HOUSE BILL REPORT

2SHB 1733

BYHouse Committee on Ways & Means /Appropriations (originally sponsored by Representatives Grimm, Ballard, Wang and Locke; by request of Department of Labor and Industries)

Revising investment policies for funds of the department of labor and industries.

House Committe on Commerce & Labor

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (9)

      Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisher, Jones, O'Brien, Patrick, Sanders, Sayan and Walker.

House Staff:Chris Cordes (786-7117)

Rereferred House Committee on Ways & Means/Appropriations

Majority Report:  The second substitute bill be substituted therefor and the second substitute bill do pass.  (16)

      Signed by Representatives Locke, Chair; Brekke, Brough, Butterfield, Fuhrman, Grant, Grimm, Hine, Holland, Nealey, Peery, Sayan, Silver, H. Sommers, Spanel and Sprenkle.

House Staff:      David Knutson (786-7136)

AS PASSED HOUSE FEBRUARY 15, 1988

BACKGROUND:

Since 1985, the State Investment Board has been authorized to invest industrial insurance trust funds in equity investments.  The board is charged with investing state funds to maximize return at a prudent level of risk.  Under present industrial insurance law and practice, large changes in the value of the trust fund assets can create significant fluctuations in the industrial insurance premiums that must be charged to employers.  Therefore, to avoid causing premium fluctuations, the funds have not been extensively invested in equity.

SUMMARY:

Until July 1, 1989, the State Investment Board is required to establish investments policies for the industrial insurance funds that are designed to limit fluctuations in industrial insurance premiums and, subject to this limitation, to maximize return at a prudent level of risk.

The board will prepare a report recommending changes in current investment policies.  The report will be presented to appropriate legislative committees at the start of the 1989 legislative session.

Appropriation:    $100,000 to the State Investment Board from the Medical aid and accident funds of the industrial insurance funds.

Fiscal Note:      Requested January 24, 1988.

House Committee ‑ Testified For:    (Commerce & Labor)  Joe Dear, Department of Labor and Industries;  John Hitchman, State Investment Board.

(Ways & Means/Appropriations)  Joe Dear, Labor & Industries; David Weig, State Investment Board.

House Committee - Testified Against:      (Commerce & Labor)  None Presented.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony For:    (Commerce & Labor)  The bill is needed to reconcile a conflict between the statutes that regulate the state investment board and the industrial insurance trust funds.  The state investment board needs the authority to consider the impact on industrial insurance premiums when determining industrial insurance fund investment policy.

(Ways & Means/Appropriations)  Same as testimony given in Committee on Commerce & Labor.

House Committee - Testimony Against:      (Commerce & Labor)  None Presented.

(Ways & Means/Appropriations)  None Presented.