Bill Text: NJ S1930 | 2018-2019 | Regular Session | Introduced
Bill Title: Requires filing of report comparing investment returns earned by private money managers and by State employees for public employee retirement funds and State of New Jersey Cash Management Fund.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-02-22 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S1930 Detail]
Download: New_Jersey-2018-S1930-Introduced.html
Sponsored by:
Senator SHIRLEY K. TURNER
District 15 (Hunterdon and Mercer)
SYNOPSIS
Requires filing of report comparing investment returns earned by private money managers and by State employees for public employee retirement funds and State of New Jersey Cash Management Fund.
CURRENT VERSION OF TEXT
As introduced.
An Act requiring the filing of a report comparing the investment returns earned by private money managers and by State employees for the public employee retirement funds and the State of New Jersey Cash Management Fund, and amending P.L.1950, c.270.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 13 of P.L.1950, c.270 (C.52:18A-91) is amended to read as follows:
13. a. The State Investment Council shall consult with the Director of the Division of Investment from time to time with respect to the work of the division. It shall have access to all files and records of the division and may require any officer or employee therein to provide such information as it may deem necessary in the performance of its functions. The council shall have authority to inspect and audit the respective accounts and funds administered through the Division of Investment. It shall formulate and establish, and may from time to time amend, modify or repeal, such policies as it may deem necessary or proper, which shall govern the methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the Director of the Division of Investment established hereunder, except that the provisions of this subsection shall not apply to the operations account of Common Pension Fund L established pursuant to section 6 of P.L.2017, c.98 (C.5:9-22.10). Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the council may adopt, immediately upon filing with the Office of Administrative Law such policies and regulations relating to the investment account, established pursuant to section 6 of P.L.2017, c.98 (C.5:9-22.10), as are necessary to implement that section, which regulations shall be effective for a period not to exceed 12 months following adoption, and may thereafter be amended, adopted, or readopted by the council in accordance with the requirements of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
b. On or before January first of each year, and at such other times as it may deem in the public interest, the council shall report to the Governor, the Legislature, and the State Treasurer with respect to its work and the work of the Division of Investment. In addition to the reports specified above and in section 14 of P.L.1950, c.270 (C.52:18A-92), the council shall issue a report by March 1 of each year on the investment activities for the prior State fiscal year, which shall include a summary of the current investment policies and strategies of the council and those in effect during the prior State fiscal year, a detailed summary for each financial product of the amount invested, performance benchmarks, and actual performance during the State fiscal year. The report shall be submitted to the Governor, the Legislature, and the State Treasurer, and shall be made available to the public through the official Internet site of the State.
In addition, the council shall issue a report by February 1, May 1, August 1, and October 1 of each year comparing for the prior calendar quarter, in the aggregate and segregated by asset class, the returns of investments achieved for the funds under the council's supervision by external managers and by Division of Investment employees. In the report the council shall also recommend whether external managers shall continue to actively manage funds under the council's supervision and whether funds under the council's supervision shall be invested in commodities, hedge funds, private equity, real estate or any asset class other than bonds and public equities. The council shall submit the report to the Governor, the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), and the State Treasurer, and shall make it available to the public through the official Internet site of the State.
c. The council shall hold a meeting each year that shall be open to the public, and shall accept comments from the public at such meeting. The matters that shall be open to discussion and public comment during this annual meeting shall include the investment policies and strategies of the council, the investment activities of the council, the financial disclosure statements filed by council members, and the certification of contributions filed by external managers, as well as other appropriate matters concerning the operations, activities and reports of the council.
d. An external manager shall be required to file a certification before being retained, and annually thereafter, that discloses the political contributions made, during the 12 months preceding the certification, by the manager or the manager's firm, or a political committee in which the manager or firm was active. The certification shall specify the political contributions made to candidates for elective public office in this State and any political committee established for the support of such candidates, and contributions made for the transition and inaugural expenses of any candidate who is elected to public office. As used in this subsection, "contribution" and "political committee" shall have the meaning set forth in "The New Jersey Campaign Contributions and Expenditures Reporting Act," P.L.1973, c.83 (C.19:44A-1 et al.). This certification shall be in addition to any other such disclosure required by law or executive order of the Governor.
(cf: P.L.2017, c.98, s.28)
2. This act shall take effect immediately.
STATEMENT
This bill requires the State Investment Council to file a quarterly report comparing the returns of investments that private money managers and Department of the Treasury employees achieved for the State public employee retirement funds and the State of New Jersey Cash Management Fund. The report must also include the council's recommendation as to the continued delegation of investment decisions for the funds to external managers and as to the continued placement of those funds in commodities, hedge funds, private equity, real estate or any asset class other than bonds and public equities.
Current law requires the State Investment Council and the Division of Investment in the Department of the Treasury to prepare monthly and annual reports on the division's operations and investment practices. These reports, however, do not disclose the performance of external money managers relative to that of division employees. Yet that information is of interest to the general public considering that the division paid $209.2 million in fees and expenses to investment firms in Fiscal Year 2012.
By requiring the division to publish the performance data of private money managers, this bill will allow for a more incisive assessment of the merits of outsourcing the management of parts of the portfolios under the division's auspices.
