2025 State Investment Modernization Act.-AB

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 709

Short Title: 2025 State Investment Modernization Act.-AB (Public)
Sponsors: Senators Hise, Craven, and Lee (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S709-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO ENACT THE 2025 STATE INVESTMEN T MODERNIZATION ACT, AS 2
RECOMMENDED BY THE STATE TREASURER. 3
The General Assembly of North Carolina enacts: 4
5
PART I. TECHNICAL RE ORGANIZATION OF ARTI CLE 6 OF CHAPTER 147 OF 6
THE GENERAL STATUTES 7
SECTION 1.1. Article 6 of Chapter 147 of the General Statutes is amended to add 8
the following new Parts: 9
(1) Part 1, to be entitled "General" and consisting of G.S. 147-65 through 10
G.S. 147-69. 11
(2) Part 2, to be entitled "Investments and Funds" and consisting of G.S. 147-69.1 12
through G.S. 147-69.7. 13
(3) Part 3, to be entitled "Reports and Audits" and consisting of G.S. 147-69.8 14
through G.S. 147-69.70. 15
(4) Part 4, to be entitled "North Carolina Investment Authority" and consisting of 16
G.S. 147-70.1 through G.S. 147-73.2. 17
(5) Part 5, to be entitled "Department Bookkeeping and Deposits" and consisting 18
of G.S. 147-74 through G.S. 147-86.2. 19
SECTION 1.2.(a) G.S. 147-65 is recodified as G.S. 147-65.2. 20
SECTION 1.2.(b) G.S. 147-69.3A is recodified as G.S. 147-67.1. 21
SECTION 1.2.(c) G.S. 147-69.11 is recodified as G.S. 147-73.2. 22
SECTION 1.2.(d) G.S. 147-69.7 is recodified as G.S. 147-70.6. 23
SECTION 1.2.(e) G.S. 147-70 is recodified as G.S. 147-68.3. 24
SECTION 1.2.(f) G.S. 147-71 is recodified as G.S. 147-68.4. 25
SECTION 1.2.(g) G.S. 147-72 is repealed. 26
SECTION 1.2.(h) G.S. 147-73 is repealed. 27
SECTION 1.2.(i) G.S. 147-75 is recodified as G.S. 147-66.2. 28
SECTION 1.2.(j) G.S. 147-75.1 is recodified as G.S. 147-68.5. 29
SECTION 1.2.(k) G.S. 147-86.2 is recodified as G.S. 147-68.6. 30
SECTION 1.3. Subsection (i2) of G.S. 147-69.3 is recodified as subsection (b) of 31
G.S. 147-65.2, as created by Section 1.2(a) of this Part. 32
SECTION 1.4. This Part is effective when it becomes law. 33
34
PART II. CREATION OF THE NORTH CAROLINA INVESTMENT AUTHORITY 35
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SECTION 2.1. Part 1 of Article 6 of Chapter 147 of the General Statutes, as created 1
and amended by Part I of this act, is amended by adding a new section to read: 2
"§ 147-65.1. Definitions. 3
The following definitions apply in this Article: 4
(1) Board of Directors. – The Board of Directors of the North Carolina Investment 5
Authority. 6
(2) Chief Investment Officer or CIO. – The Chief Investment Officer of the 7
Investment Authority. 8
(3) Department. – The Department of State Treasurer. 9
(4) Escheats Fund. – The Escheats Fund established under Article 1A of Chapter 10
116B of the General Statutes. 11
(5) Investment Authority. – The North Carolina Investment Authority, 12
established under Part 4 of this Article. 13
(6) Reserved for future codification purposes. 14
(7) Retirement Systems. – This term includes all of the following retirement 15
systems: 16
a. The Teachers' and State Employees ' Retirement System, established 17
under Article 1 of Chapter 135 of the General Statutes. 18
b. The Consolidated Judicial Retirement System, established under 19
Article 4 of Chapter 135 of the General Statutes. 20
c. The North Carolina Firefighters' and Rescue Workers' Pension Fund, 21
established under Article 86 of Chapter 58 of the General Statutes. 22
d. The Local Governmental Employees' Retirement System, established 23
under Article 3 of Chapter 128 of the General Statutes. 24
e. The Legislative Retirement System of North Carolina, established 25
under Article 1A of Chapter 120 of the General Statutes. 26
f. The North Carolina National Guard Pensio n Fund, established under 27
Article 3 of Chapter 127A of the General Statutes. 28
g. The Registers of Deeds ' Supplemental Pension Fund , established 29
under Article 3 of Chapter 161 of the General Statutes. 30
h. The Retiree Health Benefit Fund, established under G.S. 135-7(f). 31
i. The North Carolina Teachers ' and State Employees ' Benefit Trust, 32
established under G.S. 135-7(g). 33
(8) Treasurer. – The State Treasurer." 34
SECTION 2.2. Part 4 of Article 6 of Chapter 147 of the General Statutes, as created 35
and amended by Part I of this act, reads as rewritten: 36
"Part 4. North Carolina Investment Authority. 37
"§ 147-70.1. Creation of Investment Authority. 38
(a) Creation. – The North Carolina Investment Authority is created as a body corporate 39
and politic having the powers and jurisdiction as provided under this Article or any other law. 40
The Investment Authority is a State agency for the performance of essential governmental and 41
public functions. The Investment Authority is located within, but independent from the control 42
of, the Department of State Treasurer. The Investment Authority shall have perpetual succession. 43
(b) Independence. – The Investment Authority, in carrying out its statutory 44
responsibilities, shall be independent of any fiscal control exercised by the Director of the 45
Budget, the Department of Administration, and the Department of State Treasurer, including for 46
organizational, staffing, procurement, and budgetary purposes. Except as provided under 47
subsection (c) of this section and unless otherwise explicitly provided by law, t he Investment 48
Authority is exempt from the State Budget Act , and the provisions of Chapter 143C of the 49
General Statutes do not apply to the Investment Authority. 50
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(c) Fiduciary Funds. – In order for the Investment Authority to effectively operate the 1
investment programs under its management, all funds while under management of the Investment 2
Authority are Fiduciary Funds described under subdivisions (8) through (10) of G.S. 143C-1-3(a) 3
and shall be accounted for as specified in G.S. 147-69.3(f). 4
"§ 147-70.2. Powers and duties of the Investment Authority. 5
(a) In addition to the authority granted to the Investment Authority under this Article or 6
any other law, the Investment Authority shall have all of the powers necessary to execute the 7
provisions of this Part, including, at a minimum, the following powers: 8
(1) The right to sue and be sued. 9
(2) To take, demand, receive, and possess all kinds of real and personal property 10
necessary and proper for its purposes. 11
(3) To bargain, sell, grant, alienate, or dispose of all real and personal property as 12
it may lawfully acquire. 13
(b) The Investment Authority shall have the right to acquire fi delity bonds, fiduciary 14
insurance, directors' and officers' insurance, or errors and omissions coverage, as determined by 15
the Investment Authority board. This right is independent of any purchase of insurance by the 16
State Treasurer under G.S. 147-67.1. 17
(c) Pursuant to G.S. 143B-1320(b), the Investment Authority shall be exempt from the 18
provisions of Article 15 of Chapter 143B of the General Statutes. 19
"§ 147-70.3. Taxation of Investment Authority. 20
(a) Property owned or acquired by the Authority is exempt from all taxes imposed by the 21
State or any political subdivision of the State. 22
(b) The Investment Authority shall not be subject to State income taxes. 23
(c) This section shall not be construed to apply in any way to individual members of the 24
Board of Directors or any employee of the Investment Authority. 25
"§ 147-70.4. Confidentiality of Investment Authority records. 26
Any record or other information received or generated by the Investment Authority in order 27
to negotiate at arm 's length investment transactions that constitute a trade secret , as defined in 28
G.S. 66-152, is not public record and is exempt from the requirements of Chapter 132 of the 29
General Statutes until the applicable negotiation is completed and unless the record or 30
information substantiates a conflict with the duties of the Investment Authority under 31
G.S. 147-70.6(a). 32
"§ 147-70.5. Criminal record checks. 33
(a) The Investment Authority may obtain from the State and National Repositories of 34
Criminal Histories or from any other law ful source the criminal history of any of the following 35
individuals: 36
(1) A current or prospective permanent or temporary employee of the Investment 37
Authority. 38
(2) A contractor with the Investment Authority. 39
(3) An employee or agent of a contractor with the Investment Authority who is 40
performing or will perform work for the Investment Authority. 41
(4) A volunteer of the Investment Authority. 42
(5) Any other individual otherwise engaged by the Investment Authority who will 43
have access to health or financial information or data maintained by the 44
Investment Authority that is confidential or otherwise nonpublic. 45
(b) The Investment Authority may deny employment to or dismiss any individual 46
identified under subdivisions (1), (2), (4), and (5) of subsection (a) of this section who refuses to 47
consent to a criminal history record check or to the use of fingerprints or other identifying 48
information required by the State or National Repositories of Criminal Histories. Any refusal 49
shall constitute just cause for the employment denial or the dismissal from employment. 50
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(c) The Investment Authority may extend a conditional offer of employment pending the 1
results of a criminal history record check authorized by this section. 2
… 3
"§ 147-71.1. Board of Directors. 4
(a) Membership. – The Investment Authority shall be governed by a Board of Directors. 5
The Board of Directors shall consist of the following voting members: 6
(1) The State Treasurer, who shall serve as an ex officio member. 7
(2) One member appointed by the General Assembly upon the recommendation 8
of the Speaker of the House of Representatives in accordance with 9
G.S. 120-121. 10
(3) One member appointed by the General Assembly upon the recommendation 11
of the President Pro Tempore of the Senate in accordance with G.S. 120-121. 12
(4) One member appointed by the Governor. 13
(5) One member appointed by the State Treasurer. 14
(b) Terms. – The four appointive directors of the Board of Directors shall be appointed 15
for staggered six‑year terms, except for the initial term. The initial term of the director appointed 16
by the President Pro Tempore of the Senate is one year. The initial term of the director appointed 17
by the Speaker of the House of Representatives is two years. The initial term of the director 18
appointed by the State Treasurer is three years. The initial term of the director appointed by the 19
Governor is four years . An appointive director whose term has expired but whose qualified 20
successor has not been appointed shall continue to serve on the Board of Directors until a 21
qualified successor is duly appointed, including by the State Treasurer after a holdover period of 22
six months or more as provided for under subsection (e) of this section. 23
(c) Qualifications to Serve. – No appointed director of the Board of Directors shall hold 24
any other public office in North Carolina, except that an appointed director may also have 25
membership on either or both of the Boards of Trustees under G.S. 128-28 and G.S. 135-6. All 26
appointed members of the Board of Directors shall have expert knowledge of investments and a 27
minimum of a 10-year track record of successful management in pension, endowment, or other 28
relevant investment management fields. The State Treasurer shall determine the sufficiency of a 29
prospective member's expert knowledge. 30
(d) Disqualifications to Serve. – An individual is not eligible to serve on the Board of 31
Directors if any of the following apply to that individual: 32
(1) The individual has been indicted or charged with, been convicted of, pleaded 33
guilty or nolo contendere to, or forfeited bail concerning a felony , or a 34
misdemeanor involving fraud, theft, or dishonesty under the laws of any 35
jurisdiction in the United States. 36
(2) The individual has had a judgment entered against him or her by a court of 37
competent jurisdiction in a civil matter involving a breach of fiduciary duties. 38
(3) The individual has been the subject of an adverse action by the Securities and 39
Exchange Commission which resulted in any sanction, payment of a fine, 40
injunction, or other negative finding, whether individually or as a partner, 41
principal member, managing director, or other position of leadership of any 42
entity subject to the penalty or finding. 43
(4) The individual, or the individual's spouse or immediate family member, is or 44
becomes employed by the Department of State Treasurer or by a service 45
provider engaged to invest or assist in the oversight of assets overseen by the 46
Investment Authority. 47
(5) The individual, or the individual's spouse or immediate family member, is an 48
endorser, obligor, or provider of surety for , or is a borrower of, any money 49
loaned to or borrowed from the assets overseen by the Board of Directors. 50
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(e) Vacancies. – Any vacancy in a position held by an appointive member shall be filled 1
by a new appointment made by the applicable appointing authority for the vacant seat . If a seat 2
on the Board of Directors is vacant or held over for six months or more without an appointment 3
by the applicable appointing authority of an individual meeting the qualifications in this section, 4
then the State Treasurer may nominate a member for approval by the Board of Directors. Any 5
individual appointed to fill a vacancy shall serve only for the unexpired term. A vacancy 6
automatically occurs upon the death or resignation of a member of the Board of Directors or upon 7
the failure of a member of the Board of Directors to do any of the following: 8
(1) Attend meetings for three consecutive meetings unless excused by majority 9
vote of the other Board of Directors members. 10
(2) Cure a conflict of interest within 30 days of identification of the conflict. 11
(3) Agree to abide by the ethics policy adopted by the Board of Directors. 12
(f) Reappointment. – Any member of the Board of Directors is eligible for 13
reappointment, except that no appointive member of the Board of Directors may serve for more 14
than two consecutive, full, six-year terms without at least a one-year break in membership on the 15
Board of Directors. 16
(g) Oath. – Each appointive member of the Board of Directors shall take an oath of office 17
to administer the duties of office faithfully and impartially, and a record of the oath shall be filed 18
in the office of the Secretary of State. 19
(h) Officers. – The following shall apply to officers of the Board of Directors: 20
(1) The State Treasurer shall serve as chair of the Board of Directors. 21
(2) The State Treasurer shall designate a vice-chair from among the remaining 22
members of the Board of Directors. The term of the vice-chair extends to the 23
earlier of either three years or the date of expiration of the vice-chair's then 24
current term as a member of the Board of Directors. In the absence of the State 25
Treasurer o r the Treasurer 's designee, the vice -chair shall preside over the 26
proceedings of the Board of Directors. 27
(3) The Board of Directors shall appoint and prescribe the duties of a secretary , 28
who need not be a member of the Board of Directors . The secretary is the 29
custodian of all books, documents, and papers filed with the Board of 30
Directors and the minute book or journal of the Board of Directors. The 31
secretary shall keep a record of the proceedings of the Board of Directors. The 32
secretary has the authority to make copies of all minutes and other records and 33
documents of the Board of Directors. 34
(i) Designees. – The State Treasurer is authorized to appoint a designee. No other 35
member of the Board of Directors is authorized to appoint a designee. 36
(j) Compensation and Reimbursement . – Members of the Board of Directors shall 37
receive no compensation for their services. For attendance at meetings of the Board of Directors 38
or any committee of the Board of Directors, and for other services for the Investment Authority, 39
members of the Board of Directors shall receive per diem, subsistence, and travel allowances in 40
accordance with G.S. 138-5 or G.S. 138-6, as appropriate. 41
(k) Meetings and Voting . – The Board of Directors shall meet at least quarterly. A 42
meeting may be call ed by the State Treasurer or by a majority of the Board of Directors . The 43
State Treasurer or the Treasurer 's designee shall establish the agenda for each meeting. A 44
minimum of three members of the Board of Directors is required for quorum . The affirmative 45
vote of a majority of the members of the Board of Directors present at a meeting of the Board of 46
Directors that has been duly called and held is required for any action taken by the Investment 47
Authority, except that the State Treasurer's vote shall prevail in the event of a tied vote. 48
"§ 147-71.2. Duties of the Board of Directors. 49
(a) Investment-Related Powers and Duties. – The Board of Directors has all of the 50
following investment-related powers and duties: 51
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(1) The Board of Directors has the authority to approve all of the following: 1
a. Investment policy statements to include investment objectives, 2
strategic asset allocation, and policy benchmarks. 3
b. Risk budgets, including related limits for key risk indicators. 4
c. The appointment of a master global custodian bank. 5
d. Annual operating budgets for investment programs. 6
e. Market-oriented compensation plans. 7
(2) The Board of Directors shall periodically review all of the following: 8
a. Investment performance and investment manager appointment and 9
termination activities. 10
b. Investment strategies, policies, and tactical considerations. 11
c. Asset liability studies. 12
d. Performance benchmarks and key risk indicators. 13
e. Audited investment financial statements and audit reports pursuant to 14
G.S. 147-69.9. 15
f. Independent evaluation of governance, operations, and investment 16
practices. 17
g. Periodic cost-effectiveness studies of the investment programs. 18
(3) The Board of Directors shall appoint a Chief Investment Officer of the 19
Investment Authority. 20
(4) With respect to Retirement Systems ' assets, at least biennially, the Board of 21
Directors shall approve an absolute risk operating range . The absolute risk 22
operating range shall be expressed in equity and debt allocation equivalency 23
terms and shall meet all of the following criteria: 24
a. The range is deemed appropriate in seeking to maximize long -term 25
returns. 26
b. The risk is not considered undue relative to other similarly situated 27
U.S. public pension funds . An assessment of compliance with t his 28
requirement related to undue risk shall be construed in a manner 29
consistent with subsections (c) and (d) of G.S. 147-70.6. 30
c. In setting t he range , the Board of Directors has taken into 31
consideration all of the factors affecting the funding of the Retirement 32
Systems and each of the Retirement Systems ' ability to meet its 33
financial obligations. 34
(5) The Board of Directors shall utilize the approved absolute risk operating range 35
under subdivision ( 4) of this sub section to recommend investment return 36
assumptions to (i) the Board of Trustees of the Local Governmental 37
Retirement System, (i i) the Board of Trustees of the Teachers ' and State 38
Employees' Retirement System, and (iii) the actuaries engaged to prepare 39
annual actuarial valuations. 40
(b) Annual Internal Budget. – The Board of Directors shall not approve an annual internal 41
budget for the Investment Authority that exceeds three basis points of a rolling three-year average 42
of total assets invested by the Investment Authority, unless the Investment Authority reasonably 43
determines that, because of special circumstances , including applicable investment restrictions, 44
it is clearly not prudent to do so. The annual internal budget includes expenditures directly 45
associated with services retained by the Investment Authority in accordance with subsection (c) 46
of this section and employee compensation and benefits. The Investment Authority's approved 47
annual internal budget as well as the Investment Authority 's actual spending for the prior fiscal 48
year shall be annually reported to the Joint Legislative Commission on Governmental Operations, 49
the House of Representative s Appropriations Committee, the Senate Appropriations/Ba se 50
Budget Committee, and the Fiscal Research Division. 51
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(c) Authority to Contract for Services. – Notwithstanding Article 3 of Chapter 143 of the 1
General Statutes , G.S. 114-2.3, and G.S. 147-17, the Investment Authority is authorized to 2
independently retain the services of appraisers, auditors, actuaries, attorneys, investment 3
consultants, statisticians, custodians, information technology professionals, or other persons or 4
firms possessing spe cialized skills or knowledge necessary for the proper administration of 5
investment programs created pursuant to this section. 6
(d) Setting of Compensation Plans . – In order to promote achievement of long -term 7
investment objectives and to retain key public e mployees with investment functions, the 8
Investment Authority is authorized to establish, consistent with the Investment Authority 's 9
fiduciary duties, market-oriented compensation plans, including salaries and performance-related 10
bonuses, for employees poss essing specialized skills or knowledge necessary for the proper 11
administration of investment programs . The design and administration of those compensation 12
plans shall be based on compensation studies conducted by a nationally recognized firm 13
specializing in public fund investment compensation. The compensation and other associated 14
employee benefits shall be apportioned directly from the investment program. The Investment 15
Authority shall report the salaries and bonuses paid to the Joint Legislative Oversight Committee 16
on General Government annually. 17
"§ 147-71.3. Liability of Board of Directors. 18
An individual serving on the Board of Directors shall be immune individually from civil 19
liability for monetary damages, except to the extent covered by insurance, for any act or failure 20
to act arising out of that service, except where any of the following apply: 21
(1) The individual was not acting within the scope of that individual 's official 22
duties. 23
(2) The individual was not acting in good faith. 24
(3) The individual committed gross negligence or willful or wanton misconduct 25
that resulted in the damages or injury. 26
(4) The individual derived an improper personal financial benefit, either directly 27
or indirectly, from the transaction. 28
(5) The individual incurred the liability from the operation of a motor vehicle. 29
… 30
"§ 147-72.1. Chief Investment Officer. 31
(a) Principal Executive Officer. – The Chief Investment Officer is the Investment 32
Authority's principal executive officer and is responsible to the Board of Directors. 33
(b) Appointment and Term. – The CIO shall be appointed by a majority vote of the Board 34
of Directors, and any vacancy may be so filled by the Board of Directors. An individual appointed 35
as the CIO shall have expert knowledge of investments and a minimum of a 15-year track record 36
of successful management in pension, endowment, or other relevant investment management 37
arenas. The term of employment and compensation of the CIO is set by the Board of Directors, 38
except that each term of employment shall be limited to five years or l ess. The CIO is eligible 39
for multiple terms of employment without interruption. The CIO may be removed from office by 40
the Board of Directors. 41
(c) Employment of Staff. – The Chief Investment Officer shall employ staff necessary to 42
assist the CIO and the Board of Directors in carrying out duties and responsibilities under this 43
Article or as prescribed in any other law. Unless otherwise provided by law, Investment Authority 44
employees shall serve at the pleasure of the CIO and any vacancies in these positions may be 45
filled by the CIO. The CIO may designate managerial, professional, and policy-making positions 46
as exempt from the North Carolina Human Resources Act, in accordance with G.S. 126-5(c1). 47
Compensation of employees is set by the CIO within the limits set by the compensation plan 48
approved by the Board of Directors under G.S. 147-71.2. 49
(d) Contract Negotiation. – The CIO may negotiate, renegotiate , and execute contracts 50
with third parties in the performance of the CIO's duties and responsibilities under this Article . 51
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Any delegation of authority by the Board of Directors shall require Board of Directors approval 1
and shall reserve certain strategic decisions and extraordinary investment decisions to the Board 2
of Directors. Contract execution with master global custodian banks and external auditors shall 3
be done only after approved by the Board of Directors. 4
… 5
"§ 147-73.2. Ethics policies. 6
To ensure that the State Treasurer's Investment Authority investment programs operate under 7
a strong governance framework with rigorous internal controls and a high degree of operational 8
transparency and are managed with the highest ethical and professional standards and in the most 9
efficient and effective manner possible, the State Treasurer, after consultation with the 10
Investment Advisory Committee, is authorized and required to Board of Directors shall adopt 11
policies and procedures on the following topics: 12
(1) Requiring that the Department of State Treasurer's Investment Management 13
Division Investment Authority adopt a code of ethics. 14
(2) Requiring all employees of the Department Investment Authority who have 15
responsibility for matters related to investments to be provided with training 16
with respect to the discharge of their duties and responsibilities to the funds. 17
(3) Governing gifts to employees of the Department Investment Authority who 18
have responsibility for matters related to investments. 19
(4) Imposing limitations on external investment managers' use of placement 20
agents and other persons that appear before the Department Investment 21
Authority to ensure that these persons play only a proper role in investment 22
opportunities. 23
(5) As a component of the investment due diligence, negotiations, and contracting 24
process, requiring an independent assessment of whether circumstances exist 25
that create a material risk that professional judgement or actions regarding a 26
potential investment arrangement's recomme ndation, approval, or execution 27
have been or will be unduly influenced by a direct or indirect personal 28
interest." 29
SECTION 2.3.(a) Rules, codes of ethics, policies, and procedures adopted by the 30
State Treasurer in effect on June 30, 2025, that are impacted by the change in authority from the 31
State Treasurer or Department of State Treasurer to the Investment Authority under this Part shall 32
remain in effect until amended by law, amended by the Investment Authority, or repealed. 33
SECTION 2.3.(b) Before Januar y 1, 2026, when the Investment Authority shall 34
begin to manage investments under Part III of this act, funds appropriated to the Department of 35
State Treasurer and funds available to the Department of State Treasurer under G.S. 147-69.3 36
may be used to pay any expenses of the Investment Authority. 37
SECTION 2.4. This Part is effective July 1, 2025. 38
39
PART III. NORTH CARO LINA INVESTMENT AUTH ORITY TO MANAGE 40
INVESTMENTS AND BEGI N CARRYING OUT STATU TORY DUTIES JANUARY 1, 41
2026 42
SECTION 3.1.(a) Part 2 of Article 6 of Chapter 147 of the General Statutes, as 43
created and amended by Part I of this act, reads as rewritten: 44
"Part 2. Investments and Funds 45
"§ 147-69.1. Investments authorized for General Fund and Highway Funds assets. 46
(a) The Governor and Council of State, with the advice and assistance of the State 47
Treasurer, shall Treasurer and the Investment Authority, may adopt such rules and regulations as 48
shall be necessary and appropriate to implement the provisions for the implement ation of this 49
section. 50
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(b) This section applies to funds held by deposited with the State Treasurer to the credit 1
of:of all of the following: 2
(1) The General Fund;Fund. 3
(2) The Highway Fund and Highway Trust Fund. 4
(c) It shall be is the duty of the State Treasurer Investment Authority to invest the cash 5
of the funds enumerated in subsection (b) of this section in excess of the amount required to meet 6
the current needs and demands on such those funds, selecting from among the following: 7
(1) Obligations of the United States or obligations fully guaranteed both as to 8
principal and interest by the United States. 9
(2) Obligations of the Federal Farm Credit Bank, the Federal Home Loan Banks, 10
the Federal Home Loan Mortgage Corporation, Fannie Mae, the Government 11
National Mortgage Association, the International Bank for Reconstruction 12
and Development, the International Finance Corporation, the Inter-American 13
Development Bank, the Asian Development Bank, and the African 14
Development Bank. 15
(3) Repurchase Agreements with respect to one or more of the following: 16
a. Securities issued or guaranteed by the United States government or its 17
agencies. 18
b. Securities eligible for investment by this section executed by a bank 19
or trust company or by primary or other reporting d ealers to the 20
Federal Reserve Bank of New York. 21
c. Securities eligible for investment by this section executed by a 22
registered broker-dealer that is subject to the rules and regulations of 23
the U.S. Securities and Exchange Commission and is a member in 24
good standing of the Financial Industry Regulatory Authority. 25
(4) Obligations of the State of North Carolina. 26
(5) Certificates of deposit and other deposit accounts of financial institutions 27
under any of the following conditions: 28
a. With financial institutions with a physical presence in the State for the 29
purpose of receiving commercial or retail deposits; provided that any 30
principal amount of such deposit in excess of the amount insured by 31
the federal government or any agency thereof, be fully secured by 32
surety bonds, or be fully collateralized; provided further that the rate 33
of return or investment yield may not be less than that available in the 34
market on United States government or agency obligations of 35
comparable maturity. 36
b. With financial institutions wit h a physical presence inside or outside 37
the State, in accordance with all of the following conditions: 38
1. The funds are initially deposited through a bank or savings and 39
loan association in the State that is an official depository and 40
that is selected by the State Treasurer, provided that the rate of 41
return or investment yield shall not be less than that available 42
in the market on United States government or agency 43
obligations of comparable maturity. 44
2. The selected bank or savings and loan association arranges for 45
the redeposit of the funds in deposit accounts of the State in 46
one or more federally insured banks or savings and loan 47
associations wherever located, provided that no State funds 48
shall be deposited in a bank or savings and loan association 49
that at the time holds other deposits from the State. 50
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3. The full amount of principal and any accrued interest of each 1
deposit account are covered by federal deposit insurance. 2
4. The selected bank or savings and loan association acts as 3
custodian for the State with respect to the deposit in the State's 4
account. 5
5. On the same date that the State funds are redeposited, the 6
selected bank or savings and loan association receives an 7
amount of federally insured deposits from customers of other 8
financial institutions wherever located equal to or greater than 9
the amount of the funds invested by the State through the 10
selected bank or savings and loan association pursuant to this 11
sub-subdivision. 12
… 13
(7) Prime quality commercial paper that, when acquired, bears the highest rating, 14
such as a minimum of "P1," "A1," or "F1," of at least one nationally 15
recognized rating service designated by the U.S. Securities and Exchange 16
Commission, and does not bear a rating below the highest by any nationally 17
recognized rating service which rates the particular obligation. 18
(8) Bills of exchange or time drafts drawn on and accepted by a commercial bank 19
and eligible for use as collateral by member banks in borrowing from a federal 20
reserve bank, provided that when bills or drafts are acquired, t he accepting 21
bank or its holding company is either (i) incorporated in the State of North 22
Carolina or (ii) has outstanding publicly held obligations that bear the highest 23
rating, such as a minimum of "P1," "A1," or "F1," of at least one nationally 24
recognized rating service designated by the U.S. Securities and Exchange 25
Commission, and do not bear a rating below the highest by any nationally 26
recognized rating service which rates the particular obligations. 27
(9) Asset-backed securities (whether considered debt or equity) provided, when 28
acquired, the securities bear the highest rating, such as "AAA" or "Aaa," of at 29
least one nationally recognized rating service designated by the U.S. 30
Securities and Exchange Commission, and do not bear a rating below the 31
highest rating by any nationally recognized rating service which rates the 32
particular securities. 33
(10) Corporate bonds and notes provided they, when acquired, bear the highest 34
rating, such as "AAA" or "Aaa," of at least one nationally recognized rating 35
service designated by the U.S. Securities and Exchange Commission, and do 36
not bear a rating below the highest by any nationally recognized rating service 37
which rates the particular obligation. 38
(d) Unless otherwise provided by law, the interest or income received and accruing from 39
all deposits or investments of such cash balances shall be paid into the State's General Fund, 40
except that all interest or income received and accruing on the monthly balance of the Highway 41
Fund and Highway Trust Fund shall be paid into the S tate Highway Fund and Highway Trust 42
Fund. The cash balances of the several funds may be combined for deposit or investment 43
purposes; and when such combined deposits or investments are made, the interest or income 44
received and accruing from all deposits or investments shall be prorated among the funds in 45
conformity with applicable law and the rules and regulations adopted by the Governor and 46
Council of State. 47
… 48
"§ 147-69.2. Investments authorized for special funds held by State Treasurer. 49
(a) This section applies to funds held by the State Treasurer to the credit of each of the 50
following: 51
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 11
(1) The Teachers' and State Employees' Retirement System of North Carolina. 1
(2) The Consolidated Judicial Retirement System of North Carolina. 2
(3) The State Health Plan for Teachers and State Employees. 3
… 4
(5) The Disability Salary Continuation Income Plan of North Carolina. 5
(6) The North Carolina Firefighters' and Rescue Squad Workers' Pension Fund. 6
(7) The North Carolina Local Governmental Employees' Retirement System. 7
(8) The Legislative Retirement System of North Carolina. 8
(9) The Escheat Fund. 9
(10) The Legislative Retirement Fund. 10
(11) The State Education Assistance Authority. 11
(12) The State Property Fire Insurance Fund. 12
… 13
(16) The Liability Insurance Trust Fund. 14
(16a) The University of North Carolina Hospitals at Chapel Hill funds, except 15
appropriated funds, deposited with the State Treasurer pursuant to 16
G.S. 116-350.40. 17
(17) Trust funds of The University of North Carolina and its constituent institutions 18
deposited with the State Treasurer pursuant to G.S. 116-36.1. 19
(17a) North Carolina Veterans Home Trust Fund. 20
(17b) North Carolina National Guard Pension Fund. 21
(17c) Retiree Health Benefit Fund. 22
(17d) The Election Fund. 23
(17e) The North Carolina State Lottery Fund. 24
(17f) Funds deposited with the State Treasurer by public hospitals pursuant to 25
G.S. 159-39(g). 26
(17g) Funds deposited with the State Treasurer by Local Government Other 27
Post-Employment Benefits Trusts pursuant to G.S. 159-30.1. 28
(17h) The Local Government Law Enfor cement Special Separation Allowance 29
Fund. 30
(17i) The North Carolina Conservation Easement Endowment Fund. 31
(17j) The Conservation Grant Fund. 32
(17k) The Wildlife Endowment Fund. 33
(17l) The Ecosystem Restoration Fund. 34
(17m) The Needs-Based Public School Capital Fund. 35
(17n) The Riparian Buffer Restoration Fund. 36
(18) Any other special fund created by or pursuant to law for purposes other than 37
meeting appropriations made pursuant to the Executive Budget Act. 38
(19) The Swain County Settlement Trust Fund. 39
(20) Institutional funds of the colleges of the North Carolina Community College 40
System. 41
(21) The Disability Income Plan of North Carolina. 42
… 43
(23) The Catawba Unit No. 1 Decommissioning Trust Fund and the Catawba Unit 44
No. 2 Decommissioning Trust Fund established by North Carolina Municipal 45
Power Agency Number 1, as described in G.S. 159B-18(b)(6). 46
(24) Funds deposited with the State Treasurer by charter schools pursuant to 47
G.S. 115C-218.15(f). 48
(b) It shall be the duty of the State Treasurer Investment Authority to invest the cash of 49
the funds enumerated in subsection (a) of this section in excess of the amount required to meet 50
the current needs and demands on these funds. The State Treasurer Investment Authority may 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 709-First Edition
invest the funds as provided in this subsection in the manner authorized by subsection (e) of this 1
section. If an investment was authorized by this subsection at the time the investment was made 2
or contractually committed to be made, then that investment shall continue to be authorized by 3
this subsection, and none of the percentage or other limitation on investments set forth in this 4
subsection shall be construed to require the State Treasurer Investment Authority to subsequently 5
dispose of the investment or fail to honor any contractual commitments as a result of changes in 6
market values, ratings, or other investment qualifications. For purposes of computing market 7
values on which percentage limitations on investments in this subsection are based, all 8
investments shall be valued as of the last date of the most recent fiscal quarter. Notwithstanding 9
anything in this section to the contrary, the State Treasurer Investment Authority shall categorize 10
investment management arrangements according to the primary investment type or primary 11
strategy utilized under the a rrangement authorized under subsection (e) of this section. No 12
investment management arrangement may be categorized in more than one of the subdivisions 13
of this section. The State Treasurer Investment Authority shall select from among the following 14
investments subject to the following any stipulated limitations and requirements:requirements: 15
(1) Investments authorized by G.S. 147-69.1(c)(1)-(7). 16
(2) General obligations of other states of the United States. 17
(3) General obligations of cities, counties and special districts in North Carolina. 18
(4) Obligations of any company, other organization or legal entity incorporated 19
or otherwise created or located within or outside the United States, including 20
obligations that are convertible into equity securities, if, when acquired, the 21
obligations are within one of the four highest rating categories regardless of 22
gradations, such as ratings beginning with "AAA," "AA," "A," or either 23
"BBB" or "Baa," of at least one nationally recognized rating service 24
designated by the U.S. Securities and Exchange Commission. 25
… 26
(6) Asset-backed securities (whether securities, whether considered debt or 27
equity), equity, if, when acquired, the obligations are within one of the four 28
highest ratings categories regardless of gradations, such as ratings beginning 29
with "AAA," "AA," "A," or either "BBB" or "Baa," of at least one nationally 30
recognized rating service designated by the U.S. Securities and Exchange 31
Commission. 32
(6a) In addition to the limitations and requirements with respect to the investments 33
of the Retirement Systems set forth in under this subsection, the State 34
Treasurer Investment Authority shall select investments of the assets of the 35
Retirement Systems such that investments made pursuant to subdivisions 36
(b)(1) (1) through (6) of this section subsection shall at all times equal or 37
exceed twenty percent (20%) of the market value of all invested assets of the 38
Retirement Systems. 39
… 40
(6c) With respect to Retirement Systems' assets referred to in subdivision (b)(8), 41
they may be invested, within or outside the United States, in obligations, debt 42
securities, and asset -backed securities, whether considered debt or equity, 43
including obligations and securities convertible into other securities, that do 44
not meet the requirements of any of subdivisions (b)(1) (1) through (6) of this 45
section subsection nor subdivision (b)(7) (7) of this section. The amount 46
invested under this subdivision shall not exceed seven and one -half percent 47
(7.5%) of the market value of all invested assets of the Retirement 48
Systems.subsection. 49
(7) Retirement Systems' assets referred to in subdivision (8) of this subsection 50
may be invested in strategies managed primarily for the purpose of owning 51
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 13
real estate or related debt financing, excluding asset -backed fin ancing and 1
timberlands, located within or outside the United States. The amount invested 2
under this subdivision shall not exceed ten percent (10%) of the market value 3
of all invested assets of the Retirement Systems. 4
(8) With respect to assets of the Teachers' and State Employees' Retirement 5
System, the Consolidated Judicial Retirement System, the Firefighters' and 6
Rescue Workers' Pension Fund, the Local Governmental Employees' 7
Retirement System, the Legislative Retirement System, the North Carolina 8
National Guard Pension Fund, the Registers of Deeds' Supplemental Pension 9
Fund, and the Retiree Health Benefit Fund (hereinafter referred to collectively 10
as the Retirement Systems), they Retirement Systems' assets may be invested 11
in a strategy composed primarily of equity securities traded on a public 12
securities exchange or market organized and regulated pursuant to the laws of 13
the jurisdiction of the exchange or market and issued by any company 14
incorporated or otherwise created or located within or outside the United 15
States as long as the investments meet the conditions of this subdivision. The 16
investments authorized for the Retirement Systems under this subdivision are 17
subject to the following limitations: 18
… 19
a1. The aggregate am ount of the investments cannot exceed sixty -five 20
percent (65%) of the market value of all invested assets of the 21
Retirement Systems. 22
b. The aggregate amount of the investment invested through investment 23
companies described in sub -subdivision (e)(4)b. of th is section shall 24
not exceed eight and one -half percent (8.5%) of the market value of 25
all invested assets of the Retirement Systems, except that the market 26
value of group trusts and individual, common, or collective trust funds 27
of banks and trust companies shall not be applied against this limit. 28
… 29
(9) With respect to Retirement Systems' assets, as defined in subdivision (b)(8) 30
of this subsection, they assets may be invested in (i) a strategy composed 31
primarily of private equity, or corporate buyout transactions, within or outside 32
the United States or (ii) an arrangement authorized under subsection (e) of this 33
section with the primary purpose to engage in other strategies not expressly 34
authorized by any other subdivision of this subsection. The amount invested 35
under this subdivision shall not exceed eight and three -quarters percent 36
(8.75%) of the market value of all invested assets of the Retirement Systems. 37
(9a) With respect to Retirement Systems' assets, as defined in subdivision (b)(8) 38
of this subsection, they assets may be invested, within or outside the United 39
States, in obligations, debt securities, asset -backed securities, whether 40
considered debt or equity, and other investments that are acquired by the 41
Treasurer Investment Authority for the prim ary purpose of providing 42
protection against risks associated with inflation, along with owning real 43
assets or related debt financing , including, but not limited to, timberland, 44
natural resources, commodities, infrastructure, transportation, agriculture, and 45
other tangible and intangible real assets. The amount invested under this 46
subdivision shall not exceed seven and one-half percent (7.5%) of the market 47
value of all invested assets of the Retirement Systems. 48
… 49
(10a) With respect to Retirement Systems' ass ets, as defined in subdivision (8) of 50
this subsection, the market value of any of subdivision (6c) or (7), 51
General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 709-First Edition
sub-subdivision b. of subdivision (8), or subdivision (9) or (9a) of this 1
subsection shall not exceed ten percent (10%) of the market value of all 2
invested assets of the Retirement Systems; and the The aggregate market value 3
of all assets invested pursuant to subdivisions (6c) and (7), sub-subdivision b. 4
of subdivision (8), and subdivisions (9) and (9a) (6c), (7), (8), (9), and (9a) of 5
this subsection shall not exceed thirty-five percent (35%) eighty percent 6
(80%) of the market value of all invested assets of the Retirement 7
Systems.Systems, including any digital assets invested pursuant to 8
G.S. 147-69.2E(c). 9
(10b) The market value of illiquid investment s, as determined by the Board of 10
Directors, shall not exceed forty percent (40%) of the market value of all 11
invested assets of the Retirement System. 12
… 13
(12) It is the intent of the General Assembly that the Escheat Fund provide a 14
perpetual and sustainable source of funding for the purposes authorized by the 15
State Constitution. Accordingly, the following provisions apply:apply to the 16
assets of the Escheat Fund: 17
a. With respect to The Investment Authority may invest the assets of the 18
Escheat Fund, in addition to Fund in those investments authorized by 19
subdivisions (1) through (6) of this subsection, up to ten percent (10%) 20
subsection. Up to eighty percent (80%) of the assets may be invested 21
in the investments authorized under subdivisions (6c) through (9a) of 22
this subsection, notwithstanding the percentage limitations imposed on 23
the Retirement Systems' investments under those subdivisions, and 24
provided that the State Treasurer subsection. The Investment 25
Authority may invest the assets as provided in subsection (e) of this 26
section. 27
… 28
c. The State Treasurer shall The Investment Authority may invest, in 29
addition to those investments authorized by sub -subdivision a. ten 30
percent (10%) of the net assets of the Escheat Fund as authorized under 31
G.S. 147-69.2A. 32
(b1) The State Treasurer shall appoint an Investment Advisory Committee, which shall 33
consist of seven members: the State Treasurer, who shall be chairman ex officio; two members 34
selected from among the members of the boards of trustees of the Retirement Systems; and four 35
members selected from the general public. All appointed members must have experience in areas 36
relevant to the administration of a large, diversified investment program, including, but not 37
limited to, investm ent management, securities law, real estate development, or absolute return 38
strategies. The State Treasurer shall also appoint a Secretary of the Investment Advisory 39
Committee who need not be a member of the committee. Members of the committee shall receive 40
for their services the same per diem and allowances granted to members of the State boards and 41
commissions generally. The committee shall have advisory powers only and membership shall 42
not be deemed a public office within the meaning of Article VI, Section 9 of the Constitution of 43
North Carolina or G.S. 128-1.1. 44
(b2) The State Treasurer Investment Authority may invest funds deposited pursuant to 45
subdivision (a)(17f) of this section in any of the investments authorized under subdivisions (b)(1) 46
through (6) , subdivision (b)(6c), and subdivision (b)(8) of this section, notwithstanding the 47
percentage limitations imposed on the Retirement Systems' investments therein. section. The 48
State Treasurer Investment Authority may require a minimum deposit, up to one hun dred 49
thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 50
annum, as a condition of participation pursuant to this subsection. Funds deposited pursuant to 51
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 15
this subsection by a hospital shall remain the funds of that hospital, and interest or other 1
investment income earned thereon shall be prorated and credited to the contributing hospital on 2
the basis of the amounts thereof contributed, figured according to sound accounting principles. 3
Fees assessed by the State Treasurer Investment Authority may be used to defray the cost of 4
administering investments pursuant to this subsection and expenditures authorized under this 5
section. 6
(b3) The State Treasurer Investment Authority may invest funds deposited pursuant to 7
subdivision (a)(16a) of this section in any of the investments authorized under subdivisions (1) 8
through (6), subdivision (6c) and subdivision (b)(8) of this section, notwithstanding the 9
percentage limitations imposed on the Retirement Systems' investments therein. section. The 10
State Treasurer Investment Authority may require a minimum deposit, up to one hundred 11
thousand dollars ($100,000), and may assess reasonable fees, not to exceed 15 basis points per 12
annum, as a c ondition of participation pursuant to this subsection. Funds deposited pursuant to 13
this subsection by the University of North Carolina Hospitals at Chapel Hill shall remain the 14
funds of the University of North Carolina Hospitals at Chapel Hill, and interes t or other 15
investment income earned thereon shall be prorated and credited to the University of North 16
Carolina Hospitals at Chapel Hill on the basis of the amounts thereof contributed, figured 17
according to sound accounting principles. Fees assessed by the State Treasurer Investment 18
Authority may be used to defray the cost of administering investments pursuant to this subsection 19
and expenditures authorized under this section. 20
(b4) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 21
section, the State Treasurer Investment Authority may invest funds deposited pursuant to 22
subdivision (17g) of subsection (a) of this section in any of the investments authorized under 23
subdivisions (b)(6c) and (b)(8) of this section, notwithstandi ng the percentage limitations 24
imposed on the Retirement Systems' investments therein. section. Funds deposited pursuant to 25
this subsection by a Local Government Other Post -Employment Benefits Trust and interest or 26
other investment income earned from those funds shall be prorated and credited to the 27
contributing trust on the basis of the amounts contributed, figured according to sound accounting 28
principles. For investments under subdivisions (b)(6c) and (b)(8) of this section, the State 29
Treasurer Investment Authority may require a minimum deposit of up to one hundred thousand 30
dollars ($100,000) and may assess reasonable fees of up to 15 basis points per annum as a 31
condition of participation pursuant to this subsection. Fees assessed by the State Treasurer 32
Investment Authority may be used to defray the costs of administering the Fund and expenditures 33
authorized under this section. 34
(b5) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 35
section, the State Treasurer Investment Authority may invest funds deposited in the Local 36
Government Law Enforcement Special Separation Allowance Fund in any of the investments 37
authorized under subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage 38
limitations imposed on the Retirement Systems' investments therein. section. For investments 39
from that Fund made under subdivisions (b)(6c) and (b)(8) of this section, the State Treasurer 40
Investment Authority may require a minimum deposit of up to one hundred thousand dollars 41
($100,000) and may assess reasonable fees of up to 15 basis points per annum as a condition of 42
making the investment. The fee may be used to defray the costs of administering the Fund and 43
expenditures authorized under this section. 44
(b6) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 45
section, the State Treasurer Investment Authority may invest funds deposited in the Catawba 46
Unit No. 1 Decommissioning Trust F und and the Catawba Unit No. 2 Decommissioning Trust 47
Fund in any of the investments authorized under subdivisions (b)(6c) and (b)(8) of this section, 48
notwithstanding the percentage limitations imposed on the Retirement Systems' investments 49
therein. section. For investments from the Funds made under subdivisions (b)(6c) and (b)(8) of 50
this section, the State Treasurer Investment Authority may require a minimum deposit of up to 51
General Assembly Of North Carolina Session 2025
Page 16 Senate Bill 709-First Edition
one hundred thousand dollars ($100,000) and may assess reasonable fees of up to 15 basis points 1
per annum as a condition of making the investment. The fee may be used to defray the costs of 2
administering the Fund and expenditures authorized under this section. 3
(b7) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 4
section, the State Treasurer Investment Authority may invest funds deposited in the Swain 5
County Settlement Trust Fund in any of the investments authorized under subdivision (b)(8) of 6
this section, notwithstanding the percentage limitations imposed on the Retirement Systems' 7
investments therein. section. For investments from that Fund made under subdivision (b)(8) of 8
this section, the State Treasurer Investment Authority may require a minimum deposit of up to 9
one hundred thousand dollars ($100,000) and may assess reasonable fees of up to 15 basis points 10
per annum as a condition of making the investment. The fee may be used to defray the costs of 11
administering the Fund and expenditures authorized under this section. 12
(b8) In addition to the investments authorized under subdivisions (b)(1) through (6) of this 13
section, the State Treasurer Investment Authority may invest funds deposited pursuant to 14
subdivision (24) of subsection (a) of this section in any of the investments authorized under 15
subdivisions (b)(6c) and (b)(8) of this section, notwithstanding the percentage limitations 16
imposed on the Retirement Systems' investments therein. For investments from that Fund made 17
under subdivisions (b)(6c) and (b)(8) of this section, the State Treasurer Investment Authority 18
may require a minimum deposit of up to fifty thousand dollars ($50,000) and may assess 19
reasonable fees of up to 15 basis points per annum as a condition of making the investment. The 20
fee may be used to defray the costs of administering investments and expenditures authorized 21
under this section. 22
… 23
(d) The State Treasurer Investment Authority may invest f unds deposited pursuant to 24
subdivisions (17i), (17j), (17k), (17 l), and (17n) of subsection (a) of this section in any of the 25
investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) 26
of this section. The State Treasurer Investment Authority may require a minimum deposit, up to 27
one hundred thousand dollars ($100,000), and may assess a reasonable fee, not to exceed 15 basis 28
points, as a condition of participation pursuant to this subsection. Fees assessed by the State 29
Treasurer Investment Authority may be used to defray the costs of administering the funds and 30
expenditures authorized under this section. Funds deposited pursuant to this subsection shall 31
remain the funds of the North Carolina Conservation Easement Endowment Fund, the 32
Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian Buffer Restoration 33
Fund, or the Wildlife Endowment Fund, as applicable, and interest or other investment income 34
earned thereon shall be prorated and credited to the North Caro lina Conservation Easement 35
Endowment Fund, the Conservation Grant Fund, the Ecosystem Restoration Fund, the Riparian 36
Buffer Restoration Fund, or the Wildlife Endowment Fund on the basis of the amounts 37
contributed to the respective Funds, figured according to sound accounting principles. 38
(e) Investments made pursuant to this section may be made as internally managed 39
investments by the State Treasurer Investment Authority or may be made through third -party 40
investment management arrangements, under the following conditions: 41
(1) Internally managed portfolios shall be subject to industry standard portfolio 42
guidelines developed with periodic consultation by the Investment Advisory 43
Committee.guidelines. 44
(2) In assessing whether to invest directly or to utilize indi rect third -party 45
investment management arrangements, the State Treasurer Investment 46
Authority shall consider all relevant material factors he or she considers 47
relevant to the decision consistent with the Treasurer's Investment Authority's 48
fiduciary duties under G.S. 147-69.7, G.S. 147-70.6, including financial, 49
operational, and investment expertise and resources, alignment of interests 50
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 17
and investor protections, transparency and repeatability of investment process, 1
risk controls, and cost-effectiveness. 2
(3) For any third -party investment management arrangements, the investment 3
manager must have total assets under management of at least one hundred 4
million dollars ($100,000,000) at the inception of the investment management 5
arrangement with the State Treasurer. 6
(4) Third-party investment management arrangements may be with persons and 7
legal entities located within or outside the United States, including through 8
any of the following: 9
a. Contractual arrangements in which the investment manager ha s 10
delegated discretion and authority to invest assets. 11
b. Investment companies as defined under United States generally 12
accepted accounting principles as promulgated by the Financial 13
Accounting Standards Board, including without limitation entities 14
registered under the Investment Company Act of 1940; individual, 15
common, or collective trust funds of banks and trust companies; 16
limited partnerships; limited liability companies or other limited 17
liability investment vehicles; and insurance contracts that provide for 18
participation in individual or pooled separate accounts of insurance 19
companies. 20
Any limited liability investment vehicles organized by the State Treasurer 21
Investment Authority shall be deemed investment companies for the purposes 22
of this subsection.subdivision. 23
(5) Investment companies shall provide annual audited financial statements to the 24
State Treasurer, Investment Authority, unless the State Treasurer Investment 25
Authority waives the requirement after conducting a cost-benefit analysis. 26
(6) In connection with any investment otherwise authorized under this section, 27
the State Treasurer Investment Authority may enter into an indemnification 28
agreement provided that, under any agreement, the liability of the State 29
Treasurer Investment Authority will be limited to the amount of the State 30
Treasurer's Investment Authority's contractual investment. 31
"§ 147-69.2A. Investments; special funds held by the State Treasurer. 32
(a) Firm to Administer Special Fund. – Following a public procurement process, a 33
designee of the Governor, a designee of the State Treasurer, a designee of the Speaker of the 34
House of Representatives, and a designee of the President Pro Tempore of the Senate shall jointly 35
and unanimously Venture Capital Multiplier Fund. – The Investment Authority may select a 36
third-party professional investment management firm, subject to the rules and regulations of the 37
U.S. Securities and Exchange Commission, to administer a special fund created to invest assets 38
described in G.S. 147-69.2(b)(12)c. of the Escheats Fund and select investment opportunities 39
appropriate for receiving allocations from the Venture Capital Multiplier Fund on the basis of 40
potential return on investment and the risks attendant thereto. The State Treasurer Investment 41
Authority shall assign professional and clerical staff to assist in the oversight of the Venture 42
Capital Multiplier Fund. All costs for the third -party investment management firm and the 43
professional and clerical staff shall be borne by the Venture Capital Multiplier Fund pursuant to 44
G.S. 147-69.3(f). The State Treasurer Investment Authority shall discharge his or her its duties 45
with respect to the Venture Capital Multiplier Fund as a fiduciary consistent with 46
G.S. 147-69.7.G.S. 147-70.6. 47
(b) Organization and Reporting. – All documents of the Governor or the State Treasurer 48
concerning the Fund are public records governed by Chapter 132 of the General Statutes and any 49
applicable provisions of the General Statutes protecting confidential information. 50
General Assembly Of North Carolina Session 2025
Page 18 Senate Bill 709-First Edition
The State Treasurer and the Governor shall jointly The Investment Authority shall develop 1
and adopt an investment policy statement for the Venture Capital Multiplier Fund. 2
The State Treasurer and Governor shall jointly adopt a common policy to prevent conflicts 3
of interests such that (i) the designees of the State Treasurer and Governor who selected the 4
third-party investment management firm, (ii) the staff of the State Treasurer overseeing the Fund, 5
and (iii) the third-party investment management firm's employees selecting or overseeing Fund 6
investments do not provide services for compensation (as an employee, consultant, or otherwise), 7
within two years after the end of their service to the Fund, to any entity in which an investment 8
from the Fund was made. 9
(b1) Conflict of Interest Policy. – The Investment Authority shall adopt a policy to prevent 10
conflicts of interest. This policy shall include a provision prohibiting all of the following 11
individuals from providing services for compensation to any entity in which an investment from 12
the Venture Capital Multiplier Fund was made within two years after the end of that individual's 13
service to the Fund: 14
(1) The designee of the State Treasurer and Governor who selected the third-party 15
investment management firm prior to the creation of the Investment Authority. 16
(2) The designee of the Investment Authority who selected the third -party 17
investment management firm. 18
(3) The staff of the Department of State Treasurer or of the Investment Authority 19
overseeing the Fund. 20
(4) The third -party investment management firm 's employees selecting or 21
overseeing Fund investments. 22
(c) Types of Investments. – Assets of the Venture Capital Multiplier Fund may be 23
invested in those types of investments authorized for the North Carolina Retirement Systems by 24
G.S. 147-69.2(b), notwithstanding the percentage limitations imposed on the Retirement 25
Systems' investments under those subdivisions.G.S. 147-69.2(b). 26
(d) Report on Escheat Fund Financial Status. – The State Treasurer Treasurer, in 27
coordination with the Investment Authority, shall engage a third-party professional consultant to 28
conduct an assessment and projection of the financial status of the Escheat Fund. A third-party 29
professional consultant may be engaged to conduct the required assessment. The associated costs 30
for the services may be directly charged to the Escheat Fund. The No later than December 31 of 31
each year, the State Treasurer shall communicate the assessment of the consultant in an annual 32
report to the Governor, the Speaker of the House of Representatives, the President Pro Tempore 33
of the Senate, and the chairs of the respective appropriations and appropriate substantive 34
committees of each chamber. The annual report shall evaluate include all of the following: 35
(1) An evaluation of claims by owners upon the Escheat Fund, current and 36
projected investment returns, and projected contributions to the Escheat Fund, 37
current and projected legislative appropriations, and au thorized expenses. In 38
the report, the State Treasurer shall assess 39
(2) An assessment of the State Treasurer, with the assistance of the Investment 40
Authority of the status of utilizing the Escheat Fund as an endowment fund 41
and shall recommend a recommendation of an annual amount available for the 42
funding of scholarships, loans, and grants from the Fund. The annual report 43
shall be presented no later than December 31 of each year. 44
"§ 147-69.2E. Investments in digital assets. 45
(a) The following definitions apply in this section: 46
(1) Designated funds. – Any of the funds described in G.S. 147-69.1(b) and 47
G.S. 147-69.2(a). 48
(2) Digital asset. – A virtual currency, cryptocurrency, native electronic asset, 49
stablecoin, nonfungible token, or any other asset that is only digital and that 50
confers economic, proprietary, or access rights or powers. 51
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(3) Private key. – A unique element of cryptographic data used for signing 1
transactions on a blockchain that is known to the owner of the unique element. 2
(4) Secure custody solution. – A technological product or a blended product and 3
service that employ s advanced security measures to safeguard private keys 4
and prevent unauthorized access. 5
(b) The Investment Authority may invest the cash of the designated funds in digital assets 6
only after approval by the Board of Directors. The approval shall be based on an independent 7
assessment by a third -party consultant that all of the following requirements for proposed 8
investments have been met: 9
(1) The digital assets are maintained with a secure custody solution. 10
(2) The risk and reward profile, including under adverse scenarios, is appropriate 11
for the designated fund's circumstances from a total portfolio perspective. 12
(3) The control environment meets institutional investment industry requirements 13
for independent risk and compliance oversight, operational robustness, and 14
regulatory compliance. 15
(c) An investment in digital assets from any of the designated funds shall not exceed, in 16
the aggregate, five percent (5%) of the balance of the designated fund for an initial period of time 17
that is set by the Board of Directors. The Board of Directors shall annually review the percentage 18
limit on digital assets investments and may raise or lower the limit after the initial period. 19
"§ 147 -69.3. Administration of State Treasurer's Investment Authority 's investment 20
programs. 21
(a) The State Treasurer shall deposit with the Investment Authori ty assets of the funds 22
under G.S. 147-69.1 and the special funds under G.S. 147-69.2. The Investment Authority shall 23
establish, maintain, administer, manage, and operate within the Department of State Treasurer 24
one or more investment programs for the deposit and to the credit of the State Treasurer of the 25
investment of assets pursuant to the provisions of G.S. 147-69.1 and G.S. 147-69.2. Different of 26
the funds under G.S. 147-69.1 and the special funds under G.S. 147-69.2. Funds of each of the 27
Retirement Systems and other funds held by the State Treasurer Investment Authority may be 28
invested co llectively or separately in the State Treasurer's Investment Authority 's discretion 29
consistent with the fiduciary duties stated in G.S. 147-69.7.under G.S. 147-70.6. 30
(b) Any official, board, commission, other public authority, local government, school 31
administrative unit, charter school, local ABC board, or community college of the State having 32
custody of any funds not required by law to be deposited with and invested by the State Treasurer 33
or the Investment Authority may deposit all or any portion of those funds with the State Treasurer 34
Investment Authority for investment in one of the investment programs established pursuant to 35
authorized under this section, subject to an y provisions of law with respect to eligible 36
investments, provided that any investments. Any occupational licensing board as defined in 37
G.S. 93B-1 may participate in one of the investment programs established pursuant to authorized 38
under this section regardless of whether or not the funds were required by law to be deposited 39
with and invested by the State Treasurer. Treasurer or the Investment Authority. In the absence 40
of specific statutory provisions to the contrary, any of those funds described in this subsection 41
may be invested by the Investment Authority in accordance with the provisions of G.S. 147-69.2 42
and 147-69.3. Upon request from any depositor eligible under this subsection, the State Treasurer 43
may authorize moneys invested purs uant to this subsection to be withdrawn by warrant on the 44
State Treasurer. 45
(c) The State Treasurer's Investment Authority 's investment programs shall be so 46
managed that that, in the judgment of the State Treasurer Investment Authority, funds may be 47
readily converted into cash when needed. 48
(d) Except as provided by G.S. 147-69.1(d), the total return earned on investments shall 49
accrue pro rata to the fund whose assets are invested according to the formula prescribed by the 50
State Treasurer with the approval of the Governor and Council of State.invested. 51
General Assembly Of North Carolina Session 2025
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(e) The State Treasurer Investment Authority has full powers as a fiduciary to hold, 1
purchase, sell, assign, transfer, lend and dispose of any of the securities or investments in which 2
any of the investment programs created pursuant to this section have been invested, and may 3
reinvest the proceeds from the sale of those securities or investments and any other investable 4
assets of the program. 5
(f) The cost of administration, management, and operation of invest ment programs 6
established pursuant to this section shall be apportioned and paid equitably among the programs 7
in a manner prescribed by the State Treasurer. Investment Authority, including through 8
administrative fees if approved by the Board of Directors. To the extent not otherwise chargeable 9
directly to the income or assets of a specific investment program or pooled investment vehicle, 10
the cost of administration, management, and operation of investment programs established 11
pursuant to this section shall b e paid from the income and assets of the investment programs. 12
Any apportionment and payment under this section shall be accounted for in a manner determined 13
by the State Treasurer.Investment Authority. 14
(g) The State Treasurer is authorized to retain the se rvices of independent appraisers, 15
auditors, actuaries, attorneys, investment counseling firms, statisticians, custodians, or other 16
persons or firms possessing specialized skills or knowledge necessary for the proper 17
administration of investment programs created pursuant to this section. 18
(g1) Notwithstanding G.S. 114-8.3, the Investment Authority's designated attorneys shall 19
review all proposed investment contracts and all proposed contracts for investment -related 20
services entered into pursuant to the Investment Authority's authority under this Article. All of 21
the following apply to the required review: 22
(1) This review shall include confirmation that a proposed contract meets all of 23
the following criteria: 24
a. The proposed contract is in proper legal form. 25
b. The proposed contract is legally enforceable to the extent governed by 26
North Carolina law. 27
c. The proposed contract accomplishes the intended purposes of the 28
contract. 29
(2) The Investment Authority 's designated attorneys shall establish procedures 30
regarding the review. 31
(3) The required review does not constitute approval or disapproval of the policy 32
merit, or lack thereof, of the proposed contract. 33
(4) A designated attorney under this subsection includes any attorney employed 34
or retained by the Investment Authority to review contracts as required by this 35
subsection. 36
(5) For purposes of this subsection, "investment contract" means investments to 37
be acquired, held, or sold, directly or indirectly, by or for the Investment 38
Authority or an investment entity created by the Investment Authority, either 39
on its own behalf or on behalf of another beneficial owner. 40
… 41
(i1) The State Treasurer shall report the incentive bonus paid to the Chief Investment 42
Officer to the Joint Legislative Commission on Governmental Operations by October 1 of each 43
year. 44
… 45
(i3) The Treasurer Investment Authority may invest in the countries of Sudan and South 46
Sudan to the extent not prohibited by the United States Government, or to the extent that such 47
investment is part of an index or index replication strategy, a commingled fund, limited 48
partnership, or similar investment vehicle, or a derivative instrument. 49
(j) Subject to the provisions of G.S. 147-69.1(d), the State Treasurer shall Investment 50
Authority may adopt any rules necessary to carry out the provisions of this section. 51
General Assembly Of North Carolina Session 2025
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… 1
"§ 147-69.4A. Support and assistance; Supplemental Retirement Board of Trustees. 2
(a) The Supplemental Retirement Board of Trustees, as established under G.S. 135-96, 3
may request the Investment Authority to provide monitoring, evaluation, reporting, and other 4
support or assistance for the investments of the Supplemental Retirement Income Plan of North 5
Carolina and the North Carolina Public Employee Deferred Compensation Plan. 6
(b) Upon the consent of the Investment Authority to provide requested support or 7
assistance under this section, the Investment Authority's responsibilities shall be documented in 8
a Statement of Investment Policy approved by the Supplemental Retirement Board of Trustees. 9
(c) In providing any support or assistance under this section, the Investment Authority 10
shall discharge its duties as a fiduciary to the participants in the Supplemental Retirement Income 11
Plan of North Carolina and the North Carolina Public Employee Deferred Compensation Plan. 12
"§ 147-69.5. Local Government Law Enforcement Special Separation Allowance Fund. 13
The Local Government Law Enforcement Special Separation Allowance Fund is established 14
as a fund in the Office of the State Treasurer under the management of the Treasurer. Investment 15
Authority. The Fund consists of contributions made by entities authorized to make contributions 16
to the Fund and interest and other investment income earned by the Fund. Contributions to the 17
Fund are irrevocable. Assets of the Fund may be used only to provide law enforcement special 18
separation allowance benefits to individuals who are former employees of a unit of local 19
government that contributes to the Fund and are entitled to law enforcement spe cial separation 20
allowance payable by the unit. The assets of the Fund are not subject to the claims of creditors 21
of an entity that contributes to the Fund. 22
"§ 147-69.6. Swain County Settlement Trust Fund. 23
(a) The Swain County Settlement Trust Fund is established as a special fund in the Office 24
of the State Treasurer under the management of the Treasurer. The Treasurer Investment 25
Authority. The Investment Authority may invest the assets of the Fund in any of the investments 26
authorized under subdivisions (b) (1) through (6) and subdivision (b)(8) of G.S. 147-69.2. The 27
Fund shall consist of the proceeds of any payments made by the United States in settlement of 28
the 1943 agreement between Swain County and the United States Department of Interior, such 29
other contributions as Swain County or other entities may choose to make to the Fund, and the 30
interest and other investment income earned by the Fund. For the purposes of this section, the 31
initial balance of the Fund shall be defined as fifty-two million dollars ($52,000,000). 32
…." 33
SECTION 3.1.(b) Part 3 of Article 6 of Chapter 147 of the General Statutes, as 34
created and amended by Part I of this act, reads as rewritten: 35
"Part 3. Reports and Audits. 36
"§ 147-69.8. Annual report on new investment authority. 37
Whenever the General Assembly broadens the investment authority of the State Treasurer 38
Investment Authority as to the General Fund, the Teachers' and State Employees' Retirement 39
System, the Consolidated Judicial Retirement System, the Firefighters' and Rescue Squad 40
Workers' Pension Fund, the Local Governmental Employees' Retirement System, the Legislative 41
Retirement System, the North Carolina National Guard Pension Fund, or any idle funds, the State 42
Treasurer Investment Authority shall annually report in detail to the General Assembly the 43
investments made under such new authority, including the returns on those investments, earnings, 44
changes to value, and gains and losses in disposition of such investments. The report shall be 45
made no later than the first six months of each calendar year, covering performance in the prior 46
fiscal year. As to each type of new investment authority, the report shall be made for at least four 47
years. To the extent the information required by this section is also required in the reports under 48
G.S. 147-69.12, the State Treasurer Investment Authority may combine reports or make 49
cross-reference to those reports. 50
"§ 147-69.9. Third-party audit of State Treasurer's investments. 51
General Assembly Of North Carolina Session 2025
Page 22 Senate Bill 709-First Edition
(a) In addition to all other audits and reports required by the law, the State Treasurer 1
Treasurer, with the active assistance of the Investment Authority, shall prepare and issue, at the 2
end of each fiscal year beginning with the 2015 -2016 fiscal year, year, a set of consolidated 3
stand-alone financial statements regarding investments authorized in G.S. 147-69.1 and 4
G.S. 147-69.2. These financial statements shall be audi ted by a commercial independent 5
third-party audit firm selected and engaged by the State Treasurer. Treasurer, in consultation with 6
the Investment Authority. The audit firm's report and the financial statement shall be provided to 7
the Joint Legislative Commission on Governmental Operations, the House of Representative 8
Appropriations Committee, the Senate Appropriations/Base Budget Committee, and the Fiscal 9
Research Division within six months after the closing of the reporting period. 10
(b) The management d iscussion and analysis section of the report accompanying the 11
financial statements shall be prepared by the Investment Authority and shall include a discussion 12
of the investment programs' risk and returns compared to benchmarks, total management fees 13
and incentives paid, and comparison to peer cost benchmarks. 14
"§ 147 -69.10. Investment policies and performance reviews of Retirement Systems 15
investment programs. 16
(a) On at least a biennial basis, the State Treasurer Chief Investment Officer shall present 17
an investment policy statement to the Investment Advisory Committee Board of Directors for the 18
Committee's consultation. approval. The investment policy statement must include descriptions 19
of investment objectives and strategy, roles and responsibilities, permi ssible asset classes, asset 20
allocation targets and ranges, risk management and compliance guidelines, and evaluation 21
criteria necessary to measure investment performance. 22
(b) At least once every four years, the State Treasurer Investment Authority shall engage 23
a commercial independent expert firm, pursuant to G.S. 147-69.3(g), G.S. 147-71.2(c), to 24
evaluate the governance, operations, and investment practices of the State Treasurer Investment 25
Authority in order to develop recommendations for improvement. The State Treasurer must 26
consult with the Investment Advisory Committee to develop the scope of the evaluation. The 27
report of the independent expert firm shall be provided to the Joint Legislative Commission on 28
Governmental Operations, the House of Representatives Appropriations Committee, the Senate 29
Appropriations/Base Budget Committee, and the Fiscal Research Division within 30 days of 30
receipt. 31
"§ 147 -69.12. Reporting on the State Treasurer's Investment Authority 's investment 32
programs. 33
(a) No later than the tenth day of February, May, August, and November of each year, 34
the State Treasurer shall report on all investments for which the State Treasurer is in any way 35
responsible, including investments made from the Escheat Fund and return on investment as 36
provided in G.S. 147-69.2A. This report shall be made for the Escheat Fund in lieu of the report 37
required by G.S. 147-69.8. The State Treasurer's quarterly report shall include each of the 38
following: 39
(1) A specific listing of all direct and indirect placement fees, asset fees, 40
performance fees, and any other money management fees incurred by the 41
State in the management of the Retirement Systems defined in 42
G.S. 147-69.2(b)(8). In the event that the market value of any of subdivision 43
(6c) or (7), sub-subdivision b. of subdivision (8), or subdivision (9) or (9a) of 44
G.S. 147-69.2 increases during a fiscal year by an amount greater than three 45
percent (3%) of the market value of all invested assets of the Retirement 46
Systems as of the prior fiscal year end, then the quarterly report provided shall 47
describe how that increase complies with the duties described in 48
G.S. 147-69.7 and the consequent expected impact on the risk profile of the 49
Retirement Systems' assets. 50
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 23
(2) A specific listing of all investments made with cert ified green managers and 1
companies and funds that support sustainable practices, including the names 2
of the companies, managers, and funds, the amount invested, and the State's 3
return on investment. 4
(3) For bank balances: 5
a. The State's total bank balance with the State Treasurer, including the 6
amount of cash on hand and money on deposit. 7
b. For each bank or other qualified depository utilized by the State 8
Treasurer to hold cash balances, (i) the name of each depository and 9
(ii) current quarter-end cash balances. 10
(4) For the State Treasurer's cash management programs: 11
a. Total assets. 12
b. Duration of investments. 13
c. Rate of return, including a comparison to an appropriate benchmark, 14
if available. 15
(5) For the Retirement Systems, as defined in G.S. 147-69.2(b)(8), reported 16
separately for each asset class authorized by G.S. 147-69.2(b): 17
a. Total assets. 18
b. Rate of return, including a comparison to an appropriate benchmark, 19
if available. 20
c. Percentage of the total assets that are invested in the asset class and the 21
limitation, if any, on the percentage under G.S. 147-69.2(b). 22
(6) For each investment program created under G.S. 147-69.3: 23
a. The financial condition of each investment program. 24
b. A full and complete statement of all moneys invested by virtue of the 25
provisions of G.S. 147-69.1 and G.S. 147-69.2. 26
c. The nature and character of the investments. 27
d. The revenues derived from the investments, net of fees and expenses. 28
e. The costs of administering, managing, and operating the investment 29
programs, including the recapture of any investment commissions. 30
f. The location on the State Treasurer's Web site where the public may 31
find a statement of the investment policies for the revenues invested. 32
g. Any other information that may be helpful in understanding the State 33
Treasurer's investment policies, investment practices, and investment 34
results. 35
h. Any other information requested by the House of Representatives and 36
Senate Finance Committees. 37
i. The location on the State Treasurer's Web site where the public ma y 38
find a list of new commitments to external investment managers. 39
j. The location on the State Treasurer's Web site where the public may 40
find information on the use of placement agents by investment 41
managers. 42
(7) For all other investments with or on behalf of the State or any of its agencies 43
or institutions: 44
a. The particular agency or institution, fund, rate of return, and duration 45
of the investment. 46
b. The amount of deposit on all noninterest bearing accounts. 47
(a1) On a monthly basis, the Investment Autho rity shall report on the performance of all 48
investments for which the Investment Authority is in any way responsible. The monthly report 49
shall include all of the following information: 50
General Assembly Of North Carolina Session 2025
Page 24 Senate Bill 709-First Edition
(1) The beginning and ending market value of each investment program an d 1
deposits or withdrawals. 2
(2) The rate of return, net of all fees , and expenses for various time periods, 3
including comparisons to an appropriate benchmark, if available. For the 4
Retirement Systems' investment program, asset class level information shall 5
also be provided. 6
(3) The asset allocation of each investment program and compliance with any 7
statutory limitations or limitations set by the Board of Directors. 8
(4) All of the following information for each investment program: 9
a. The location on the Investment Authority 's website where the public 10
may find a statement of the investment policies. 11
b. The location on the Department 's or Investment Authority 's website 12
where the public may find a list of n ew commitments to external 13
investment managers and on the use of placement agents by 14
investment managers. 15
c. Any other information that may be helpful in understanding the 16
Investment Authority's investment policies, investment practices, and 17
investment results. 18
(b) No later than the date set by G.S. 147-69.9 for the submission of consolidated 19
stand-alone financial statements, the State Treasurer Investment Authority shall report annually 20
on the fees and performance of all externally and internally managed investments for the 21
Retirement Systems defined in G.S. 147-69.2(b)(8). Systems. Externally managed investments 22
shall be reported on the basis of each investment vehi cle or investment manager, as applicable. 23
Internally managed investments shall be reported on a portfolio -by-portfolio basis. The State 24
Treasurer's Investment Authority's annual report shall include all of the following, as applicable, 25
reported separately for each investment: 26
(1) The name, commitment amount, statutory classification, and inception year. 27
(2) Either a statement that the investment is managed internally by the staff of the 28
State Treasurer Investment Authority or the names of the external investment 29
manager and the investment vehicle for that investment. 30
(3) Value The value of the investment. 31
(4) Dollar The dollar amount of the management fees and incentive fees. 32
(5) For investment-grade fixed income or public equity investments, public 33
market i nvestment manager accounts, the periodic net annualized 34
time-weighted rate of return for that fiscal year and since inception, reported 35
net of fees. 36
(6) For all investments other than investment-grade fixed income or public equity 37
investments, public market investment manager accounts, all of the following: 38
a. The net annualized internal rate of return and investment multiple 39
since inception, reported net of fees. 40
b. The total cash contributions or other investments made by the State 41
Treasurer.made. 42
c. The total distribution received by the State Treasurer with respect to 43
that investment since inception, reported net of fees. 44
(7) For any fund of funds investment vehicles, the aggregate management fees 45
and incentive fees for the underlying investment mana gers or investment 46
vehicles used by the external investment manager. 47
(8) If any placement agent fees relating to the investment were directly or 48
indirectly borne by the State Treasurer Investment Authority or Retirement 49
Systems, a list of the amount and type of those fees. 50
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 25
(c) The Treasurer shall report to the Governor annually the exact balance in the treasury 1
to the credit of the State, with a summary of the receipts and payments of the treasury during the 2
preceding fiscal year, and so far as practicable an account of the same down to the termination 3
of the current calendar year. 4
(d) The reports required by this section shall be delivered to the Joint Legislative 5
Commission on Governmental Operations, chairs of the House of Representatives and Senate 6
Appropriations Committees, chairs of the House of Representative and Senate Finance 7
Committees, Fiscal Research Division, Governor, Council of State, and State Auditor. The 8
reports shall also be made available for public review, including by posting on the Stat e 9
Treasurer's Web site. 10
A copy of a report on any State Treasurer investment program shall be sent to review by the 11
official, institution, board, commission, or other agency investing in that program.the programs, 12
including by posting on the Investment Authority's website." 13
SECTION 3.1.(c) G.S. 147-70.6, as created and amended by Part I of this act, and 14
as further amended by Section 2.2 of this act, reads as rewritten: 15
"§ 147-70.6. Discharge of duties to funds. 16
(a) The State Treasurer Investment Authority, including the Board of Directors, shall 17
discharge his or her all duties with respect to each fund or investment program held by the 18
Investment Authority to the credit of the State Treasurer, including each of the funds, funds 19
enumerated in G.S. 147-69.2 as follows:G.S. 147-69.1 and G.S. 147-69.2, in all of the following 20
manners: 21
(1) Solely in the interest of the intended beneficiaries of the fund, if any. 22
(2) For the exclusive purpose of carrying out the purpose of the fund, including 23
providing benefits to participants and beneficiaries, and paying reasonable 24
expenses of administering the fund. 25
(3) With the care, skill, and caution that a prudent investor would use after 26
considering the purposes, distribution requirements, and other cir cumstances 27
then prevailing. 28
(4) Impartially, taking into account any differing interests of participants and 29
beneficiaries. 30
(5) Incurring only costs that are appropriate and reasonable. 31
(6) In accordance with a good -faith interpretation of the provisions o f 32
G.S. 147-69.2 and any other applicable law governing the fund. 33
(b) In investing and managing assets of the any fund or investment program pursuant to 34
subsection (a) of this section, the State Treasurer: Investment Authority shall do all of the 35
following: 36
(1) Shall consider Consider all of the following circumstances: 37
a. General economic conditions. 38
b. The possible effect of inflation or deflation. 39
c. The role that each investment or course of action plays within the 40
overall portfolio of the fund. 41
d. The expected total return from income and the appreciation of capital. 42
e. Needs for liquidity, regularity of income, and preservation or 43
appreciation of capital. 44
f. With respect to the Retirement Systems defined in G.S. 147-69.2(b)(8) 45
and any other pension pla ns, the adequacy of funding for the 46
Retirement Systems or other pension plan based on reasonable 47
actuarial factors. 48
g. The purpose of the fund, if established. 49
(2) Shall diversify Diversify the investments of the fund fund, unless the State 50
Treasurer Investment Authority reasonably determines that, because of 51
General Assembly Of North Carolina Session 2025
Page 26 Senate Bill 709-First Edition
special circumstances, including applicable investment restrictions, it is 1
clearly prudent not to do so. 2
(3) Shall make Make a reasonable effort to verify facts relevant to the investment 3
and management of assets of the funds. 4
(4) Shall invest only in those investments authorized by law consistent with the 5
provisions of Article 6 of Chapter 146 of the General Statutes. 6
(5) Shall, in In the evaluation of an investment, or in the evaluation or exercise of 7
any right appurtenant to an investment, consider only pecuniary 8
factors:factors as follows: 9
a. For the purposes of this section, a pecuniary factor is a factor that has 10
a material effect on the financial risk or financial return of an 11
investment based on appropriate investment horizons consistent with 12
the purpose of the fund, if established. 13
b. Environmental or social considerations are pecuniary factors only if 14
they present economic risks or opportunities that qualified investment 15
professionals would treat as material economic considerations under 16
generally accepted investment theories. The weight given to those 17
factors shall solely reflect a prudent assessment of their impact on risk 18
and return. 19
(6) May, 20
(b1) In investing and managing assets of any fund or investment program pursuant to 21
subsection (a) of this section, the Investment Authority may, in the evaluation or exercise of any 22
right appurtenant to an investment, reasonably conclude that not exercising such a that right is in 23
the best interest of the fund's beneficiaries. 24
(c) Compliance by the State Treasurer Investment Authority with this section must be 25
determined in light of the facts and circumstances existing at the time of the Treasurer's 26
Investment Authority's decision or action and not by hindsight. 27
(d) The State Treasurer's Investment Authority's investment and management decisions 28
must be evaluated not in isolation but in the context of the portfolio of the fund as a whole and 29
as part of an overal l investment strategy having risk and return objectives reasonably suited to 30
the fund. 31
(e) Notwithstanding any of the foregoing, the State Treasurer other provision of this 32
section to the contrary, the Investment Authority shall have no duty to assist or advise any 33
official, board, commission, local government, other public authority, school administrative unit, 34
local ABC board, community college of the State, or other person, trust, agency, institution, or 35
entity in connection with any of the following decisions and directions with respect to any funds 36
to be deposited with the State Treasurer and invested by the State Treasurer: Investment 37
Authority. 38
(1) The voluntary decision to deposit or withdraw funds in accordance with 39
applicable law in one or more of the State Treasurer's Investment Authority's 40
investment programs. 41
(2) The voluntary direction as to the allocation of deposited funds in accordance 42
with applicable law among the State Treasurer's Investment Authority 's 43
investment programs. 44
(3) Any other decision or direction by which the depositor exercises control over 45
assets deposited or to be deposited with the State Treasurer or the Investment 46
Authority in accordance with applicable law." 47
SECTION 3.1.(d) G.S. 147-71.2(a), as enacted by Section 2.2 of this act, is amended 48
by adding a new subdivision to read: 49
"(6) The Board of Directors has the following liquidity monitoring duties: 50
General Assembly Of North Carolina Session 2025
Senate Bill 709-First Edition Page 27
a. Upon the quarterly receipt of liquidity monitoring requirements from 1
the Chief Investment Officer, the Board of Directors shall ensure that 2
a portion of the Retirement Systems ' invested assets are at all times 3
available to be converted in an orderly fashio n to cash proceeds 4
sufficient to meet projected net benefit payments and highly probable 5
contractual obligations. 6
b. The Board of Directors shall annually certify the allocation of illiquid 7
investment. 8
c. If the Board of Directors determines that liquidity is insufficient, then 9
the Board of Directors may direct the CIO to pause new contractual 10
commitments to illiquid investment s or implement other mitigation 11
activities." 12
SECTION 3.1.(e) G.S. 147-72.1, as enacted by Section 2.2 of this act, is amended 13
by adding a new subsection to read: 14
"(e) Management of Retirement Systems Investments. – The Chief Investment Officer 15
shall manage the Retirement Systems investments to remain within the approved absolute risk 16
operating range set by the Board of Directors in accordance with G.S. 147-71.2(a)(4)." 17
SECTION 3.2. Rules adopted by the State Treasurer in effect as of December 31, 18
2025, and that are impacted by the change in authority under this Part shall remain in effect until 19
amended by the Investment Authority, amended by law, or repealed. 20
SECTION 3.3. This Part is effective January 1, 2026. 21
22
PART IV. TECHNICAL AND CONFORMING CHANGES 23
SECTION 4.1.(a) G.S. 147-65.2, as created by Section 1.2(a) of this act, reads as 24
rewritten: 25
"§ 147-65.2. Salary of State Treasurer.Treasurer and certain Department employees. 26
(a) State Treasurer. – The salary of the State Treasurer shall be as established in the 27
Current Operations Appropriations Act. In addition to the salary set by the General Assembly in 28
the Current Operations Appropriations Act, longevity pay shall be paid on the same basis as is 29
provided to employees of the State who are subject to the North Carolina Human Resources Act. 30
(b) In order to promote achievement of long term investment objectives and to retain key 31
public employees with investment functions, the Certain Departmental Employees. – The State 32
Treasurer is authorized to establish, consistent with the duties of the State Treasurer's fiduciary 33
duties, Treasurer as prescribed by law, market-oriented compensation plans, including salaries 34
and performance -related bonuses, for employees possessing specialized skills or knowledge 35
necessary for the proper administration of investment programs, who shall be programs. In 36
accordance with G.S. 126-5(c12), these employees are exempt from the classification and 37
compensation rules established by the Office of State Human Resources. The design and 38
administration of those compensation plans shall be based on compensation studies conducted 39
by a nationally recognized firm specializing in public fund investment compensation. The 40
compensation and other associated employee benefits shall be apportioned directly from the 41
investment program. and paid equitably among the funds and programs utilizing the services of 42
these employees in a manner prescribed by the State Treasurer. The Treasurer shall report the 43
salaries and bonuses paid to the Joint Legislative Oversight Committee on General Government 44
annually." 45
SECTION 4.1.(b) G.S. 126-5 reads as rewritten: 46
"§ 126-5. Employees subject to Chapter; exemptions. 47
… 48
(c1) Except as to Articles 6 and 7 of this Chapter, this Chapter does not apply to any of the 49
following: 50
… 51
General Assembly Of North Carolina Session 2025
Page 28 Senate Bill 709-First Edition
(23) The Executive Administrator of the State Health Plan for Teachers and State 1
Employees. 2
(24) Employees of the State Health Plan for Teachers and State Employees as 3
designated by law or by the Executive Administrator of the Plan. 4
… 5
(40) The Chief Investment Officer of the North Carolina Investment Authority 6
established under Part 5 of Article 6 of Chapter 147 of the General Statutes. 7
(41) Employees of the North Carolina Investment Authority established under Part 8
5 of Article 6 of Chapter 147 of the General Statutes who possess specialized 9
skills or knowledge necessary for the proper administration of investment 10
programs and who are employe d in a position designated by the Chief 11
Investment Officer as exempt in accordance with G.S. 147-72.1. 12
… 13
(c12) Except as to G.S. 126-13, 126-14, 126-14.1, and Articles 6, 7, 14, 15, and 16 of this 14
Chapter, this Chapter does not apply to employees of the De partment of State Treasurer 15
possessing specialized skills or knowledge necessary for the proper administration of investment 16
programs and compensated pursuant to G.S. 147-69.3(i2).G.S. 147-65.2(b). 17
…." 18
SECTION 4.1.(c) This section is effective July 1, 202 5, and applies to employees 19
hired on or after that date. 20
SECTION 4.2.(a) G.S. 128-29(c) reads as rewritten: 21
"(c) Custodian of Funds. – The State Treasurer shall be the custodian of the several funds 22
and shall deposit these funds with the Investment Author ity to invest their these assets in 23
accordance with the provisions of G.S. 147-69.2 and 147-69.3. Article 6 of Chapter 147 of the 24
General Statutes. All payments from said funds shall be made by him the State Treasurer only 25
upon vouchers signed by two persons designated by the Board of Trustees. The secretary of the 26
Board of Trustees shall furnish said Board a surety bond in a company authorized to do business 27
in North Carolina in such amount as shall be required by the Board, the premium to be paid from 28
the expense fund." 29
SECTION 4.2.(b) G.S. 135-7(c) reads as rewritten: 30
"(c) Custodian of Funds; Disbursements; Bond of Director. – The State Treasurer shall be 31
the custodian of the several funds and shall deposit these funds with the Investment Authority to 32
invest their these assets in accordance with the provisions of G.S. 147-69.2 and 147-69.3.Article 33
6 of Chapter 147 of the General Statutes." 34
SECTION 4.2.(c) This section is effective January 1, 2026. 35
SECTION 4.3.(a) G.S. 143C-1-3 is amended by adding a new subsection to read: 36
"(e) Notwithstanding subsections (a) and (b) of this section, funds under the management 37
of the North Carolina Investment Authority are exempt from this Chapter and shall be accounted 38
for as provided in Article 6 of Chapter 147 of the General Statutes." 39
SECTION 4.3.(b) This section is effective July 1, 2025. 40
41
PART V. EFFECTIVE DATE 42
SECTION 5.1. Except as otherwise provided, this act is effective when it becomes 43
law. 44