H-1851              _______________________________________________

                                                   HOUSE BILL NO. 1108

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Locke, Ballard, Lux and Grimm

Read first time 2/25/87 and referred to Committee on Commerce & Labor.

AN ACT Relating to investment of trust funds; and amending RCW 51.44.100, 43.33A.110, and 43.84.150.

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

        Sec. 1.  Section 51.44.100, chapter 23, Laws of 1961 as last amended by section 41, chapter 3, Laws of 1981 and RCW 51.44.100 are each amended to read as follows:

          Whenever, in the judgment of the state investment board, there shall be in the accident fund, medical aid fund, or in the reserve fund, funds in excess of that amount deemed by the state investment board to be sufficient to meet the current expenditures properly payable therefrom, the state investment board may invest and reinvest such excess funds in the manner prescribed by RCW 43.84.150, and not otherwise.  All investments of excess funds shall be made and accounted for in accordance with recognized insurance industry  practices.

          The state investment board may give consideration to the investment of excess funds in federally insured student loans made to persons in vocational training or retraining or reeducation programs.  The state investment board may make such investments  by purchasing from savings and loan associations, commercial banks, mutual savings banks, credit unions and other institutions authorized to be lenders under the federally insured student loan act, organized under federal or state law and operating in this state loans made by such institutions to residents of the state of Washington particularly for the purpose of vocational training or reeducation:  PROVIDED, That the state investment board shall purchase only that portion of any loan which is guaranteed or insured by the United States of America, or by any agency or instrumentality of the United States of America:  PROVIDED FURTHER, That the state investment board is authorized to enter into contracts with such savings and loan associations, commercial banks, mutual savings banks, credit unions, and other institutions authorized to be lenders under the federally insured student loan act to service loans purchased pursuant to this section at an agreed upon contract price.

        Sec. 2.  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:  PROVIDED, That all investments of excess industrial insurance funds shall be made in a manner consistent with RCW 51.44.100.  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. 3.  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 RCW 43.33A.140 and 51.44.100 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.