H-4974              _______________________________________________

                                    SECOND SUBSTITUTE HOUSE BILL NO. 1733

                        _______________________________________________

State of Washington                              50th Legislature                              1988 Regular Session

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

Read first time 2/8/88.

AN ACT Relating to investment of funds of the department of labor and industries; amending RCW 43.33A.110; creating a new section; and making appropriations.

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

        Sec. 1.  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.  However, until July 1, 1989, in the case of the department of labor and industries' accident, medical aid, and reserve funds, the board shall establish investment policies and procedures designed to attempt to limit fluctuations in industrial insurance premiums and, subject to this purpose, to maximize return at a prudent level of risk.  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.

NEW SECTION. Sec. 2.     At the start of the 1989 regular legislative session, the state investment board shall present to the economic development and labor committee of the senate and the commerce and labor committee of the house of representatives, or the appropriate successor committees, a report recommending, where necessary, changes in current investment policies.  The report shall study current investment needs of the department of labor and industries and casualty insurance industry investment policies; analyze statutory and regulatory constraints and the need to encourage stability in Washington's industrial insurance rates; and recommend investment policies for determination of asset allocation.  The report shall include recommendations for appropriate accounting policies that will allow stabilization of rates and maximization of investment return and a plan making recommendations for investment of state industrial insurance funds in both equity and fixed investments.

NEW SECTION. Sec. 3.     There is appropriated from the medical aid fund and the accident fund in equal parts one hundred thousand dollars, or so much thereof as may be necessary, to the state investment board for the biennium ending June 30, 1989, for the purposes of this act.