SENATE 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

Rereferred House Committee on Ways & Means/Appropriations

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 23, 1988; February 26, 1988

Majority Report:  Do pass as amended and refer to Committee on Ways & Means.

      Signed by Senators von Reichbauer, Chairman; Johnson, Kreidler, Moore, Sellar, Smitherman.

Senate Staff:Walt Corneille (786-7416)

                  February 29, 1988

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 22, 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 investment 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 the Senate Committee on Economic Development and Labor and the House Committee on Commerce and Labor at the start of the 1989 legislative session.

SUMMARY OF PROPOSED SENATE AMENDMENT:

The report by the State Investment Board recommending changes in investment policies must be sent to the Senate Committee on Financial Institutions and Insurance instead of the Senate Committee on Economic Development and Labor.

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

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 24, 1988

Senate Committee - Testified: no one