AN ACT Relating to the investment of public pension and retirement funds; amending RCW 28B.20.130, 28B.30.150, 28B.35.120, 28B.40.120, 28B.50.090, 43.33A.020, 43.33A.110, 43.33A.130, 43.33A.140, 43.84.061, and 43.84.150; adding new sections to chapter 43.33A RCW; creating new sections; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature intends to limit the investment of state funds in nations with an expressed national policy of limiting or denying civil, human, or political rights to any of its people because of color, creed, nationality, or race. Therefore, the limitation on investments of state funds in business entities that do business in the Union of South Africa is intended to apply only so long as the Union of South Africa continues its policy of limiting or denying civil, human, and political rights to its people because of their color, creed, nationality, or race.

NEW SECTION. Sec. 2. A new section is added to chapter 43.33A RCW to read as follows:

The board shall, by January 1, 1986, develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the board by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the standard of judgment and care expressed in RCW 43.33A.140, the board and its fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the board shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the board shall report its experience to the legislature.

NEW SECTION. Sec. 3. A new section is added to chapter 43.33A RCW to read as follows:

The governor, or the governor's representative, shall, where possible, actively attempt to influence and promote the policy of freedom of civil, human, and political rights of persons regardless of color, creed, nationality, or race within those corporate and other business entities in which the state has invested through the purchase of securities through active participation at stockholder meetings of these entities where appropriate. In carrying out this mandate, the governor shall seek the support of or attempt to influence other public investment agencies to join in promoting and influencing such corporate and other business entities to express, within their policy, these various rights of persons.

Sec. 4. Section 28B.20.130, chapter 223, Laws of 1969 ex. sess. as last amended by section 92, chapter 370, Laws of 1985 and RCW 28B.20.130 are each amended to read as follows:

General powers and duties of the board of regents are as follows:

(1) To have full control of the university and its property of various kinds, except as limited by subsections (7) and (8) of this section or otherwise provided by law.

(2) To employ the president of the university, his assistants, members of the faculty, and employees of the institution, who except as otherwise provided by law, shall hold their positions during the pleasure of said board of regents.

(3) Establish entrance requirements for students seeking admission to the university which meet or exceed the standards specified under RCW 28B.80.350(2). Completion of examinations satisfactory to the university may be a prerequisite for entrance by any applicant at the university's discretion. Evidence of completion of public high schools and other educational institutions whose courses of study meet the approval of the university may be acceptable for entrance.

(4) Establish such colleges, schools or departments necessary to carry out the purpose of the university and not otherwise proscribed by law.

(5) With the assistance of the faculty of the university, prescribe the course of study in the various colleges, schools and departments of the institution and publish the necessary catalogues thereof.

(6) Grant to students such certificates or degrees as recommended for such students by the faculty. The board, upon recommendation of the faculty, may also confer honorary degrees upon persons other than graduates of this university in recognition of their learning or devotion to literature, art or science: PROVIDED, That no degree shall ever be conferred in consideration of the payment of money or the giving of property of whatsoever kind.

(7) Accept such gifts, grants, conveyances, bequests and devises, whether real or personal property, or both, in trust or otherwise, for the use or benefit of the university, its colleges, schools, departments, or agencies; and sell, lease or exchange, invest or expend the same or the proceeds, rents, profits and income thereof except as limited by the terms of said gifts, grants, conveyances, bequests and devises. The board shall adopt proper rules to govern and protect the receipt and expenditure of the proceeds of all fees, and the proceeds, rents, profits and income of all gifts, grants, conveyances, bequests and devises above-mentioned, and shall make full report of the same in the customary biennial report to the governor and members of the legislature, or more frequently if required by law: PROVIDED, HOWEVER, That nothing herein contained shall be construed to repeal, amend or in any way modify any of the provisions of RCW 28B.20.380: PROVIDED, FURTHER, That the regents shall develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the regents by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the same standard of judgment and care expressed in RCW 43.33A.140, the regents and its fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the regents shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the regents shall report their experience to the legislature.

(8) With regard to funds other than those provided for in subsection (7) of this section, the regents shall use the investment and reporting procedures in subsection (7) of this section.

(9) Except as otherwise provided by law, to enter into such contracts as the regents deem essential to university purposes.

((~~(9)~~)) (10) To submit upon request such reports as will be helpful to the governor and to the legislature in providing for the institution.

((~~(10)~~)) (11) Subject to the approval of the higher education coordinating board pursuant to RCW 28B.80.340, offer new degree programs, offer off-campus programs, participate in consortia or centers, contract for off-campus educational programs, and purchase or lease major off-campus facilities.

Sec. 5. Section 28B.30.150, chapter 223, Laws of 1969 ex. sess. as last amended by section 93, chapter 370, Laws of 1985 and RCW 28B.30.150 are each amended to read as follows:

The regents of Washington State University, in addition to other duties prescribed by law, shall:

(1) Have full control of the university and its property of various kinds, except as limited in subsections (24) and (25) of this section or otherwise provided by law.

(2) Employ the president of the university, his assistants, members of the faculty, and employees of the university, who, except as otherwise provided by law, shall hold their positions during the pleasure of said board of regents.

(3) Establish entrance requirements for students seeking admission to the university which meet or exceed the standards specified under RCW 28B.80.350(2). Completion of examinations satisfactory to the university may be a prerequisite for entrance by any applicant, at the university's discretion. Evidence of completion of public high schools and other educational institutions whose courses of study meet the approval of the university may be acceptable for entrance.

(4) Establish such colleges, schools or departments necessary to carry out the purpose of the university and not otherwise proscribed by law.

(5) Subject to the approval of the higher education coordinating board pursuant to RCW 28B.80.340, offer new degree programs, offer off-campus programs, participate in consortia or centers, contract for off-campus educational programs, and purchase or lease major off-campus facilities.

(6) With the assistance of the faculty of the university, prescribe the courses of instruction in the various colleges, schools and departments of the institution and publish the necessary catalogues thereof.

(7) Collect such information as the board deems desirable as to the schemes of technical instruction adopted in other parts of the United States and foreign countries.

(8) Provide for holding agricultural institutes including farm marketing forums.

(9) Provide that instruction given in the university, as far as practicable, be conveyed by means of laboratory work and provide in connection with the university one or more physical, chemical, and biological laboratories, and suitably furnish and equip the same.

(10) Provide training in military tactics for those students electing to participate therein.

(11) Establish a department of elementary science and in connection therewith provide instruction in elementary mathematics, including elementary trigonometry, elementary mechanics, elementary and mechanical drawing and land surveying.

(12) Establish a department of agriculture and in connection therewith provide instruction in physics with special application of its principles to agriculture, chemistry with special application of its principles to agriculture, morphology and physiology of plants with special reference to common grown crops and fungus enemies, morphology and physiology of the lower forms of animal life, with special reference to insect pests, morphology and physiology of the higher forms of animal life and in particular of the horse, cow, sheep and swine, agriculture with special reference to the breeding and feeding of livestock and the best mode of cultivation of farm produce, and mining and metallurgy, appointing demonstrators in each of these subjects to superintend the equipment of a laboratory and to give practical instruction therein.

(13) Establish agricultural experiment stations in connection with the department of agriculture, including at least one in the western portion of the state, and appoint the officers and prescribe regulations for their management.

(14) Grant to students such certificates or degrees, as recommended for such students by the faculty.

(15) Confer honorary degrees upon persons other than graduates of the university in recognition of their learning or devotion to literature, art or science when recommended thereto by the faculty: PROVIDED, That no degree shall ever be conferred in consideration of the payment of money or the giving of property of whatsoever kind.

(16) Adopt plans and specifications for university buildings and facilities or improvements thereto and employ skilled architects and engineers to prepare such plans and specifications and supervise the construction of buildings or facilities which the board is authorized to erect, and fix the compensation for such services. The board shall enter into contracts with one or more contractors for such suitable buildings, facilities or improvements as the available funds will warrant, upon the most advantageous terms offered at a public competitive letting, pursuant to public notice under regulations established by the board. The board shall require of all persons with whom they contract for construction and improvements a good and sufficient bond for the faithful performance of the work and full protection against all liens.

(17) Except as otherwise provided by law, direct the disposition of all money appropriated to or belonging to the state university.

(18) Receive and expend the money appropriated under the act of congress approved May 8, 1914, entitled "An Act to provide for cooperative agricultural extension work between the agricultural colleges in the several States receiving the benefits of the Act of Congress approved July 2, 1862, and Acts supplemental thereto and the United States Department of Agriculture" and organize and conduct agricultural extension work in connection with the state university in accordance with the terms and conditions expressed in the acts of congress.

(19) Except as otherwise provided by law, to enter into such contracts as the regents deem essential to university purposes.

(20) Acquire by lease, gift, or otherwise, lands necessary to further the work of the university or for experimental or demonstrational purposes.

(21) Establish and maintain at least one agricultural experiment station in an irrigation district to conduct investigational work upon the principles and practices of irrigational agriculture including the utilization of water and its relation to soil types, crops, climatic conditions, ditch and drain construction, fertility investigations, plant disease, insect pests, marketing, farm management, utilization of fruit byproducts and general development of agriculture under irrigation conditions.

(22) Supervise and control the agricultural experiment station at Puyallup.

(23) Establish and maintain at Wenatchee an agricultural experiment substation for the purpose of conducting investigational work upon the principles and practices of orchard culture, spraying, fertilization, pollenization, new fruit varieties, fruit diseases and pests, byproducts, marketing, management and general horticultural problems.

(24) Accept such gifts, grants, conveyances, devises and bequests, whether real or personal property, in trust or otherwise, for the use or benefit of the university, its colleges, schools or departments; and sell, lease or exchange, invest or expend the same or the proceeds, rents, profits and income thereof except as limited by the terms of said gifts, grants, conveyances, bequests and devises; adopt proper rules to govern and protect the receipt and expenditure of the proceeds of all fees, and the proceeds, rents, profits and income of all gifts, grants, conveyances, bequests and devises, and make full report thereof in a biennial report to the governor and members of the legislature: PROVIDED, That the regents shall develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the regents by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the same standard of judgment and care expressed in RCW 43.33A.140, the regents and its fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the regents shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the regents shall report their experience to the legislature.

(25) With regard to funds other than those provided for in subsection (24) of this section, the regents shall use the investment and reporting procedures in subsection (24) of this section.

(26) Construct when the board so determines a new foundry and a mining, physical, technological building and fabrication shop at the university, or add to the present foundry and other buildings, in order that both instruction and research be expanded to include permanent molding and die casting with a section for new fabricating techniques, especially for light metals, including magnesium and aluminum; purchase equipment for the shops and laboratories in mechanical, electrical, and civil engineering; establish a pilot plant for the extraction of alumina from native clays and other possible light metal research; purchase equipment for a research laboratory for technological research generally; and purchase equipment for research in electronics, instrumentation, energy sources, plastics, food technology, mechanics of materials, hydraulics and similar fields.

((~~(26)~~)) (27) Make and transmit to the governor and members of the legislature upon request such reports as will be helpful in providing for the institution.

Sec. 6. Section 48, chapter 169, Laws of 1977 ex. sess. as amended by section 94, chapter 370, Laws of 1985 and RCW 28B.35.120 are each amended to read as follows:

In addition to any other powers and duties prescribed by law, each board of trustees of the respective regional universities:

(1) Shall have full control of the regional university and its property of various kinds, except as limited in subsections (10) and (11) of this section or otherwise provided by law.

(2) Shall employ the president of the regional university, his assistants, members of the faculty, and other employees of the institution, who, except as otherwise provided by law, shall hold their positions, until discharged therefrom by the board for good and lawful reason.

(3) With the assistance of the faculty of the regional university, shall prescribe the course of study in the various schools and departments thereof and publish such catalogues thereof as the board deems necessary: PROVIDED, That the state board of education shall determine the requisites for and give program approval of all courses leading to teacher certification by such board.

(4) Establish such divisions, schools or departments necessary to carry out the purposes of the regional university and not otherwise proscribed by law.

(5) Except as otherwise provided by law, may establish and erect such new facilities as determined by the board to be necessary for the regional university.

(6) May acquire real and other property as provided in RCW 28B.10.020, as now or hereafter amended.

(7) Except as otherwise provided by law, may purchase all supplies and purchase or lease equipment and other personal property needed for the operation or maintenance of the regional university.

(8) May establish, lease, operate, equip and maintain self-supporting facilities in the manner provided in RCW 28B.10.300 through 28B.10.330, as now or hereafter amended.

(9) Except as otherwise provided by law, to enter into such contracts as the trustees deem essential to regional university purposes.

(10) May receive such gifts, grants, conveyances, devises and bequests of real or personal property from whatsoever source, as may be made from time to time, in trust or otherwise, whenever the terms and conditions thereof will aid in carrying out the regional university programs; sell, lease or exchange, invest or expend the same or the proceeds, rents, profits and income thereof except as limited by the terms and conditions thereof; and adopt regulations to govern the receipt and expenditure of the proceeds, rents, profits and income thereof: PROVIDED, That the boards of trustees shall develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the boards of trustees by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the same standard of judgment and care expressed in RCW 43.33A.140, the boards of trustees and their fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the boards of trustees shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the boards of trustees shall report their experience to the legislature.

(11) With regard to funds other than those provided for in subsection (10) of this section, the boards of trustees shall use the investment and reporting procedures in subsection (10) of this section.

(12) Subject to the approval of the higher education coordinating board pursuant to RCW 28B.80.340, offer new degree programs, offer off-campus programs, participate in consortia or centers, contract for off-campus educational programs, and purchase or lease major off-campus facilities.

((~~(12)~~)) (13) May promulgate such rules and regulations, and perform all other acts not forbidden by law, as the board of trustees may in its discretion deem necessary or appropriate to the administration of the regional university.

Sec. 7. Section 28B.40.120, chapter 223, Laws of 1969 ex. sess. as last amended by section 95, chapter 370, Laws of 1985 and RCW 28B.40.120 are each amended to read as follows:

In addition to any other powers and duties prescribed by law, the board of trustees of The Evergreen State College:

(1) Shall have full control of the state college and its property of various kinds, except as limited in subsections (10) and (11) of this section or otherwise provided by law.

(2) Shall employ the president of the state college, his assistants, members of the faculty, and other employees of the institution, who, except as otherwise provided by law, shall hold their positions, until discharged therefrom by the board for good and lawful reason.

(3) With the assistance of the faculty of the state college, shall prescribe the course of study in the various schools and departments thereof and publish such catalogues thereof as the board deems necessary: PROVIDED, That the state board of education shall determine the requisites for and give program approval of all courses leading to teacher certification by such board.

(4) Establish such divisions, schools or departments necessary to carry out the purposes of the college and not otherwise proscribed by law.

(5) Except as otherwise provided by law, may establish and erect such new facilities as determined by the board to be necessary for the college.

(6) May acquire real and other property as provided in RCW 28B.10.020, as now or hereafter amended.

(7) Except as otherwise provided by law, may purchase all supplies and purchase or lease equipment and other personal property needed for the operation or maintenance of the college.

(8) May establish, lease, operate, equip and maintain self-supporting facilities in the manner provided in RCW 28B.10.300 through 28B.10.330, as now or hereafter amended.

(9) Except as otherwise provided by law, to enter into such contracts as the trustees deem essential to college purposes.

(10) May receive such gifts, grants, conveyances, devises and bequests of real or personal property from whatsoever source, as may be made from time to time, in trust or otherwise, whenever the terms and conditions thereof will aid in carrying out the college programs; sell, lease or exchange, invest or expend the same or the proceeds, rents, profits and income thereof except as limited by the terms and conditions thereof; and adopt regulations to govern the receipt and expenditure of the proceeds, rents, profits and income thereof: PROVIDED, That the board of trustees shall develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the board of trustees by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the same standard of judgment and care expressed in RCW 43.33A.140, the board of trustees and its fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the board of trustees shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the board of trustees shall report its experience to the legislature.

(11) With regard to funds other than those provided for in subsection (10) of this section, the board of trustees shall use the investment and reporting procedures in subsection (10) of this section.

Sec. 8. Section 28B.50.090, chapter 223, Laws of 1969 ex. sess. as last amended by section 1, chapter 50, Laws of 1982 and RCW 28B.50.090 are each amended to read as follows:

The college board shall have general supervision and control over the state system of community colleges, except as limited in subsections (14) and (15) of this section. In addition to the other powers and duties imposed upon the college board by this chapter, the college board shall be charged with the following powers, duties and responsibilities:

(1) Review the budgets prepared by the community college boards of trustees, prepare a single budget for the support of the state system of community colleges and adult education, and submit this budget to the governor as provided in RCW 43.88.090; the coordinating council shall assist with the preparation of the community college budget that has to do with vocational education programs;

(2) Establish guidelines for the disbursement of funds; and receive and disburse such funds for adult education and maintenance and operation and capital support of the community college districts in conformance with the state and district budgets, and in conformance with chapter 43.88 RCW;

(3) Ensure, through the full use of its authority:

(a) that each community college district shall offer thoroughly comprehensive educational, training and service programs to meet the needs of both the communities and students served by combining, with equal emphasis, high standards of excellence in academic transfer courses; realistic and practical courses in occupational education, both graded and ungraded; and community services of an educational, cultural, and recreational nature; and adult education: PROVIDED, That notwithstanding any other provisions of this chapter, a community college shall not be required to offer a program of vocational-technical training, when such a program as approved by the coordinating council for occupational education is already operating in the district;

(b) that each community college district shall maintain an open-door policy, to the end that no student will be denied admission because of the location of his residence or because of his educational background or ability; that, insofar as is practical in the judgment of the college board, curriculum offerings will be provided to meet the educational and training needs of the community generally and the students thereof; and that all students, regardless of their differing courses of study, will be considered, known and recognized equally as members of the student body: PROVIDED, That the administrative officers of a community college may deny admission to a prospective student or attendance to an enrolled student if, in their judgment, he would not be competent to profit from the curriculum offerings of the community college, or would, by his presence or conduct, create a disruptive atmosphere within the community college not consistent with the purposes of the institution;

(4) Prepare a comprehensive master plan for the development of community college education and training in the state; and assist the office of financial management in the preparation of enrollment projections to support plans for providing adequate community college facilities in all areas of the state;

(5) Define and administer criteria and guidelines for the establishment of new community colleges or campuses within the existing districts;

(6) Establish criteria and procedures for modifying district boundary lines consistent with the purposes set forth in RCW 28B.50.020 as now or hereafter amended and in accordance therewith make such changes as it deems advisable;

(7) Establish minimum standards to govern the operation of the community colleges with respect to:

(a) qualifications and credentials of instructional and key administrative personnel, except as otherwise provided in the state plan for vocational education,

(b) internal budgeting, accounting, auditing, and financial procedures as necessary to supplement the general requirements prescribed pursuant to chapter 43.88 RCW,

(c) the content of the curriculums and other educational and training programs, and the requirement for degrees and certificates awarded by the colleges,

(d) standard admission policies,

(e) eligibility of courses to receive state fund support;

(8) Establish and administer criteria and procedures for all capital construction including the establishment, installation, and expansion of facilities within the various community college districts;

(9) Encourage innovation in the development of new educational and training programs and instructional methods; coordinate research efforts to this end; and disseminate the findings thereof;

(10) Exercise any other powers, duties and responsibilities necessary to carry out the purposes of this chapter;

(11) Authorize the various community colleges to offer programs and courses in other districts when it determines that such action is consistent with the purposes set forth in RCW 28B.50.020 as now or hereafter amended;

(12) Notwithstanding any other law or statute regarding the sale of state property, sell or exchange and convey any or all interest in any community college real and personal property, except such property as is received by a community college district in accordance with RCW 28B.50.140(8), when it determines that such property is surplus or that such a sale or exchange is in the best interests of the community college system;

(13) In order that the treasurer for the state board for community college education appointed in accordance with RCW 28B.50.085 may make vendor payments, the state treasurer will honor warrants drawn by the state board providing for an initial advance on July 1, 1982, of the current biennium and on July 1 of each succeeding biennium from the state general fund in an amount equal to twenty-four percent of the average monthly allotment for such budgeted biennium expenditures for the state board for community college education as certified by the office of financial management; and at the conclusion of such initial month and for each succeeding month of any biennium, the state treasurer will reimburse expenditures incurred and reported monthly by the state board treasurer in accordance with chapter 43.88 RCW: PROVIDED, That the reimbursement to the state board for actual expenditures incurred in the final month of each biennium shall be less the initial advance made in such biennium;

(14) Notwithstanding the provisions of subsection (12) of this section, may receive such gifts, grants, conveyances, devises, and bequests of real or personal property from private sources as may be made from time to time, in trust or otherwise, whenever the terms and conditions thereof will aid in carrying out the community college programs and may sell, lease or exchange, invest or expend the same or the proceeds, rents, profits and income thereof according to the terms and conditions thereof; and adopt regulations to govern the receipt and expenditure of the proceeds, rents, profits and income thereof: PROVIDED, FURTHER, That the college board shall develop a list of those business entities that do business in the Union of South Africa. This list should be compiled and updated by the college board by using one or more listings maintained and promulgated by a recognized organization or organizations. Within the same standard of judgment and care expressed in RCW 43.33A.140, the college board and its fund managers shall not use the firms on this list as the first investment source. Within that standard of judgment and care, the college board shall divest the securities of those business entities that do business in the Union of South Africa. Periodically, the college board shall report its experience to the legislature.

(15) With regard to funds other than those provided for in subsection (14) of this section, the college board shall use the investment and reporting procedures in subsection (14) of this section.

The college board shall have the power of eminent domain.

Sec. 9. Section 2, chapter 3, Laws of 1981 as last amended by section 1, chapter 195, Laws of 1985 and RCW 43.33A.020 are each amended to read as follows:

There is hereby created the state investment board to consist of ((~~fourteen~~)) fifteen members ((~~to be appointed as provided in this section~~)).

(1) The governor, or a representative of the governor, is to be a member ex officio.

(2) One member ((~~who is~~)) shall be an active member of the public employees' retirement system and has been an active member for at least five years. This member shall be appointed by the governor, subject to confirmation by the senate, from a list of nominations submitted by organizations representing active members of the system. The initial term of appointment shall be one year.

((~~(2)~~)) (3) One member ((~~who is~~)) shall be an active member of the law enforcement officers' and fire fighters' retirement system and has been an active member for at least five years. This member shall be appointed by the governor, subject to confirmation by the senate, from a list of nominations submitted by organizations representing active members of the system. The initial term of appointment shall be two years.

((~~(3)~~)) (4) One member ((~~who is~~)) shall be an active member of the teachers' retirement system and has been an active member for at least five years. This member shall be appointed by the superintendent of public instruction subject to confirmation by the senate. The initial term of appointment shall be three years.

((~~(4)~~)) (5) One member shall be the state treasurer or the assistant state treasurer if designated by the state treasurer.

((~~(5)~~)) (6) One member shall be a member of the state house of representatives. This member shall be appointed by the speaker of the house of representatives.

((~~(6)~~)) (7) One member shall be a member of the state senate. This member shall be appointed by the president of the senate.

((~~(7)~~)) (8) One member ((~~who is~~)) shall be a retired member of a state retirement system shall be appointed by the governor, subject to confirmation by the senate. The initial term of appointment shall be three years.

((~~(8)~~)) (9) One member shall be the director of the department of labor and industries.

((~~(9)~~)) (10) One member shall be the director of the department of retirement systems.

((~~(10)~~)) (11) There shall be five nonvoting members appointed by the state investment board who are considered experienced and qualified in the field of investments.

The legislative members shall serve terms of two years. The initial legislative members appointed to the board shall be appointed no sooner than January 10, 1983. The position of a legislative member on the board shall become vacant at the end of that member's term on the board or whenever the member ceases to be a member of the senate or house of representatives from which the member was appointed.

After the initial term of appointment, all other members of the state investment board, except ex officio members, shall serve terms of three years and shall hold office until successors are appointed. Members' terms, except for ex officio members, shall commence on January 1 of the year in which the appointments are made.

Members may be reappointed for additional terms. Appointments for vacancies shall be made for the unexpired terms in the same manner as the original appointments. Any member may be removed from the board for cause by the member's respective appointing authority.

Sec. 10. Section 11, chapter 3, Laws of 1981 as amended by section 4, chapter 219, Laws of 1981 and RCW 43.33A.110 are each amended to read as follows:

The state investment board may make appropriate rules and regulations for the performance of its duties. The board shall establish investment policies and procedures designed exclusively to maximize return at a prudent level of risk, except as limited by RCW 43.84.150. The board shall adopt rules to ensure that its members perform their functions in compliance with chapter 42.18 RCW. Rules adopted by the board shall be adopted pursuant to chapter 34.04 RCW.

Sec. 11. Section 13, chapter 3, Laws of 1981 and RCW 43.33A.130 are each amended to read as follows:

The state treasurer may cause any securities in which the state investment board deals to be registered in the name of a nominee without mention of any fiduciary relationship, except that adequate records shall be maintained to identify the actual owner of the security so registered. The securities so registered shall be held in the physical custody of the state treasurer, the federal reserve system, the designee of the state treasurer, or, at the election of the designee and upon approval of the state treasurer, the Depository Trust Company of New York City or its designees.

With respect to the securities, the nominee shall act only upon the order of the state treasurer who shall act only on the direction of the state investment board. All rights to the dividends, interest, and sale proceeds from the securities and all voting rights of the securities are vested in the actual owners of the securities, and not in the nominee. The voting rights of the securities shall be publicly exercised by the board taking into consideration the general policy or guidelines set forth by the governor to meet the goals set forth in sections 2 and 3 of this 1986 act. The actions of the board in voting such rights shall be promulgated in a timely manner.

Sec. 12. Section 14, chapter 3, Laws of 1981 and RCW 43.33A.140 are each amended to read as follows:

Except as limited by RCW 43.84.150, any investments made by the state investment board shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived.

Sec. 13. Section 6, chapter 104, Laws of 1965 ex. sess. and RCW 43.84.061 are each amended to read as follows:

Any investments made hereunder shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived, except that investments shall not be made in securities of nongovernmental companies or financial institutions directly doing business in the Union of South Africa.

Sec. 14. Section 2, chapter 17, Laws of 1975-'76 2nd ex. sess. as last amended by section 1, chapter 98, Laws of 1981 and RCW 43.84.150 are each amended to read as follows:

Except where otherwise specifically provided by law, the state investment board shall have full power to invest, reinvest, manage, contract, or sell or exchange investments acquired. Investments shall be made in accordance with this section, RCW 43.33A.140, section 2 of this 1986 act, and investment policy duly established and published by the state investment board. All funds shall be sufficiently diversified and no corporate fixed income issue or common stock holding may exceed three percent of the cost or six percent of the market value of the assets of any fund.

NEW SECTION. Sec. 15. By January 1987, the board shall inform the legislature on the structure of the list specified in section 2 of this act and the criteria upon which the list was developed.

NEW SECTION. Sec. 16. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.