Oklahoma 2022 Regular Session

Oklahoma House Bill HB2870 Compare Versions

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3	34		BILL NO. 2870 By: Wallace of the House
4	35
5	36		and
6	37
7	38		Thompson of the Senate
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14	43		An Act relating to Commissioners of the Land Office;
15	44		amending 62 O.S. 2011, Section 34.62, as last amended
16	45		by Section 28, Chapter 98, O.S.L. 2020 (62 O.S. Supp.
17	46		2020, Section 34.62), which relates to encumbrance
18	47		requirements for payments from state funds; allowing
19	48		the Commissioners of the Land Office to make fee
20	49		payments to multiple custodial banks and investment
21	50		consultants from certain proceeds; amending 64 O.S .
22	51		2011, Section 1013, as last amended by Section 1,
23	52		Chapter 8, O.S.L. 2020 (64 O.S. Supp. 2020, Section
24	53		1013), which relates to investment of the permanent
25	54		school funds; authorizing the Commissioners of the
26	55		Land Office to select one or more custodial banks ;
27	56		requiring competitive bids from custodial banks every
28	57		ten years rather than every five years; updating
29	58		statutory language; providing an effective date; and
30	59		declaring an emergency.
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32	61
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35		-	SUBJECT: Commissioners of the Land Office
36	64
37	65		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
38		-
39	66		SECTION 1. AMENDATORY 62 O.S. 2011, Section 34.62, as
40	67		last amended by Section 28, Chapter 98, O.S.L. 2020 (62 O.S. Supp.
41	68		2020, Section 34.62), is amended to read as follows:
42		-
43	69		Section 34.62 Encumbrance requirements for payments from funds
44	70		of the state shall include the following:
45		-	ENR. H. B. NO. 2870 Page 2
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46	98		1. Whenever agencies of this state enter into contracts for, or
47	99		on behalf of the state for the purchase of tangible or intangible
48	100		property, or for services or labor, su ch agreement shall be
49	101		evidenced by written contracts or purchase orders, and must be
50	102		transmitted to the Director of the Office of Management and
51	103		Enterprise Services within a reasonable time from the date of the
52	104		awarding of the contract or purchase order, a s determined by the
53	105		Director;
54		-
55	106		2. The Director of th e Office of Management and Enterprise
56	107		Services shall charge such contracts or purchase orders against the
57	108		proper account as an outstanding order until it is liquidated by
58	109		payment of a claim, or claims, ag ainst the contracts or purchase
59	110		orders, or by cancel lation of the contract or purchase order;
60		-
61	111		3. The Director of the Office of Management and Enterprise
62	112		Services shall have the power to authorize agencies of the state to
63	113		make acquisitions without the subm ission of competitive bids or
64	114		compliance with the st ate purchase card program as otherwise
65	115		required by the Oklahoma Central Purchasing Act, for or on behalf of
66	116		the state whenever the Director determines that it is in the best
67	117		interests of the state. The a dministrative head of any agency shall
68	118		be personally liable for obligations incurred in excess of the
69	119		authorization granted by the Director;
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71	147		4. The Director of the Office of Management and Enterprise
72	148		Services shall never authorize payment of claims for an y agency of
73	149		the state unless they are supported by:
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75	150		a. contracts or purchase orders of the Office of
76	151		Management and Enterprise Services,
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78	152		b. institutional purchase orders or contracts,
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80	153		c. departmental purchase orders or contracts, or
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82	154		d. authorizations for p urchases granted by the Director
83	155		as provided by paragraph 3 of this section;
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85	156		5. Any invoice or claim dated prior to the date of any of the
86	157		above-mentioned encumbrance documents shall be rejected by the
87	158		Office of Management and Enterprise Services;
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89	159		6. Any encumbrance document that is outstanding on the rec ords
90		-	in the Office of Management and Enterprise Services when its funding ~~ENR. H. B. NO. 2870 Page 3~~
	160	+	in the Office of Management and Enterprise Services when its funding
91	161		source or sources lapse shall be canceled, unless another current
92	162		funding source is assigned; and
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94	163		7. The Commissioners of the Lan d Office shall be authorized to
95	164		make payment of fees to its custodial bank banks, investment
96	165		consultants and investment managers from the proceeds of total
97	166		realized investment gains and such payments may be made from a
98	167		special fund hereby created in the St ate Treasury for this purpose.
99	168		Total payments for t his purpose in a fiscal year shall not exceed
100	169		one-half percent (0.5%) of the market value of the funds under the
101	170		Commissioners' management on June 30 of the previous fiscal year.
102	171
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103	198		SECTION 2. AMENDATORY 64 O.S. 2011, Section 1013, a s
104	199		last amended by Section 1, Chapter 8, O.S.L. 2020 (64 O.S. Supp.
105	200		2020, Section 1013), is amended to read as follows:
106		-
107	201		Section 1013. A. The Commissioners of the Land Office shall be
108	202		responsible for the investment of the permanent school funds, other
109	203		educational funds and public building funds solely in the best
110	204		interests of the current and future beneficiaries. The
111	205		Commissioners of the Land Office shall make investments:
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113	206		1. For the exclusive purpose of :
114		-
115	207		a. providing maximum benefits to current and futur e
116	208		beneficiaries, and
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118	209		b. defraying reasonable expenses of administering the
119	210		trust funds;
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121	211		2. With the care, skill, prudence and diligence under the
122	212		circumstances then prevailing that a prudent person actin g in a like
123	213		enterprise of a like character and with like aims would use; and
124		-
125	214		3. By diversifying the investments of the trust funds so as to
126	215		minimize the risk of large losses.
127		-
128	216		B. The permanent school fund and other educational funds may
129	217		only be invested in bonds issued in the United States, United States
130	218		dollar denominated or other investments settled in United States
131	219		dollars or traded on the United States exchange markets and real
132	220		property to be owned or acquired by the Commissioners of the Land
133	221		Office. The Commissioners of the Land Office shall not inves t more
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134	249		than sixty percent (60%) of the trust fund investments in equity
135		-	securities. The Commissioners of the Land Office are further ~~ENR. H. B. NO. 2870 Page 4~~
	250	+	securities. The Commissioners of the Land Office are further
136	251		authorized to acquire, purchase, exchange and grant any real
137	252		property under its jurisdiction as is necessary to carry out the
138	253		investment in the real property. The Commissioners of the Land
139	254		Office shall not invest more than five percent (5%) of the total
140	255		value of the assets of the permanent school funds in connection with
141	256		investments in real property. In no case shall the Co mmissioners of
142	257		the Land Office bid against private -sector bidders above the
143	258		appraised value of any property to be acquired.
144		-
145	259		C. The Commissioners shall establish an investment committee.
146	260		The investment committee shall be composed of not more than three
147	261		members of the Commissioners of the Land Office or their designees.
148	262		The committee shall make recommendations to the Commissioners of the
149	263		Land Office on all matters related to the choice of managers of the
150	264		assets of the funds, on the establishment of investm ent and fund
151	265		management guidelines, and in planning future investment policy.
152	266		The committee shall have no authority to act on behalf of the
153	267		Commissioners of the Land Office in any circumstances whatsoeve r.
154	268		No recommendations of the committee shall have e ffect as an action
155	269		of the Commissioners of the Land Office or take effect without the
156	270		approval of the Commissioners as provided by law. The Commissioners
157	271		shall promulgate and adopt on an annual basis an investment plan.
158	272		The investment plan shall state th e criteria for selecting
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159	300		investment managers, the allocation of assets among investment
160	301		managers, and established standards of investment and fund
161	302		management.
162		-
163	303		D. The Commissioners shall retain qualified investment managers
164	304		to provide for investment of the fund monies and for the management
165	305		of investment real property pursuant to the investment plan.
166	306		Investment managers shall be chosen by a solicitation of proposals
167	307		on a competitive bid basis pursuant to standards set by the
168	308		Commissioners. Subject to the investment plan, each investment
169	309		manager shall have full discretion in the management of the funds or
170	310		investment real property allocated to said the investment managers.
171	311		The funds allocated to investment managers shall be actively managed
172	312		by them, which may include selling investments and realizing losses
173	313		if the action is considered advantageous to longer term return
174	314		maximization. Because of the total return objective, no distinction
175	315		shall be made for ma nagement and performance evaluation purposes
176	316		between realized and unrealized capital gains and losses.
177		-
178	317		E. The Commissioners shall take any measures they deem
179	318		appropriate to safeguard custody of securities and other assets of
180		-	the trusts. ENR. H. B. NO. 2870 Page 5
181		-
	319	+	the trusts.
182	320		F. By September 1 of each year, the Commissioners shall develop
183	321		a written investment plan for the trust funds.
184		-
185	322		G. The Commissioners shall compile a quarterly financial report
186	323		showing the performance of all the combined funds under their
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187	351		control on a fiscal year basis. Th e report shall contain a list of
188	352		all investments made by the Commissioners and a list of any
189	353		commissions, fees or payments made for services regarding the
190	354		investments for that reporting period. The report shall be based on
191	355		market values and shall be compi led pursuant to uniform reporting
192	356		standards prescribed by the Oklahoma State Pension Commission for
193	357		all state retirement systems. The report shall be distributed to
194	358		the Oklahoma State Pension Commission, the Cash Management and
195	359		Investment Oversight Commis sion, and the Legislative Service Bureau.
196		-
197	360		H. Before January 1 of each year, the Commissioners shall
198	361		publish an annual report of all Trust operations, presented in a
199	362		simple and easily understood manner to the extent possible. The
200	363		report shall be submitted to the Governor, the Speaker of the House
201	364		of Representatives, the President Pro Tempore of the Senate, the
202	365		State Department of Education and each higher education beneficiary.
203	366		The annual report shall cover the operation of the Trusts during the
204	367		past fiscal year, including income, disbursements and the fin ancial
205	368		condition of the Trusts at the end of each fiscal year on a cash
206	369		basis. The annual report shall also contain a summary of the assets
207	370		of each trust and current market value as of the report date.
208		-
209	371		I. The Cash Management and Investment Oversight Comm ission
210	372		shall review reports prepared by the Commissioners of the Land
211	373		Office pursuant to this subsection and shall make recommendations
212	374		regarding the investment strategies and practices, the development
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213	402		of internal auditing procedures and practices and any other matters
214	403		as determined necessary and applicable.
215		-
216	404		J. The Commissioners of the Land Office shall select one or
217	405		more custodial bank banks to settle transactions involving the
218	406		investment of the funds u nder the control of the Commissioners of
219	407		the Land Office. The Commissioners of the Land Office shall review
220	408		the performance of the each custodial bank at least once every year.
221	409		The Commissioners of the Land Office shall require a written
222	410		competitive bid every five (5) ten (10) years. The custodial bank
223	411		shall have a minimum of Five Hundred Million Dollars
224	412		($500,000,000.00) in assets to be eligible for selection. Any out -
225		-	of-state custodial bank shall have a service agent in the State of ~~ENR. H. B. NO. 2870 Page 6~~
	413	+	of-state custodial bank shall have a service agent in the State of
226	414		Oklahoma so that service of summons or legal notice may be had on
227	415		the designated agent, and the bank shall submit to the jurisdiction
228	416		of Oklahoma state courts for resolution of any and all disputes. In
229	417		order to be eligible for selection, the custodial bank shall allow
230	418		electronic access to all transaction and portfolio repor ts
231	419		maintained by the custodial bank involving the investment of state
232	420		funds under control of the Commissioners of the Land Office and to
233	421		the Cash Management and Investment Oversight Commission. The
234	422		requirement for electronic access shall be incorporated i nto any
235	423		contract between the Commissioners of the Land Office and the
236	424		custodial bank. Neither the Commissioners of the Land Office nor
237	425		the custodial bank shall permit any of the funds under the control
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238	453		of the Commissioners of the Land Office or any of the documents,
239	454		instruments, securities or other evidence of a right to be paid
240	455		money to be located in any place other than within a jurisdiction or
241	456		territory under the control or regulatory power of the Unit ed States
242	457		government.
243		-
244	458		SECTION 3. This act shall become effective July 1, 2021.
245		-
246	459		SECTION 4. It being immediately necessary for the preservation
247	460		of the public peace, health or safety, an emergency is hereby
248	461		declared to exist, by reason whereof this act shall take effect and
249		-	be in full force from and after its passage and approval. ENR. H. B. NO. 2870 Page 7
250		-
251		-	Passed the House of Representatives the 9th day of March, 2021.
252		-
253		-
254		-
255		-
256		-	Presiding Officer of the House
257		-	of Representatives
258		-
259		-
260		-	Passed the Senate the 20th day of April , 2021.
261		-
262		-
263		-
264		-
265		-	Presiding Officer of the Senate
266		-
267		-
268		-
269		-	OFFICE OF THE GOVERNOR
270		-	Received by the Office of the Governor this ____________________
271		-	day of ___________________, 20_______, at _______ o'clock _______ M.
272		-	By: _________________________________
273		-	Approved by the Governor of the State of Oklahoma this _________
274		-	day of ___________________, 20_______, at _______ o'clock _______ M.
275		-
276		-
277		-	_________________________________
278		-	Governor of the State of Oklahoma
279		-
280		-	OFFICE OF THE SECRETARY OF STATE
281		-	Received by the Office of the Secretary of State this __________
282		-	day of ___________________, 20_______, at _______ o'clock _______ M.
283		-	By: _________________________________
	462	+	be in full force from and after its passage and approval.
	463	+	COMMITTEE REPORT BY: COMMITTEE ON APPROPRIATIONS
	464	+	March 24, 2021 - DO PASS