Enacts the New York state common retirement fund reformation act

Summary of specific provisions

Part A

Provides for defense and indemnification to existing members of the investment advisory committee; and changes the name of the mortgage advisory committee to the real estate advisory committee, and provides for defense and indemnification for the members of such committee.

Part B

Prohibits an employee of the Fund from knowingly and willfully making any commitment of the assets or resources of the Common Retirement Fund (Fund) to any investment manager if the investment manager has engaged, hired, utilized, or retained for compensation a placement agent or intermediary for the purpose of securing or influencing a decision by the Fund. Defines a placement agent or intermediary as any person or entity, including a registered lobbyist, that is, for compensation, hired, engaged, utilized or retained for facilitating the placement of any investment with the investment manager. A placement agent or intermediary is not a regular employee of the investment manager.

Defines an investment manager as any person or entity, other than an employee of the State Comptroller, engaged by the Fund in the management of an investment portfolio of the Fund.

Part C

Requires the State Comptroller to adopt a code of conduct to govern the operations of the Common Retirement Fund.

The Code of Conduct may include, but need not be limited to: fiduciary duties of the State Comptroller; the requirement of an investment policy statement for the Fund; duties of the advisory council and committees including but not limited to the investment committee, real estate advisory committees, audit committee, and the actuarial committee; fiduciary duties of employees of the Office of State Comptroller who have responsibility for matters relating to the New York State and Local Employees' Retirement System (NYSLERS), the New York State and Local Police and Fire Retirement System (NYSLPFRS), and the Fund, including but not limited to fiduciary and ethics training and compliance with the provisions of public officers law; policies to prevent the misuse of material and confidential information by officers and employees; guidelines for internal audits of NYSLERS, NYSLPFRS, and the Fund; fiduciary duties and conflict of interest disclosure policies for investment managers, consultants, and advisors to the Fund; guidelines for the procumnent of services of investment managers, consultants, and advisors; guidelines for the audit of fees by the Superintendent of Insurance; guidelines for the investigation of complaints of abuse within NYSLERS, NYSLPFRS, and the Fund; guidelines for the maintenance of all books and records of NYSLERS, NYSLPFRS, and the Fund; guidelines for an annual audit of NYSLERS, NYSLPFRS, and the Fund; and guidelines for the publication of information related to NYSLERS, NYSLPFRS, and the Fund including but not limited to fund performance and transactions.

Part D

Establishes the State Comptroller Campaign Finance Reform Act. The bill amends Article 14 of the election law to designate the existing law Title 1 and adds an identification requirement for independent political communications, a filing requirement for independent expenditures and a requirement that certain candidates disclose their intent to spend personal funds in a campaign.

It also adds a new Title II to Article 14 to provide for public financing of primary and general election campaigns for the office of state comptroller.

To participate, a candidate for the office of state Comptroller must satisfy all requirements for participation, including raising not less than $300,000 from at least 3,000 matchable contributions made up of sums of up to $250 per individual contributor who resides in New York state. All candidates who choose to participate in the public financing system have a contribution limit of $2,000 per contributor.

Matchable Contributions may be collected after January first of the year of the primary or general election and consist of the net amount of contributions after deduction of the value of any food, drink or entertainment provided in exchange for the contribution. Only contributions from persons who reside in New York State are matchable. Eligible contributions up to $250 are matched at the rate of $4 for every $1.

If, however, a candidate who does not elect to receive public funds raises, spends or contributes his or her own personal funds in an amount greater than the expenditure limit established for such office for candidates participating in the public financing system, an additional grant of public funds is given to the participating candidate. The grants equal 25% of the amount of public funds previously received by the candidate as a match for matchable contributions obtained and reported to the state board of elections. Each of the grants is added to the original expenditure limit, effectively creating a new trigger for the next grant when the non-participating candidate raises, spends or contributes his or her own personal funds in an amount greater than the new expenditure limit.

Public funds may be used only for qualified campaign expenditures during the year of the primary or general election. The following expenditure limits apply to all state comptroller candidates who participate in the public financing system: in the general election, $8,000,000; in the primary, $1.1 per enrolled voter or $600,000, whichever is more, but not to exceed $6,000,000. In addition, a state party committee may make up to $1,000,000 in expenditures for services to participating state comptroller candidates the party has nominated; transfers may constitute up to 25% of such party expenditures.

The bill provides for an income tax check-off of $5. If the state campaign finance fund lacks the money to pay all properly certified claims, the deficiency will be paid from the general fund.

The bill would impose penalties for the knowing and willful failure to identify the source of campaign communications; the failure to file required statements; and for exceeding the expenditure limits.

Part E

Provides that the State Comptroller in consultation with the Superintendent of Insurance, may establish the frequency for reporting certain information to be published on the Comptrollers' website related to the transactions of the Common Retirement Fund, such as investment performance results, proxy voting records, asset allocation, and performance figures.

Part F

Authorizes the Comptroller to establish a variable interest rate bond liquidity and monoline insurer investment program (Program). The Comptroller may invest up to $1 billion in variable interest rate bond liquidity and up to $500 million in monoline insurer investments. The Program would assist entities of State and local governments and other issues of municipal and public debt to secure more favorable financing terms by providing letters of credit, standby bond purchase agreements and similar liquidity facilities for variable interest rate bonds, and investing in existing or new monoline insurers that enhance such types of debt.

There will be limitations on the size of the Program: The aggregate outstanding balance of obligations enhanced as part of variable interest rate bond liquidity shall not exceed ten percent of the

assets of the Fund; the aggregate outstanding balance of obligations enhanced for a single issuer shall not exceed two percent of the assets of the Fund; the aggregate outstanding balance of obligations enhanced as part of monoline insurer investments shall not exceed live percent of the assets of the Fund, and the maximum liability for the Fund as a result of its investment in any monoline insurer shall not exceed the dollar about of such investment.

Adds the following to the list of eligible investments of the public retirement funds in the State, subject to the following limits: In-State Private Equity Investments, not to exceed $1.5 billion; real assets, not to exceed $1 billion, including but not limited to commodities, natural resources, and timber.

Such in-State private equities shall have: An investment strategy designed to provide returns consistent with similar, non-New York focused investments; a coherent investment strategy consistent with the business environment; an ability to raise capital from other sources; and an investment strategy designed to result in business presence in the State.

Part G

Exempts the Common Retirement Fund from a provision of current law that provides that any money credited to the State as the result of a cause, or action shall vest in the State. Under the bill, funds that accrue as a result of a cause of action related to the Common Retirement Fund shall be deposited into such Fund, and the State may not deduct the expenses incurred in the acted from any money owed to the Common Retirement Fund.

Justification

This bill will increase the independence, transparency and oversight of the New York state common retirement fund; reduce conflicts of interest and increase the public's confidence in the management of such fund; and permit a candidate for state Comptroller to run for office free of the appearance of undue influence.

Prior legislative history

None

Fiscal implication

There would be minimal administrative costs to the Office of the State Comptroller related to the provisions of this bill requiring that the State Comptroller promulgate a code of conduct. There would be no fiscal impact to the State in State Fiscal Year (SFY) 2009-10 related to the provisions of this bill that enact the State Comptroller Campaign Finance Reform Act, as such funds would be subject to appropriation and State Comptroller candidates would not be eligible for public matching funds under the provisions of this bill until 2010.

Effective date

Immediately; provided however, that each individual part shall take effect as provided at the end of such part.