Bill Text: IA HF653 | 2023-2024 | 90th General Assembly | Introduced
Bill Title: A bill for an act concerning public contracts by public funds with companies that boycott certain companies or that engage in nonpecuniary social investment policies.(Formerly HF 2.)
Spectrum: Committee Bill
Status: (Introduced) 2023-03-15 - Withdrawn. H.J. 653. [HF653 Detail]
Download: Iowa-2023-HF653-Introduced.html
House
File
653
-
Introduced
HOUSE
FILE
653
BY
COMMITTEE
ON
STATE
GOVERNMENT
(SUCCESSOR
TO
HF
2)
A
BILL
FOR
An
Act
concerning
public
contracts
by
public
funds
with
1
companies
that
boycott
certain
companies
or
that
engage
in
2
nonpecuniary
social
investment
policies.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
12.8,
subsection
1,
Code
2023,
is
amended
1
to
read
as
follows:
2
1.
The
treasurer
of
state
shall
invest
or
deposit,
subject
3
to
chapters
12F
,
12H
,
and
12J
,
and
12K
and
as
provided
by
law,
4
any
of
the
public
funds
not
currently
needed
for
operating
5
expenses
and
shall
do
so
upon
receipt
of
monthly
notice
from
6
the
director
of
the
department
of
administrative
services
of
7
the
amount
not
so
needed.
In
the
event
of
loss
on
redemption
8
or
sale
of
securities
invested
as
prescribed
by
law,
and
if
9
the
transaction
is
reported
to
the
executive
council,
neither
10
the
treasurer
nor
director
of
the
department
of
administrative
11
services
is
personally
liable
but
the
loss
shall
be
charged
12
against
the
funds
which
would
have
received
the
profits
or
13
interest
of
the
investment
and
there
is
appropriated
from
the
14
funds
the
amount
so
required.
15
Sec.
2.
NEW
SECTION
.
12K.1
Legislative
findings
and
intent.
16
The
general
assembly
intends
to
ensure
that
state
funds
and
17
funds
administered
by
the
state,
including
public
employee
18
retirement
funds,
are
protected
from
political
influence
19
detrimental
to
the
financial
health
of
the
state
and
its
20
citizens
and
promote
the
general
assembly’s
goal
of
protecting
21
free
enterprise.
22
Sec.
3.
NEW
SECTION
.
12K.2
Definitions.
23
As
used
in
this
chapter,
unless
the
context
otherwise
24
requires:
25
1.
“Boycott
of
certain
companies”
means,
except
as
otherwise
26
provided
in
chapters
12F,
12H,
and
12J
or
without
a
reasonable
27
business
purpose,
refusal
to
invest
in
a
company,
termination
28
of
business
activities
with
a
company,
or
another
action
that
29
is
intended
to
penalize,
inflict
economic
harm
on,
or
limit
30
commercial
relations
with
a
company
because
the
company
does
31
any
of
the
following:
32
a.
Engages
in,
or
does
business
with
a
company
that
engages
33
in,
the
exploration,
production,
utilization,
transportation,
34
or
sale
of
fossil
fuel-based
energy,
timber,
mining,
or
35
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production
agriculture.
1
b.
Engages
in,
or
does
business
with
a
company
that
engages
2
in,
the
manufacturing,
distribution,
sale,
import,
export,
or
3
lawful
use
of
firearms,
firearm
parts,
firearm
accessories,
or
4
ammunition.
5
2.
“Company”
means
any
business
or
business
entity,
bank,
6
national
banking
association,
nonbank
financial
institution,
7
financial
services
company,
investment
company,
bank
and
trust
8
company,
trust
company,
savings
and
loan
association,
building
9
and
loan
association,
mutual
savings
bank,
credit
union,
or
10
savings
bank,
including
a
wholly
owned
subsidiary,
majority-
11
owned
subsidiary,
parent
company,
or
affiliate
of
such
business
12
or
business
entity,
that
exists
for
the
purpose
of
making
a
13
profit.
14
3.
“Nonpecuniary
social
investment”
means,
except
as
15
otherwise
provided
in
this
chapter
and
chapters
12F,
12H,
16
and
12J,
investment
or
commitment
of
public
funds
to
further
17
environmental,
social,
governance,
political,
or
ideological
18
interests
and
for
the
purpose
of
obtaining
an
effect
other
than
19
a
maximized
return
to
the
public
fund
without
a
reasonable
20
business
purpose.
21
4.
“Public
fund”
means
the
treasurer
of
state,
the
state
22
board
of
regents,
the
public
safety
peace
officers’
retirement
23
system
created
in
chapter
97A,
the
Iowa
public
employees’
24
retirement
system
created
in
chapter
97B,
the
statewide
fire
25
and
police
retirement
system
created
in
chapter
411,
or
the
26
judicial
retirement
system
created
in
chapter
602.
27
5.
“Reasonable
business
purpose”
means
includes
any
purpose
28
directly
related
to
any
of
the
following:
29
a.
Promoting
the
financial
success
or
stability
of
a
30
company.
31
b.
Mitigating
risk
to
a
company.
32
c.
Complying
with
legal
or
regulatory
requirements.
33
d.
Limiting
liability
of
a
company.
34
6.
“Scrutinized
company”
means
any
company
that
engages
in
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nonpecuniary
social
investment
on
behalf
of
a
public
fund
or
a
1
boycott
of
certain
companies
on
behalf
of
a
public
fund.
2
Sec.
4.
NEW
SECTION
.
12K.3
Public
funds
——
contract
and
3
investment
requirements.
4
1.
A
public
fund
shall
not
enter
into
a
contract
with
a
5
company
to
provide
investment
or
management
of
securities
6
services
to
the
public
fund
so
long
as
such
company
engages
7
in
nonpecuniary
social
investment
or
a
boycott
of
certain
8
companies
on
behalf
of
the
public
fund.
9
2.
In
accordance
with
sound
investment
criteria
and
10
consistent
with
fiduciary
obligations,
a
public
fund
shall
11
terminate
a
contract
to
provide
investment
or
management
of
12
securities
services
with
a
company
that
begins
to
engage
13
in
nonpecuniary
social
investment
or
a
boycott
of
certain
14
companies
on
behalf
of
the
public
fund.
The
contract
will
be
15
terminated
within
six
months
of
a
written
notice
to
terminate
16
sent
to
the
company.
17
3.
This
section
does
not
apply
to
a
public
fund
acting
on
18
behalf
of
a
participant
directing
investments
in
a
retirement
19
account
in
which
the
participant
has
the
authority
to
make
such
20
a
decision
independently
from
the
public
fund.
21
Sec.
5.
NEW
SECTION
.
12K.4
Annual
report.
22
On
October
1,
2024,
and
each
October
1
thereafter,
each
23
public
fund
shall
make
available
to
the
public,
and
file
with
24
the
general
assembly,
an
annual
report
covering
the
prior
25
fiscal
year
that
includes
all
contracts
terminated
as
provided
26
in
section
12K.3
during
the
fiscal
year.
27
Sec.
6.
NEW
SECTION
.
12K.5
Public
funds
——
legal
28
obligations.
29
1.
With
respect
to
actions
taken
in
compliance
with
this
30
chapter,
including
all
good-faith
determinations
regarding
31
companies
as
required
by
this
chapter,
the
public
fund
shall
32
be
immune
from
any
liability
and
exempt
from
any
conflicting
33
statutory
or
common
law
obligations,
including
any
such
34
obligations
in
respect
to
choice
of
asset
managers,
investment
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funds,
or
investments
for
the
public
fund’s
securities
1
portfolios.
2
2.
This
chapter
shall
not
limit
the
ability
of
a
public
fund
3
to
terminate
the
contract
of
an
investment
manager
or
other
4
vendor
at
any
time
and
for
any
reason
in
the
exercise
of
the
5
public
fund’s
fiduciary
duties.
6
Sec.
7.
Section
35A.13,
subsection
4,
paragraph
a,
Code
7
2023,
is
amended
to
read
as
follows:
8
a.
Notwithstanding
subsection
5
,
moneys
in
the
fund,
except
9
so
much
of
the
fund
as
may
be
necessary
to
be
kept
on
hand
10
for
the
making
of
disbursements
under
this
section
,
shall
11
be
invested
by
the
treasurer
of
state,
in
consultation
with
12
the
commission
and
the
public
retirement
systems
committee
13
established
by
section
97D.4
,
in
any
investments
authorized
for
14
the
Iowa
public
employees’
retirement
system
in
section
97B.7A
,
15
including
common
stock,
and
subject
to
the
requirements
of
16
chapters
12F
,
12H
,
and
12J
,
and
12K,
and
the
earnings
therefrom
17
shall
be
credited
to
the
fund.
The
treasurer
of
state
may
18
execute
contracts
and
agreements
with
investment
advisors,
19
consultants,
and
investment
management
and
benefit
consultant
20
firms
in
the
administration
of
investments
of
moneys
in
the
21
fund.
22
Sec.
8.
Section
97A.7,
subsection
1,
Code
2023,
is
amended
23
to
read
as
follows:
24
1.
The
board
of
trustees
shall
be
the
trustees
of
the
25
retirement
fund
created
by
this
chapter
as
provided
in
section
26
97A.8
and
shall
have
full
power
to
invest
and
reinvest
funds
27
subject
to
the
terms,
conditions,
limitations,
and
restrictions
28
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
29
12K
and
subject
to
like
terms,
conditions,
limitations,
and
30
restrictions
said
trustees
shall
have
full
power
to
hold,
31
purchase,
sell,
assign,
transfer,
or
dispose
of
any
of
the
32
securities
and
investments
of
the
retirement
fund
which
have
33
been
invested,
as
well
as
of
the
proceeds
of
said
investments
34
and
any
moneys
belonging
to
the
retirement
fund.
The
board
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of
trustees
may
authorize
the
treasurer
of
state
to
exercise
1
any
of
the
duties
of
this
section
.
When
so
authorized
the
2
treasurer
of
state
shall
report
any
transactions
to
the
board
3
of
trustees
at
its
next
monthly
meeting.
4
Sec.
9.
Section
97B.4,
subsection
5,
Code
2023,
is
amended
5
to
read
as
follows:
6
5.
Investments.
The
system,
through
the
chief
investment
7
officer,
shall
invest,
subject
to
chapters
12F
,
12H
,
and
12J
,
8
and
12K
and
in
accordance
with
the
investment
policy
and
9
goal
statement
established
by
the
board,
the
portion
of
the
10
retirement
fund
which,
in
the
judgment
of
the
system,
is
not
11
needed
for
current
payment
of
benefits
under
this
chapter
12
subject
to
the
requirements
of
section
97B.7A
.
13
Sec.
10.
Section
262.14,
unnumbered
paragraph
1,
Code
2023,
14
is
amended
to
read
as
follows:
15
The
board
may
invest
funds
belonging
to
the
institutions,
16
subject
to
chapters
12F
,
12H
,
and
12J
,
and
12K
and
the
17
following
regulations:
18
Sec.
11.
Section
411.7,
subsection
1,
Code
2023,
is
amended
19
to
read
as
follows:
20
1.
The
board
of
trustees
is
the
trustee
of
the
fire
21
and
police
retirement
fund
created
in
section
411.8
and
22
shall
annually
establish
an
investment
policy
to
govern
the
23
investment
and
reinvestment
of
the
moneys
in
the
fund,
subject
24
to
the
terms,
conditions,
limitations,
and
restrictions
25
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
26
12K
.
Subject
to
like
terms,
conditions,
limitations,
and
27
restrictions
the
system
has
full
power
to
hold,
purchase,
sell,
28
assign,
transfer,
or
dispose
of
any
of
the
securities
and
29
investments
in
which
the
fund
has
been
invested,
as
well
as
of
30
the
proceeds
of
the
investments
and
any
moneys
belonging
to
the
31
fund.
32
Sec.
12.
Section
602.9111,
subsection
1,
Code
2023,
is
33
amended
to
read
as
follows:
34
1.
So
much
of
the
judicial
retirement
fund
as
may
not
be
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necessary
to
be
kept
on
hand
for
the
making
of
disbursements
1
under
this
article
shall
be
invested
by
the
treasurer
of
2
state
in
any
investments
authorized
for
the
Iowa
public
3
employees’
retirement
system
in
section
97B.7A
and
subject
to
4
the
requirements
of
chapters
12F
,
12H
,
and
12J
,
and
12K,
and
5
the
earnings
therefrom
shall
be
credited
to
the
fund.
The
6
treasurer
of
state
may
execute
contracts
and
agreements
with
7
investment
advisors,
consultants,
and
investment
management
and
8
benefit
consultant
firms
in
the
administration
of
the
judicial
9
retirement
fund.
10
EXPLANATION
11
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
12
the
explanation’s
substance
by
the
members
of
the
general
assembly.
13
This
bill
creates
new
Code
chapter
12K,
which
restricts
14
public
funds,
defined
as
the
treasurer
of
state,
the
state
15
board
of
regents,
the
Iowa
public
employees’
retirement
16
system
(IPERS),
the
public
safety
peace
officers’
retirement
17
system,
the
statewide
fire
and
police
retirement
system,
and
18
the
judicial
retirement
system
from
generally
entering
into
a
19
contract
with
certain
companies
engaged
in
nonpecuniary
social
20
investment
or
a
boycott
of
certain
companies.
21
The
bill
defines
“boycott
of
certain
companies”
as,
without
22
a
reasonable
business
purpose
or
as
otherwise
required
under
23
Code
chapters
12F,
12H,
and
12J,
to
take
any
adverse
action
to
24
penalize
or
limit
business
opportunities
for
companies
engaging
25
or
doing
business
with
fossil
fuel-based
energy,
timber,
26
mining,
production
agriculture,
firearms,
firearm
parts,
27
firearm
accessories,
or
ammunition
companies.
“Nonpecuniary
28
social
investment”
is
defined
to
mean,
except
as
otherwise
29
provided
in
new
Code
chapter
12K
in
the
bill
and
Code
chapters
30
12F,
12H,
and
12J,
investment
or
commitment
of
public
funds
31
to
further
environmental,
social,
governance,
political,
or
32
ideological
interests
without
a
reasonable
business
purpose.
33
The
bill
also
defines
“scrutinized
company”
as
any
company
that
34
engages
in
nonpecuniary
social
investment
on
behalf
of
a
public
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entity
or
a
boycott
of
certain
companies
on
behalf
of
a
public
1
entity.
2
New
Code
section
12K.3
requires
that
a
public
fund
shall
not
3
enter
into
a
contract
with
a
company
to
provide
investment
or
4
management
of
securities
services
to
the
public
fund
so
long
5
as
such
company
engages
in
nonpecuniary
social
investment
or
a
6
boycott
of
certain
companies
on
behalf
of
the
public
fund.
If
7
the
public
fund
has
a
contract
for
investment
services
with
a
8
company
subject
to
termination,
the
public
fund
shall
proceed
9
to
terminate
the
contract
with
that
company
in
six
months,
10
as
applicable,
so
long
as
the
company
remains
a
scrutinized
11
company.
The
bill
provides
that
this
requirement
on
public
12
funds
does
not
apply
to
a
public
fund
acting
on
behalf
of
a
13
participant
directing
investments
in
a
retirement
account.
14
The
bill
further
requires
each
public
fund
to
prepare
15
and
make
available
to
the
public,
and
file
with
the
general
16
assembly,
an
annual
report,
beginning
October
1,
2024,
17
concerning
actions
taken
by
the
public
fund
relative
to
the
18
requirements
of
new
Code
chapter
12K
in
the
previous
fiscal
19
year.
20
The
bill
further
provides
that
with
respect
to
actions
21
taken
in
compliance
with
the
bill,
including
all
good-faith
22
determinations
regarding
companies
as
required,
the
public
23
fund
shall
be
immune
from
any
liability
and
exempt
from
any
24
conflicting
statutory
or
common
law
obligations,
including
25
any
such
obligations
in
respect
to
choice
of
asset
managers,
26
investment
funds,
or
investments
for
the
public
fund.
In
27
addition,
the
bill
provides
that
the
requirements
of
the
bill
28
shall
not
limit
the
ability
of
a
public
fund
to
terminate
29
any
contract
of
an
investment
manager
or
other
vendor
in
the
30
exercise
of
the
public
fund’s
fiduciary
duties.
31
The
bill
makes
conforming
changes
to
Code
sections
12.8,
32
35A.13,
97A.7,
97B.4,
262.14,
411.7,
and
602.9111.
33
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