House Amendment 63
H 4300 - Session 125 (2023-2024)
Appropriations Bill, 2023-2024

Amend the bill, as and if amended, page 450, after line 35, by adding a new SECTION to read:

/ SECTION 99-E190- RETIREMENT SYSTEM INVESTMENT COMMISSION

(RSIC: Proxy Voting Rights)(A) In the current fiscal year, from the funds a uthorized in Section 99 of Part 1A of this Act, the commission, in its fiduciary capacity in investing benefit member participants' contributions, may expend such funds to cast shareholder proxy votes that are in keeping with its fiduciary duties that are consistent with the best interest of the trust fund, as a prudent person in a like capacity would reasonably believe has a material effect or impact on the financial risk or return on an investment based on an appropriate investment and most likely to maximize shareholder value over an appropriate investment horizon consistent with a retirement systems investment objectives and funding policy.

(B) In the current fiscal year, to the extent that it is economically practicable, the commission shall retain the Public Employee Benefits Authority to exercise shareholder proxy rights for shares that are owned directly or indirectly on behalf of a system. The commission may retain a proxy firm or advisory service to assist the commission in exercising shareholder proxy rights, but only if the proxy advisor commits to follow proxy guidelines that are consistent with the requirements of subsection (A).

(C) The commission only may delegate the exercise of shareholder proxy rights to an investment manager under one or more of the following conditions:

(1) the manager commits to vote pending language;

(2) the commission reasonably believes that the economic benefits of the manager's strategy will provide a superior outcome as compared to a strategy by which the commission retained proxy voting authority; or

(3) the allocation is necessary to avoid the concentration risk of assets with any one or more investment managers.

(D)(1) In using the funds identified in subsection (A) to invest and manage the assets of a retirement system, the commission shall consider among other circumstances:

(a) general economic conditions;

(b) the possible effect of inflation or deflation;

(c) the role that each investment or course of action plays within the overall portfolio of the retirement system;

(d) needs for liquidity, regularity of income, and preservation or appreciation of capital; and

(e) the adequacy of funding for the plan based on reasonable actuarial factors.

(2) The commission shall diversify the investments of the retirement system unless the commission reasonably determines that, because of special circumstances, it is clearly prudent not to do so and shall make a reasonable effort to verify facts relevant to the investment and management of assets of a retirement system.

(E) The commission only shall consider pecuniary factors in making an investment decision or when allocating capital to an investment strategy. The commission only may allocate capital to an investment strategy that prioritizes a nonpecuniary goal, objective, or outcome or considers nonpecuniary factors as part of the investment strategy, if the commission finds that a prudent person in a like capacity would reasonably believe that the investment strategy will provide a superior risk adjusted return as compared to similar type investment opportunities available at the time that do not pursue a nonpecuniary objective or consider nonpecuniary factors.

(F) The commission shall meet in the current fiscal year to review compliance with regarding the exercise of shareholder proxy rights. The commission shall review a report that summarizes the votes cast by or on the commission's behalf or at the commission's direction. The report must include a vote caption, the commission's vote, the recommendation of company management, and the recommendation of any proxy advisor retained by the commission. The report required by this subsection must be posted in a conspicuous location on the commission's website. /

Amend totals and titles to conform.