H-4773              _______________________________________________

                                          SUBSTITUTE HOUSE BILL NO. 1910

                        _______________________________________________

State of Washington                              50th Legislature                              1988 Regular Session

By House Committee on Trade & Economic Development (originally sponsored by Representatives Schoon, Vekich, Winsley, Fuhrman, Wineberry and Ferguson)

Read first time 2/5/88.

AN ACT Relating to the in-state investment opportunities by the state investment board; and adding new sections to chapter 43.33A RCW.

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

NEW SECTION. Sec. 1.     The legislature finds that the availability of adequate funds to meet the diverse financing needs of the enterprises located in the state is essential for the provision of sufficient quality employment for the citizens of the state.  The increased involvement of the state economy in the international economy, the dramatic shifts in financial markets, and the deregulation of the banking system require the state to  assure an adequate supply of capital in the state economy.  The financial characteristics of the trusts and capital funds managed by the state investment board with their requirements for long-term investment, low risk, and diverse portfolios permit the state investment board to encourage additional in-state investment in the pursuit of its legislatively mandated purpose.

          The legislature reaffirms that the purpose of the state investment board is to provide professional investment management of trusts, operating funds, and capital funds established by law and that the goal of state investment board management is to accomplish the purpose of each trust or fund.  The legislature declares that the purpose of section 2 of this act is subordinate to the statutory purposes of the state investment board.

NEW SECTION. Sec. 2.     The state investment board shall make investments in profitable in-state investment opportunities.  For the aggregate of funds and trusts for which it makes investments, at least one percent shall be invested in profitable, in-state investments.  The board shall act as a developmental investor focusing on the following types of investments:

          (a) Those types of investments which are best matched to the financial characteristics of the funds managed by the state investment board.  They should include investments which are long term, in which the risk of loss is minimized, and which serve to retain a prudent portfolio diversity.

          (b) Those investments which would increase net investment in the state and which would not primarily replace existing investments in the state.

          (c) Those investments which would serve to leverage additional investments in the state.

          The prudent investment of the funds under the  management of the state investment board remains the purpose of the state investment board, and the board should not investigate those types of investments which would promote the economy of the state at the expense of the prudent investment of those funds under the management of the state investment board.

NEW SECTION. Sec. 3.     Sections 1 and 2 of this act are each added to chapter 43.33A RCW.