitations imposed on the Retirement Systems' investments therein. section. The 48
715720 State Treasurer Investment Authority may require a minimum deposit, up to one hundred 49
716721 thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 50
717722 annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to 51 General Assembly Of North Carolina Session 2025
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719724 this subsection by a hospital shall remain the funds of that hospital, and interest or other 1
720725 investment income earned thereon shall be prorated and credited to the contributing hospital on 2
721726 the basis of the amounts thereof contributed, figured according to sound accounting principles. 3
722727 Fees assessed by the State Treasurer Investment Authority may be used to defray the cost of 4
723728 administering investments pursuant to this subsection and expenditures authorized under this 5
724729 section. 6
725730 (b3) The State Treasurer Investment Authority may invest funds deposited pursuant to 7
726731 subdivision (a)(16a) of this section in any of the investments authorized under subdivisions (1) 8
727732 through (6), subdivision (6c) and subdivision (b)(8) of this section, notwithstanding the 9
728733 percentage limitations imposed on the Retirement Systems' investments therein. section. The 10
729734 State Treasurer Investment Authority may require a minimum deposit, up to one hundred 11
730735 thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 12
731736 annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to 13
732737 this subsection by the University of North Carolina Hospitals at Chapel Hill shall remain the 14
733738 funds of the University of North Carolina Hospitals at Chapel Hill, and interest or other 15
734739 investment income earned thereon shall be prorated and credited to the University of North 16
735740 Carolina Hospitals at Chapel Hill on the basis of the amounts thereof contributed, figured 17
736741 according to sound accounting principles. Fees assessed by the State Treasurer Investment 18
737742 Authority may be used to defray the cost of administering investments pursuant to this subsection 19
738743 and expenditures authorized under this section. 20
739744 (b4) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 21
740745 section, the State Treasurer Investment Authority may invest funds deposited pursuant to 22
741746 subdivision (17g) of subsection (a) of this section in any of the investments authorized under 23
742747 subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage limitations 24
743748 imposed on the Retirement Systems' investments therein. section. Funds deposited pursuant to 25
744749 this subsection by a Local Government Other Post-Employment Benefits Trust and interest or 26
745750 other investment income earned from those funds shall be prorated and credited to the 27
746751 contributing trust on the basis of the amounts contributed, figured according to sound accounting 28
747752 principles. For investments under subdivisions (b)(6c) and (b)(8) of this section, the State 29
748753 Treasurer Investment Authority may require a minimum deposit of up to one hundred thousand 30
749754 dollars ($100,000) and may assess reasonable fees of up to 15 basis points per annum as a 31
750755 condition of participation pursuant to this subsection. Fees assessed by the State Treasurer 32
751756 Investment Authority may be used to defray the costs of administering the Fund and expenditures 33
752757 authorized under this section. 34
753758 (b5) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 35
754759 section, the State Treasurer Investment Authority may invest funds deposited in the Local 36
755760 Government Law Enforcement Special Separation Allowance Fund in any of the investments 37
756761 authorized under subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage 38
757762 limitations imposed on the Retirement Systems' investments therein. section. For investments 39
758763 from that Fund made under subdivisions (b)(6c) and (b)(8) of this section, the State Treasurer 40
759764 Investment Authority may require a minimum deposit of up to one hundred thousand dollars 41
760765 ($100,000) and may assess reasonable fees of up to 15 basis points per annum as a condition of 42
761766 making the investment. The fee may be used to defray the costs of administering the Fund and 43
762767 expenditures authorized under this section. 44
763768 (b6) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 45
764769 section, the State Treasurer Investment Authority may invest funds deposited in the Catawba 46
765770 Unit No. 1 Decommissioning Trust Fund and the Catawba Unit No. 2 Decommissioning Trust 47
766771 Fund in any of the investments authorized under subdivisions (b)(6c) and (b)(8) of this section, 48
767772 notwithstanding the percentage limitations imposed on the Retirement Systems' investments 49
768773 therein. section. For investments from the Funds made under subdivisions (b)(6c) and (b)(8) of 50
769774 this section, the State Treasurer Investment Authority may require a minimum deposit of up to 51 General Assembly Of North Carolina Session 2025
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771776 one hundred thousand dollars ($100,000) and may assess reasonable fees of up to 15 basis points 1
772777 per annum as a condition of making the investment. The fee may be used to defray the costs of 2
773778 administering the Fund and expenditures authorized under this section. 3
774779 (b7) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 4
775780 section, the State Treasurer Investment Authority may invest funds deposited in the Swain 5
776781 County Settlement Trust Fund in any of the investments authorized under subdivision (b)(8) of 6
777782 this section, notwithstanding the percentage limitations imposed on the Retirement Systems' 7
778783 investments therein. section. For investments from that Fund made under subdivision (b)(8) of 8
779784 this section, the State Treasurer Investment Authority may require a minimum deposit of up to 9
780785 one hundred thousand dollars ($100,000) and may assess reasonable fees of up to 15 basis points 10
781786 per annum as a condition of making the investment. The fee may be used to defray the costs of 11
782787 administering the Fund and expenditures authorized under this section. 12
783788 (b8) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 13
784789 section, the State Treasurer Investment Authority may invest funds deposited pursuant to 14
785790 subdivision (24) of subsection (a) of this section in any of the investments authorized under 15
786791 subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage limitations 16
787792 imposed on the Retirement Systems' investments therein. For investments from that Fund made 17
788793 under subdivisions (b)(6c) and (b)(8) of this section, the State Treasurer Investment Authority 18
789794 may require a minimum deposit of up to fifty thousand dollars ($50,000) and may assess 19
790795 reasonable fees of up to 15 basis points per annum as a condition of making the investment. The 20
791796 fee may be used to defray the costs of administering investments and expenditures authorized 21
792797 under this section. 22
793798 … 23
794799 (d) The State Treasurer Investment Authority may invest funds deposited pursuant to 24
795800 subdivisions (17i), (17j), (17k), (17l), and (17n) of subsection (a) of this section in any of the 25
796801 investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) 26
797802 of this section. The State Treasurer Investment Authority may require a minimum deposit, up to 27
798803 one hundred thousand dollars ($100,000), and may assess a reasonable fee, not to exceed 15 basis 28
799804 points, as a condition of participation pursuant to this subsection. Fees assessed by the State 29
800805 Treasurer Investment Authority may be used to defray the costs of administering the funds and 30
801806 expenditures authorized under this section. Funds deposited pursuant to this subsection shall 31
802807 remain the funds of the North Carolina Conservation Easement Endowment Fund, the 32
803808 Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian Buffer Restoration 33
804809 Fund, or the Wildlife Endowment Fund, as applicable, and interest or other investment income 34
805810 earned thereon shall be prorated and credited to the North Carolina Conservation Easement 35
806811 Endowment Fund, the Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian 36
807812 Buffer Restoration Fund, or the Wildlife Endowment Fund on the basis of the amounts 37
808813 contributed to the respective Funds, figured according to sound accounting principles. 38
809814 (e) Investments made pursuant to this section may be made as internally managed 39
810815 investments by the State Treasurer Investment Authority or may be made through third-party 40
811816 investment management arrangements, under the following conditions: 41
812817 (1) Internally managed portfolios shall be subject to industry standard portfolio 42
813818 guidelines developed with periodic consultation by the Investment Advisory 43
814819 Committee.guidelines. 44
815820 (2) In assessing whether to invest directly or to utilize indirect third-party 45
816821 investment management arrangements, the State Treasurer Investment 46
817822 Authority shall consider all relevant material factors he or she considers 47
818823 relevant to the decision consistent with the Treasurer's Investment Authority's 48
819824 fiduciary duties under G.S. 147-69.7, G.S. 147-70.6, including financial, 49
820825 operational, and investment expertise and resources, alignment of interests 50 General Assembly Of North Carolina Session 2025
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822827 and investor protections, transparency and repeatability of investment process, 1
823828 risk controls, and cost-effectiveness. 2
824829 (3) For any third-party investment management arrangements, the investment 3
825830 manager must have total assets under management of at least one hundred 4
826831 million dollars ($100,000,000) at the inception of the investment management 5
827832 arrangement with the State Treasurer. 6
828833 (4) Third-party investment management arrangements may be with persons and 7
829834 legal entities located within or outside the United States, including through 8
830835 any of the following: 9
831836 a. Contractual arrangements in which the investment manager has 10
832837 delegated discretion and authority to invest assets. 11
833838 b. Investment companies as defined under United States generally 12
834839 accepted accounting principles as promulgated by the Financial 13
835840 Accounting Standards Board, including without limitation entities 14
836841 registered under the Investment Company Act of 1940; individual, 15
837842 common, or collective trust funds of banks and trust companies; 16
838843 limited partnerships; limited liability companies or other limited 17
839844 liability investment vehicles; and insurance contracts that provide for 18
840845 participation in individual or pooled separate accounts of insurance 19
841846 companies. 20
842847 Any limited liability investment vehicles organized by the State Treasurer 21
843848 Investment Authority shall be deemed investment companies for the purposes 22
844849 of this subsection.subdivision. 23
845850 (5) Investment companies shall provide annual audited financial statements to the 24
846851 State Treasurer, Investment Authority, unless the State Treasurer Investment 25
847852 Authority waives the requirement after conducting a cost-benefit analysis. 26
848853 (6) In connection with any investment otherwise authorized under this section, 27
849854 the State Treasurer Investment Authority may enter into an indemnification 28
850855 agreement provided that, under any agreement, the liability of the State 29
851856 Treasurer Investment Authority will be limited to the amount of the State 30
852857 Treasurer's Investment Authority's contractual investment. 31
853858 "§ 147-69.2A. Investments; special funds held by the State Treasurer. 32
854859 (a) Firm to Administer Special Fund. – Following a public procurement process, a 33
855860 designee of the Governor, a designee of the State Treasurer, a designee of the Speaker of the 34
856861 House of Representatives, and a designee of the President Pro Tempore of the Senate shall jointly 35
857862 and unanimously Venture Capital Multiplier Fund. – The Investment Authority may select a 36
858863 third-party professional investment management firm, subject to the rules and regulations of the 37
859864 U.S. Securities and Exchange Commission, to administer a special fund created to invest assets 38
860865 described in G.S. 147-69.2(b)(12)c. of the Escheats Fund and select investment opportunities 39
861866 appropriate for receiving allocations from the Venture Capital Multiplier Fund on the basis of 40
862867 potential return on investment and the risks attendant thereto. The State Treasurer Investment 41
863868 Authority shall assign professional and clerical staff to assist in the oversight of the Venture 42
864869 Capital Multiplier Fund. All costs for the third-party investment management firm and the 43
865870 professional and clerical staff shall be borne by the Venture Capital Multiplier Fund pursuant to 44
866871 G.S. 147-69.3(f). The State Treasurer Investment Authority shall discharge his or her its duties 45
867872 with respect to the Venture Capital Multiplier Fund as a fiduciary consistent with 46
868873 G.S. 147-69.7.G.S. 147-70.6. 47
869874 (b) Organization and Reporting. – All documents of the Governor or the State Treasurer 48
870875 concerning the Fund are public records governed by Chapter 132 of the General Statutes and any 49
871876 applicable provisions of the General Statutes protecting confidential information. 50 General Assembly Of North Carolina Session 2025
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873878 The State Treasurer and the Governor shall jointly The Investment Authority shall develop 1
874879 and adopt an investment policy statement for the Venture Capital Multiplier Fund. 2
875880 The State Treasurer and Governor shall jointly adopt a common policy to prevent conflicts 3
876881 of interests such that (i) the designees of the State Treasurer and Governor who selected the 4
877882 third-party investment management firm, (ii) the staff of the State Treasurer overseeing the Fund, 5
878883 and (iii) the third-party investment management firm's employees selecting or overseeing Fund 6
879884 investments do not provide services for compensation (as an employee, consultant, or otherwise), 7
880885 within two years after the end of their service to the Fund, to any entity in which an investment 8
881886 from the Fund was made. 9
882887 (b1) Conflict of Interest Policy. – The Investment Authority shall adopt a policy to prevent 10
883888 conflicts of interest. This policy shall include a provision prohibiting all of the following 11
884889 individuals from providing services for compensation to any entity in which an investment from 12
885890 the Venture Capital Multiplier Fund was made within two years after the end of that individual's 13
886891 service to the Fund: 14
887892 (1) The designee of the State Treasurer and Governor who selected the third-party 15
888893 investment management firm prior to the creation of the Investment Authority. 16
889894 (2) The designee of the Investment Authority who selected the third-party 17
890895 investment management firm. 18
891896 (3) The staff of the Department of State Treasurer or of the Investment Authority 19
892897 overseeing the Fund. 20
893898 (4) The third-party investment management firm's employees selecting or 21
894899 overseeing Fund investments. 22
895900 (c) Types of Investments. – Assets of the Venture Capital Multiplier Fund may be 23
896901 invested in those types of investments authorized for the North Carolina Retirement Systems by 24
897902 G.S. 147-69.2(b), notwithstanding the percentage limitations imposed on the Retirement 25
898903 Systems' investments under those subdivisions.G.S. 147-69.2(b). 26
899904 (d) Report on Escheat Fund Financial Status. – The State Treasurer Treasurer, in 27
900905 coordination with the Investment Authority, shall engage a third-party professional consultant to 28
901906 conduct an assessment and projection of the financial status of the Escheat Fund. A third-party 29
902907 professional consultant may be engaged to conduct the required assessment. The associated costs 30
903908 for the services may be directly charged to the Escheat Fund. The No later than December 31 of 31
904909 each year, the State Treasurer shall communicate the assessment of the consultant in an annual 32
905910 report to the Governor, the Speaker of the House of Representatives, the President Pro Tempore 33
906911 of the Senate, and the chairs of the respective appropriations and appropriate substantive 34
907912 committees of each chamber. The annual report shall evaluate include all of the following: 35
908913 (1) An evaluation of claims by owners upon the Escheat Fund, current and 36
909914 projected investment returns, and projected contributions to the Escheat Fund, 37
910915 current and projected legislative appropriations, and authorized expenses. In 38
911916 the report, the State Treasurer shall assess 39
912917 (2) An assessment of the State Treasurer, with the assistance of the Investment 40
913918 Authority of the status of utilizing the Escheat Fund as an endowment fund 41
914919 and shall recommend a recommendation of an annual amount available for the 42
915920 funding of scholarships, loans, and grants from the Fund. The annual report 43
916921 shall be presented no later than December 31 of each year. 44
917922 "§ 147-69.2E. Investments in digital assets. 45
918923 (a) The following definitions apply in this section: 46
919924 (1) Designated funds. – Any of the funds described in G.S. 147-69.1(b) and 47
920925 G.S. 147-69.2(a). 48
921926 (2) Digital asset. – A virtual currency, cryptocurrency, native electronic asset, 49
922927 stablecoin, nonfungible token, or any other asset that is only digital and that 50
923928 confers economic, proprietary, or access rights or powers. 51 General Assembly Of North Carolina Session 2025
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925930 (3) Private key. – A unique element of cryptographic data used for signing 1
926931 transactions on a blockchain that is known to the owner of the unique element. 2
927932 (4) Secure custody solution. – A technological product or a blended product and 3
928933 service that employs advanced security measures to safeguard private keys 4
929934 and prevent unauthorized access. 5
930935 (b) The Investment Authority may invest the cash of the designated funds in digital assets 6
931936 only after approval by the Board of Directors. The approval shall be based on an independent 7
932937 assessment by a third-party consultant that all of the following requirements for proposed 8
933938 investments have been met: 9
934939 (1) The digital assets are maintained with a secure custody solution. 10
935940 (2) The risk and reward profile, including under adverse scenarios, is appropriate 11
936941 for the designated fund's circumstances from a total portfolio perspective. 12
937942 (3) The control environment meets institutional investment industry requirements 13
938943 for independent risk and compliance oversight, operational robustness, and 14
939944 regulatory compliance. 15
940945 (c) An investment in digital assets from any of the designated funds shall not exceed, in 16
941946 the aggregate, five percent (5%) of the balance of the designated fund for an initial period of time 17
942947 that is set by the Board of Directors. The Board of Directors shall annually review the percentage 18
943948 limit on digital assets investments and may raise or lower the limit after the initial period. 19
944949 "§ 147-69.3. Administration of State Treasurer's Investment Authority's investment 20
945950 programs. 21
946951 (a) The State Treasurer shall deposit with the Investment Authority assets of the funds 22
947952 under G.S. 147-69.1 and the special funds under G.S. 147-69.2. The Investment Authority shall 23
948953 establish, maintain, administer, manage, and operate within the Department of State Treasurer 24
949954 one or more investment programs for the deposit and to the credit of the State Treasurer of the 25
950955 investment of assets pursuant to the provisions of G.S. 147-69.1 and G.S. 147-69.2. Different of 26
951956 the funds under G.S. 147-69.1 and the special funds under G.S. 147-69.2. Funds of each of the 27
952957 Retirement Systems and other funds held by the State Treasurer Investment Authority may be 28
953958 invested collectively or separately in the State Treasurer's Investment Authority's discretion 29
954959 consistent with the fiduciary duties stated in G.S. 147-69.7.under G.S. 147-70.6. 30
955960 (b) Any official, board, commission, other public authority, local government, school 31
956961 administrative unit, charter school, local ABC board, or community college of the State having 32
957962 custody of any funds not required by law to be deposited with and invested by the State Treasurer 33
958963 or the Investment Authority may deposit all or any portion of those funds with the State Treasurer 34
959964 Investment Authority for investment in one of the investment programs established pursuant to 35
960965 authorized under this section, subject to any provisions of law with respect to eligible 36
961966 investments, provided that any investments. Any occupational licensing board as defined in 37
962967 G.S. 93B-1 may participate in one of the investment programs established pursuant to authorized 38
963968 under this section regardless of whether or not the funds were required by law to be deposited 39
964969 with and invested by the State Treasurer. Treasurer or the Investment Authority. In the absence 40
965970 of specific statutory provisions to the contrary, any of those funds described in this subsection 41
966971 may be invested by the Investment Authority in accordance with the provisions of G.S. 147-69.2 42
967972 and 147-69.3. Upon request from any depositor eligible under this subsection, the State Treasurer 43
968973 may authorize moneys invested pursuant to this subsection to be withdrawn by warrant on the 44
969974 State Treasurer. 45
970975 (c) The State Treasurer's Investment Authority's investment programs shall be so 46
971976 managed that that, in the judgment of the State Treasurer Investment Authority, funds may be 47
972977 readily converted into cash when needed. 48
973978 (d) Except as provided by G.S. 147-69.1(d), the total return earned on investments shall 49
974979 accrue pro rata to the fund whose assets are invested according to the formula prescribed by the 50
975980 State Treasurer with the approval of the Governor and Council of State.invested. 51 General Assembly Of North Carolina Session 2025
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977982 (e) The State Treasurer Investment Authority has full powers as a fiduciary to hold, 1
978983 purchase, sell, assign, transfer, lend and dispose of any of the securities or investments in which 2
979984 any of the investment programs created pursuant to this section have been invested, and may 3
980985 reinvest the proceeds from the sale of those securities or investments and any other investable 4
981986 assets of the program. 5
982987 (f) The cost of administration, management, and operation of investment programs 6
983988 established pursuant to this section shall be apportioned and paid equitably among the programs 7
984989 in a manner prescribed by the State Treasurer. Investment Authority, including through 8
985990 administrative fees if approved by the Board of Directors. To the extent not otherwise chargeable 9
986991 directly to the income or assets of a specific investment program or pooled investment vehicle, 10
987992 the cost of administration, management, and operation of investment programs established 11
988993 pursuant to this section shall be paid from the income and assets of the investment programs. 12
989994 Any apportionment and payment under this section shall be accounted for in a manner determined 13
990995 by the State Treasurer.Investment Authority. 14
991996 (g) The State Treasurer is authorized to retain the services of independent appraisers, 15
992997 auditors, actuaries, attorneys, investment counseling firms, statisticians, custodians, or other 16
993998 persons or firms possessing specialized skills or knowledge necessary for the proper 17
994999 administration of investment programs created pursuant to this section. 18
9951000 (g1) Notwithstanding G.S. 114-8.3, the Investment Authority's designated attorneys shall 19
9961001 review all proposed investment contracts and all proposed contracts for investment-related 20
9971002 services entered into pursuant to the Investment Authority's authority under this Article. All of 21
9981003 the following apply to the required review: 22
9991004 (1) This review shall include confirmation that a proposed contract meets all of 23
10001005 the following criteria: 24
10011006 a. The proposed contract is in proper legal form. 25
10021007 b. The proposed contract is legally enforceable to the extent governed by 26
10031008 North Carolina law. 27
10041009 c. The proposed contract accomplishes the intended purposes of the 28
10051010 contract. 29
10061011 (2) The Investment Authority's designated attorneys shall establish procedures 30
10071012 regarding the review. 31
10081013 (3) The required review does not constitute approval or disapproval of the policy 32
10091014 merit, or lack thereof, of the proposed contract. 33
10101015 (4) A designated attorney under this subsection includes any attorney employed 34
10111016 or retained by the Investment Authority to review contracts as required by this 35
10121017 subsection. 36
10131018 (5) For purposes of this subsection, "investment contract" means investments to 37
10141019 be acquired, held, or sold, directly or indirectly, by or for the Investment 38
10151020 Authority or an investment entity created by the Investment Authority, either 39
10161021 on its own behalf or on behalf of another beneficial owner. 40
10171022 … 41
10181023 (i1) The State Treasurer shall report the incentive bonus paid to the Chief Investment 42
10191024 Officer to the Joint Legislative Commission on Governmental Operations by October 1 of each 43
10201025 year. 44
10211026 … 45
10221027 (i3) The Treasurer Investment Authority may invest in the countries of Sudan and South 46
10231028 Sudan to the extent not prohibited by the United States Government, or to the extent that such 47
10241029 investment is part of an index or index replication strategy, a commingled fund, limited 48
10251030 partnership, or similar investment vehicle, or a derivative instrument. 49
10261031 (j) Subject to the provisions of G.S. 147-69.1(d), the State Treasurer shall Investment 50
10271032 Authority may adopt any rules necessary to carry out the provisions of this section. 51 General Assembly Of North Carolina Session 2025
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10291034 … 1
10301035 "§ 147-69.4A. Support and assistance; Supplemental Retirement Board of Trustees. 2
10311036 (a) The Supplemental Retirement Board of Trustees, as established under G.S. 135-96, 3
10321037 may request the Investment Authority to provide monitoring, evaluation, reporting, and other 4
10331038 support or assistance for the investments of the Supplemental Retirement Income Plan of North 5
10341039 Carolina and the North Carolina Public Employee Deferred Compensation Plan. 6
10351040 (b) Upon the consent of the Investment Authority to provide requested support or 7
10361041 assistance under this section, the Investment Authority's responsibilities shall be documented in 8
10371042 a Statement of Investment Policy approved by the Supplemental Retirement Board of Trustees. 9
10381043 (c) In providing any support or assistance under this section, the Investment Authority 10
10391044 shall discharge its duties as a fiduciary to the participants in the Supplemental Retirement Income 11
10401045 Plan of North Carolina and the North Carolina Public Employee Deferred Compensation Plan. 12
10411046 "§ 147-69.5. Local Government Law Enforcement Special Separation Allowance Fund. 13
10421047 The Local Government Law Enforcement Special Separation Allowance Fund is established 14
10431048 as a fund in the Office of the State Treasurer under the management of the Treasurer. Investment 15
10441049 Authority. The Fund consists of contributions made by entities authorized to make contributions 16
10451050 to the Fund and interest and other investment income earned by the Fund. Contributions to the 17
10461051 Fund are irrevocable. Assets of the Fund may be used only to provide law enforcement special 18
10471052 separation allowance benefits to individuals who are former employees of a unit of local 19
10481053 government that contributes to the Fund and are entitled to law enforcement special separation 20
10491054 allowance payable by the unit. The assets of the Fund are not subject to the claims of creditors 21
10501055 of an entity that contributes to the Fund. 22
10511056 "§ 147-69.6. Swain County Settlement Trust Fund. 23
10521057 (a) The Swain County Settlement Trust Fund is established as a special fund in the Office 24
10531058 of the State Treasurer under the management of the Treasurer. The Treasurer Investment 25
10541059 Authority. The Investment Authority may invest the assets of the Fund in any of the investments 26
10551060 authorized under subdivisions (b)(1) through (6) and subdivision (b)(8) of G.S. 147-69.2. The 27
10561061 Fund shall consist of the proceeds of any payments made by the United States in settlement of 28
10571062 the 1943 agreement between Swain County and the United States Department of Interior, such 29
10581063 other contributions as Swain County or other entities may choose to make to the Fund, and the 30
10591064 interest and other investment income earned by the Fund. For the purposes of this section, the 31
10601065 initial balance of the Fund shall be defined as fifty-two million dollars ($52,000,000). 32
10611066 …." 33
10621067 SECTION 3.1.(b) Part 3 of Article 6 of Chapter 147 of the General Statutes, as 34
10631068 created and amended by Part I of this act, reads as rewritten: 35
10641069 "Part 3. Reports and Audits. 36
10651070 "§ 147-69.8. Annual report on new investment authority. 37
10661071 Whenever the General Assembly broadens the investment authority of the State Treasurer 38
10671072 Investment Authority as to the General Fund, the Teachers' and State Employees' Retirement 39
10681073 System, the Consolidated Judicial Retirement System, the Firefighters' and Rescue Squad 40
10691074 Workers' Pension Fund, the Local Governmental Employees' Retirement System, the Legislative 41
10701075 Retirement System, the North Carolina National Guard Pension Fund, or any idle funds, the State 42
10711076 Treasurer Investment Authority shall annually report in detail to the General Assembly the 43
10721077 investments made under such new authority, including the returns on those investments, earnings, 44
10731078 changes to value, and gains and losses in disposition of such investments. The report shall be 45
10741079 made no later than the first six months of each calendar year, covering performance in the prior 46
10751080 fiscal year. As to each type of new investment authority, the report shall be made for at least four 47
10761081 years. To the extent the information required by this section is also required in the reports under 48
10771082 G.S. 147-69.12, the State Treasurer Investment Authority may combine reports or make 49
10781083 cross-reference to those reports. 50
10791084 "§ 147-69.9. Third-party audit of State Treasurer's investments. 51 General Assembly Of North Carolina Session 2025
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10811086 (a) In addition to all other audits and reports required by the law, the State Treasurer 1
10821087 Treasurer, with the active assistance of the Investment Authority, shall prepare and issue, at the 2
10831088 end of each fiscal year beginning with the 2015-2016 fiscal year, year, a set of consolidated 3
10841089 stand-alone financial statements regarding investments authorized in G.S. 147-69.1 and 4
10851090 G.S. 147-69.2. These financial statements shall be audited by a commercial independent 5
10861091 third-party audit firm selected and engaged by the State Treasurer. Treasurer, in consultation with 6
10871092 the Investment Authority. The audit firm's report and the financial statement shall be provided to 7
10881093 the Joint Legislative Commission on Governmental Operations, the House of Representative 8
10891094 Appropriations Committee, the Senate Appropriations/Base Budget Committee, and the Fiscal 9
10901095 Research Division within six months after the closing of the reporting period. 10
10911096 (b) The management discussion and analysis section of the report accompanying the 11
10921097 financial statements shall be prepared by the Investment Authority and shall include a discussion 12
10931098 of the investment programs' risk and returns compared to benchmarks, total management fees 13
10941099 and incentives paid, and comparison to peer cost benchmarks. 14
10951100 "§ 147-69.10. Investment policies and performance reviews of Retirement Systems 15
10961101 investment programs. 16
10971102 (a) On at least a biennial basis, the State Treasurer Chief Investment Officer shall present 17
10981103 an investment policy statement to the Investment Advisory Committee Board of Directors for the 18
10991104 Committee's consultation. approval. The investment policy statement must include descriptions 19
11001105 of investment objectives and strategy, roles and responsibilities, permissible asset classes, asset 20
11011106 allocation targets and ranges, risk management and compliance guidelines, and evaluation 21
11021107 criteria necessary to measure investment performance. 22
11031108 (b) At least once every four years, the State Treasurer Investment Authority shall engage 23
11041109 a commercial independent expert firm, pursuant to G.S. 147-69.3(g), G.S. 147-71.2(c), to 24
11051110 evaluate the governance, operations, and investment practices of the State Treasurer Investment 25
11061111 Authority in order to develop recommendations for improvement. The State Treasurer must 26
11071112 consult with the Investment Advisory Committee to develop the scope of the evaluation. The 27
11081113 report of the independent expert firm shall be provided to the Joint Legislative Commission on 28
11091114 Governmental Operations, the House of Representatives Appropriations Committee, the Senate 29
11101115 Appropriations/Base Budget Committee, and the Fiscal Research Division within 30 days of 30
11111116 receipt. 31
11121117 "§ 147-69.12. Reporting on the State Treasurer's Investment Authority's investment 32
11131118 programs. 33
11141119 (a) No later than the tenth day of February, May, August, and November of each year, 34
11151120 the State Treasurer shall report on all investments for which the State Treasurer is in any way 35
11161121 responsible, including investments made from the Escheat Fund and return on investment as 36
11171122 provided in G.S. 147-69.2A. This report shall be made for the Escheat Fund in lieu of the report 37
11181123 required by G.S. 147-69.8. The State Treasurer's quarterly report shall include each of the 38
11191124 following: 39
11201125 (1) A specific listing of all direct and indirect placement fees, asset fees, 40
11211126 performance fees, and any other money management fees incurred by the 41
11221127 State in the management of the Retirement Systems defined in 42
11231128 G.S. 147-69.2(b)(8). In the event that the market value of any of subdivision 43
11241129 (6c) or (7), sub-subdivision b. of subdivision (8), or subdivision (9) or (9a) of 44
11251130 G.S. 147-69.2 increases during a fiscal year by an amount greater than three 45
11261131 percent (3%) of the market value of all invested assets of the Retirement 46
11271132 Systems as of the prior fiscal year end, then the quarterly report provided shall 47
11281133 describe how that increase complies with the duties described in 48
11291134 G.S. 147-69.7 and the consequent expected impact on the risk profile of the 49
11301135 Retirement Systems' assets. 50 General Assembly Of North Carolina Session 2025
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11321137 (2) A specific listing of all investments made with certified green managers and 1
11331138 companies and funds that support sustainable practices, including the names 2
11341139 of the companies, managers, and funds, the amount invested, and the State's 3
11351140 return on investment. 4
11361141 (3) For bank balances: 5
11371142 a. The State's total bank balance with the State Treasurer, including the 6
11381143 amount of cash on hand and money on deposit. 7
11391144 b. For each bank or other qualified depository utilized by the State 8
11401145 Treasurer to hold cash balances, (i) the name of each depository and 9
11411146 (ii) current quarter-end cash balances. 10
11421147 (4) For the State Treasurer's cash management programs: 11
11431148 a. Total assets. 12
11441149 b. Duration of investments. 13
11451150 c. Rate of return, including a comparison to an appropriate benchmark, 14
11461151 if available. 15
11471152 (5) For the Retirement Systems, as defined in G.S. 147-69.2(b)(8), reported 16
11481153 separately for each asset class authorized by G.S. 147-69.2(b): 17
11491154 a. Total assets. 18
11501155 b. Rate of return, including a comparison to an appropriate benchmark, 19
11511156 if available. 20
11521157 c. Percentage of the total assets that are invested in the asset class and the 21
11531158 limitation, if any, on the percentage under G.S. 147-69.2(b). 22
11541159 (6) For each investment program created under G.S. 147-69.3: 23
11551160 a. The financial condition of each investment program. 24
11561161 b. A full and complete statement of all moneys invested by virtue of the 25
11571162 provisions of G.S. 147-69.1 and G.S. 147-69.2. 26
11581163 c. The nature and character of the investments. 27
11591164 d. The revenues derived from the investments, net of fees and expenses. 28
11601165 e. The costs of administering, managing, and operating the investment 29
11611166 programs, including the recapture of any investment commissions. 30
11621167 f. The location on the State Treasurer's Web site where the public may 31
11631168 find a statement of the investment policies for the revenues invested. 32
11641169 g. Any other information that may be helpful in understanding the State 33
11651170 Treasurer's investment policies, investment practices, and investment 34
11661171 results. 35
11671172 h. Any other information requested by the House of Representatives and 36
11681173 Senate Finance Committees. 37
11691174 i. The location on the State Treasurer's Web site where the public may 38
11701175 find a list of new commitments to external investment managers. 39
11711176 j. The location on the State Treasurer's Web site where the public may 40
11721177 find information on the use of placement agents by investment 41
11731178 managers. 42
11741179 (7) For all other investments with or on behalf of the State or any of its agencies 43
11751180 or institutions: 44
11761181 a. The particular agency or institution, fund, rate of return, and duration 45
11771182 of the investment. 46
11781183 b. The amount of deposit on all noninterest bearing accounts. 47
11791184 (a1) On a monthly basis, the Investment Authority shall report on the performance of all 48
11801185 investments for which the Investment Authority is in any way responsible. The monthly report 49
11811186 shall include all of the following information: 50 General Assembly Of North Carolina Session 2025
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11831188 (1) The beginning and ending market value of each investment program and 1
11841189 deposits or withdrawals. 2
11851190 (2) The rate of return, net of all fees, and expenses for various time periods, 3
11861191 including comparisons to an appropriate benchmark, if available. For the 4
11871192 Retirement Systems' investment program, asset class level information shall 5
11881193 also be provided. 6
11891194 (3) The asset allocation of each investment program and compliance with any 7
11901195 statutory limitations or limitations set by the Board of Directors. 8
11911196 (4) All of the following information for each investment program: 9
11921197 a. The location on the Investment Authority's website where the public 10
11931198 may find a statement of the investment policies. 11
11941199 b. The location on the Department's or Investment Authority's website 12
11951200 where the public may find a list of new commitments to external 13
11961201 investment managers and on the use of placement agents by 14
11971202 investment managers. 15
11981203 c. Any other information that may be helpful in understanding the 16
11991204 Investment Authority's investment policies, investment practices, and 17
12001205 investment results. 18
12011206 (b) No later than the date set by G.S. 147-69.9 for the submission of consolidated 19
12021207 stand-alone financial statements, the State Treasurer Investment Authority shall report annually 20
12031208 on the fees and performance of all externally and internally managed investments for the 21
12041209 Retirement Systems defined in G.S. 147-69.2(b)(8). Systems. Externally managed investments 22
12051210 shall be reported on the basis of each investment vehicle or investment manager, as applicable. 23
12061211 Internally managed investments shall be reported on a portfolio-by-portfolio basis. The State 24
12071212 Treasurer's Investment Authority's annual report shall include all of the following, as applicable, 25
12081213 reported separately for each investment: 26
12091214 (1) The name, commitment amount, statutory classification, and inception year. 27
12101215 (2) Either a statement that the investment is managed internally by the staff of the 28
12111216 State Treasurer Investment Authority or the names of the external investment 29
12121217 manager and the investment vehicle for that investment. 30
12131218 (3) Value The value of the investment. 31
12141219 (4) Dollar The dollar amount of the management fees and incentive fees. 32
12151220 (5) For investment-grade fixed income or public equity investments, public 33
12161221 market investment manager accounts, the periodic net annualized 34
12171222 time-weighted rate of return for that fiscal year and since inception, reported 35
12181223 net of fees. 36
12191224 (6) For all investments other than investment-grade fixed income or public equity 37
12201225 investments, public market investment manager accounts, all of the following: 38
12211226 a. The net annualized internal rate of return and investment multiple 39
12221227 since inception, reported net of fees. 40
12231228 b. The total cash contributions or other investments made by the State 41
12241229 Treasurer.made. 42
12251230 c. The total distribution received by the State Treasurer with respect to 43
12261231 that investment since inception, reported net of fees. 44
12271232 (7) For any fund of funds investment vehicles, the aggregate management fees 45
12281233 and incentive fees for the underlying investment managers or investment 46
12291234 vehicles used by the external investment manager. 47
12301235 (8) If any placement agent fees relating to the investment were directly or 48
12311236 indirectly borne by the State Treasurer Investment Authority or Retirement 49
12321237 Systems, a list of the amount and type of those fees. 50 General Assembly Of North Carolina Session 2025
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12341239 (c) The Treasurer shall report to the Governor annually the exact balance in the treasury 1
12351240 to the credit of the State, with a summary of the receipts and payments of the treasury during the 2
12361241 preceding fiscal year, and so far as practicable an account of the same down to the termination 3
12371242 of the current calendar year. 4
12381243 (d) The reports required by this section shall be delivered to the Joint Legislative 5
12391244 Commission on Governmental Operations, chairs of the House of Representatives and Senate 6
12401245 Appropriations Committees, chairs of the House of Representative and Senate Finance 7
12411246 Committees, Fiscal Research Division, Governor, Council of State, and State Auditor. The 8
12421247 reports shall also be made available for public review, including by posting on the State 9
12431248 Treasurer's Web site. 10
12441249 A copy of a report on any State Treasurer investment program shall be sent to review by the 11
12451250 official, institution, board, commission, or other agency investing in that program.the programs, 12
12461251 including by posting on the Investment Authority's website." 13
12471252 SECTION 3.1.(c) G.S. 147-70.6, as created and amended by Part I of this act, and 14
12481253 as further amended by Section 2.2 of this act, reads as rewritten: 15
12491254 "§ 147-70.6. Discharge of duties to funds. 16
12501255 (a) The State Treasurer Investment Authority, including the Board of Directors, shall 17
12511256 discharge his or her all duties with respect to each fund or investment program held by the 18
12521257 Investment Authority to the credit of the State Treasurer, including each of the funds, funds 19
12531258 enumerated in G.S. 147-69.2 as follows:G.S. 147-69.1 and G.S. 147-69.2, in all of the following 20
12541259 manners: 21
12551260 (1) Solely in the interest of the intended beneficiaries of the fund, if any. 22
12561261 (2) For the exclusive purpose of carrying out the purpose of the fund, including 23
12571262 providing benefits to participants and beneficiaries, and paying reasonable 24
12581263 expenses of administering the fund. 25
12591264 (3) With the care, skill, and caution that a prudent investor would use after 26
12601265 considering the purposes, distribution requirements, and other circumstances 27
12611266 then prevailing. 28
12621267 (4) Impartially, taking into account any differing interests of participants and 29
12631268 beneficiaries. 30
12641269 (5) Incurring only costs that are appropriate and reasonable. 31
12651270 (6) In accordance with a good-faith interpretation of the provisions of 32
12661271 G.S. 147-69.2 and any other applicable law governing the fund. 33
12671272 (b) In investing and managing assets of the any fund or investment program pursuant to 34
12681273 subsection (a) of this section, the State Treasurer:Investment Authority shall do all of the 35
12691274 following: 36
12701275 (1) Shall consider Consider all of the following circumstances: 37
12711276 a. General economic conditions. 38
12721277 b. The possible effect of inflation or deflation. 39
12731278 c. The role that each investment or course of action plays within the 40
12741279 overall portfolio of the fund. 41
12751280 d. The expected total return from income and the appreciation of capital. 42
12761281 e. Needs for liquidity, regularity of income, and preservation or 43
12771282 appreciation of capital. 44
12781283 f. With respect to the Retirement Systems defined in G.S. 147-69.2(b)(8) 45
12791284 and any other pension plans, the adequacy of funding for the 46
12801285 Retirement Systems or other pension plan based on reasonable 47
12811286 actuarial factors. 48
12821287 g. The purpose of the fund, if established. 49
12831288 (2) Shall diversify Diversify the investments of the fund fund, unless the State 50
12841289 Treasurer Investment Authority reasonably determines that, because of 51 General Assembly Of North Carolina Session 2025
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12861291 special circumstances, including applicable investment restrictions, it is 1
12871292 clearly prudent not to do so. 2
12881293 (3) Shall make Make a reasonable effort to verify facts relevant to the investment 3
12891294 and management of assets of the funds. 4
12901295 (4) Shall invest only in those investments authorized by law consistent with the 5
12911296 provisions of Article 6 of Chapter 146 of the General Statutes. 6
12921297 (5) Shall, in In the evaluation of an investment, or in the evaluation or exercise of 7
12931298 any right appurtenant to an investment, consider only pecuniary 8
12941299 factors:factors as follows: 9
12951300 a. For the purposes of this section, a pecuniary factor is a factor that has 10
12961301 a material effect on the financial risk or financial return of an 11
12971302 investment based on appropriate investment horizons consistent with 12
12981303 the purpose of the fund, if established. 13
12991304 b. Environmental or social considerations are pecuniary factors only if 14
13001305 they present economic risks or opportunities that qualified investment 15
13011306 professionals would treat as material economic considerations under 16
13021307 generally accepted investment theories. The weight given to those 17
13031308 factors shall solely reflect a prudent assessment of their impact on risk 18
13041309 and return. 19
13051310 (6) May, 20
13061311 (b1) In investing and managing assets of any fund or investment program pursuant to 21
13071312 subsection (a) of this section, the Investment Authority may, in the evaluation or exercise of any 22
13081313 right appurtenant to an investment, reasonably conclude that not exercising such a that right is in 23
13091314 the best interest of the fund's beneficiaries. 24
13101315 (c) Compliance by the State Treasurer Investment Authority with this section must be 25
13111316 determined in light of the facts and circumstances existing at the time of the Treasurer's 26
13121317 Investment Authority's decision or action and not by hindsight. 27
13131318 (d) The State Treasurer's Investment Authority's investment and management decisions 28
13141319 must be evaluated not in isolation but in the context of the portfolio of the fund as a whole and 29
13151320 as part of an overall investment strategy having risk and return objectives reasonably suited to 30
13161321 the fund. 31
13171322 (e) Notwithstanding any of the foregoing, the State Treasurer other provision of this 32
13181323 section to the contrary, the Investment Authority shall have no duty to assist or advise any 33
13191324 official, board, commission, local government, other public authority, school administrative unit, 34
13201325 local ABC board, community college of the State, or other person, trust, agency, institution, or 35
13211326 entity in connection with any of the following decisions and directions with respect to any funds 36
13221327 to be deposited with the State Treasurer and invested by the State Treasurer:Investment 37
13231328 Authority. 38
13241329 (1) The voluntary decision to deposit or withdraw funds in accordance with 39
13251330 applicable law in one or more of the State Treasurer's Investment Authority's 40
13261331 investment programs. 41
13271332 (2) The voluntary direction as to the allocation of deposited funds in accordance 42
13281333 with applicable law among the State Treasurer's Investment Authority's 43
13291334 investment programs. 44
13301335 (3) Any other decision or direction by which the depositor exercises control over 45
13311336 assets deposited or to be deposited with the State Treasurer or the Investment 46
13321337 Authority in accordance with applicable law." 47
13331338 SECTION 3.1.(d) G.S. 147-71.2(a), as enacted by Section 2.2 of this act, is amended 48
13341339 by adding a new subdivision to read: 49
13351340 "(6) The Board of Directors has the following liquidity monitoring duties: 50 General Assembly Of North Carolina Session 2025
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13371342 a. Upon the quarterly receipt of liquidity monitoring requirements from 1
13381343 the Chief Investment Officer, the Board of Directors shall ensure that 2
13391344 a portion of the Retirement Systems' invested assets are at all times 3
13401345 available to be converted in an orderly fashion to cash proceeds 4
13411346 sufficient to meet projected net benefit payments and highly probable 5
13421347 contractual obligations. 6
13431348 b. The Board of Directors shall annually certify the allocation of illiquid 7
13441349 investment. 8
13451350 c. If the Board of Directors determines that liquidity is insufficient, then 9
13461351 the Board of Directors may direct the CIO to pause new contractual 10
13471352 commitments to illiquid investments or implement other mitigation 11
13481353 activities." 12
13491354 SECTION 3.1.(e) G.S. 147-72.1, as enacted by Section 2.2 of this act, is amended 13
13501355 by adding a new subsection to read: 14
13511356 "(e) Management of Retirement Systems Investments. – The Chief Investment Officer 15
13521357 shall manage the Retirement Systems investments to remain within the approved absolute risk 16
13531358 operating range set by the Board of Directors in accordance with G.S. 147-71.2(a)(4)." 17
13541359 SECTION 3.2. Rules adopted by the State Treasurer in effect as of December 31, 18
13551360 2025, and that are impacted by the change in authority under this Part shall remain in effect until 19
13561361 amended by the Investment Authority, amended by law, or repealed. 20
13571362 SECTION 3.3. This Part is effective January 1, 2026. 21
13581363 22
13591364 PART IV. TECHNICAL AND CONFORMING CHANGES 23
13601365 SECTION 4.1.(a) G.S. 147-65.2, as created by Section 1.2(a) of this act, reads as 24
13611366 rewritten: 25
13621367 "§ 147-65.2. Salary of State Treasurer.Treasurer and certain Department employees. 26
13631368 (a) State Treasurer. – The salary of the State Treasurer shall be as established in the 27
13641369 Current Operations Appropriations Act. In addition to the salary set by the General Assembly in 28
13651370 the Current Operations Appropriations Act, longevity pay shall be paid on the same basis as is 29
13661371 provided to employees of the State who are subject to the North Carolina Human Resources Act. 30
13671372 (b) In order to promote achievement of long term investment objectives and to retain key 31
13681373 public employees with investment functions, the Certain Departmental Employees. – The State 32
13691374 Treasurer is authorized to establish, consistent with the duties of the State Treasurer's fiduciary 33
13701375 duties, Treasurer as prescribed by law, market-oriented compensation plans, including salaries 34
13711376 and performance-related bonuses, for employees possessing specialized skills or knowledge 35
13721377 necessary for the proper administration of investment programs, who shall be programs. In 36
13731378 accordance with G.S. 126-5(c12), these employees are exempt from the classification and 37
13741379 compensation rules established by the Office of State Human Resources. The design and 38
13751380 administration of those compensation plans shall be based on compensation studies conducted 39
13761381 by a nationally recognized firm specializing in public fund investment compensation. The 40
13771382 compensation and other associated employee benefits shall be apportioned directly from the 41
13781383 investment program. and paid equitably among the funds and programs utilizing the services of 42
13791384 these employees in a manner prescribed by the State Treasurer. The Treasurer shall report the 43
13801385 salaries and bonuses paid to the Joint Legislative Oversight Committee on General Government 44
13811386 annually." 45
13821387 SECTION 4.1.(b) G.S. 126-5 reads as rewritten: 46
13831388 "§ 126-5. Employees subject to Chapter; exemptions. 47
13841389 … 48
13851390 (c1) Except as to Articles 6 and 7 of this Chapter, this Chapter does not apply to any of the 49
13861391 following: 50
13871392 … 51 General Assembly Of North Carolina Session 2025
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13891394 (23) The Executive Administrator of the State Health Plan for Teachers and State 1
13901395 Employees. 2
13911396 (24) Employees of the State Health Plan for Teachers and State Employees as 3
13921397 designated by law or by the Executive Administrator of the Plan. 4
13931398 … 5
13941399 (40) The Chief Investment Officer of the North Carolina Investment Authority 6
13951400 established under Part 5 of Article 6 of Chapter 147 of the General Statutes. 7
13961401 (41) Employees of the North Carolina Investment Authority established under Part 8
13971402 5 of Article 6 of Chapter 147 of the General Statutes who possess specialized 9
13981403 skills or knowledge necessary for the proper administration of investment 10
13991404 programs and who are employed in a position designated by the Chief 11
14001405 Investment Officer as exempt in accordance with G.S. 147-72.1. 12
14011406 … 13
14021407 (c12) Except as to G.S. 126-13, 126-14, 126-14.1, and Articles 6, 7, 14, 15, and 16 of this 14
14031408 Chapter, this Chapter does not apply to employees of the Department of State Treasurer 15
14041409 possessing specialized skills or knowledge necessary for the proper administration of investment 16
14051410 programs and compensated pursuant to G.S. 147-69.3(i2).G.S. 147-65.2(b). 17
14061411 …." 18
14071412 SECTION 4.1.(c) This section is effective July 1, 2025, and applies to employees 19
14081413 hired on or after that date. 20
14091414 SECTION 4.2.(a) G.S. 128-29(c) reads as rewritten: 21
14101415 "(c) Custodian of Funds. – The State Treasurer shall be the custodian of the several funds 22
14111416 and shall deposit these funds with the Investment Authority to invest their these assets in 23
14121417 accordance with the provisions of G.S. 147-69.2 and 147-69.3. Article 6 of Chapter 147 of the 24
14131418 General Statutes. All payments from said funds shall be made by him the State Treasurer only 25
14141419 upon vouchers signed by two persons designated by the Board of Trustees. The secretary of the 26
14151420 Board of Trustees shall furnish said Board a surety bond in a company authorized to do business 27
14161421 in North Carolina in such amount as shall be required by the Board, the premium to be paid from 28
14171422 the expense fund." 29
14181423 SECTION 4.2.(b) G.S. 135-7(c) reads as rewritten: 30
14191424 "(c) Custodian of Funds; Disbursements; Bond of Director. – The State Treasurer shall be 31
14201425 the custodian of the several funds and shall deposit these funds with the Investment Authority to 32
14211426 invest their these assets in accordance with the provisions of G.S. 147-69.2 and 147-69.3.Article 33
14221427 6 of Chapter 147 of the General Statutes." 34
14231428 SECTION 4.2.(c) This section is effective January 1, 2026. 35
14241429 SECTION 4.3.(a) G.S. 143C-1-3 is amended by adding a new subsection to read: 36
14251430 "(e) Notwithstanding subsections (a) and (b) of this section, funds under the management 37
14261431 of the North Carolina Investment Authority are exempt from this Chapter and shall be accounted 38
14271432 for as provided in Article 6 of Chapter 147 of the General Statutes." 39
14281433 SECTION 4.3.(b) This section is effective July 1, 2025. 40
14291434 41
14301435 PART V. EFFECTIVE DATE 42
14311436 SECTION 5.1. Except as otherwise provided, this act is effective when it becomes 43
14321437 law. 44