Bill Text: OR SB17 | 2013 | Regular Session | Engrossed
Bill Title: Relating to state finance; declaring an emergency.
Spectrum: Unknown
Status: (Failed) 2013-07-08 - In committee upon adjournment. [SB17 Detail]
Download: Oregon-2013-SB17-Engrossed.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 394
A-Engrossed
Senate Bill 17
Ordered by the Senate April 19
Including Senate Amendments dated April 19
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of State Treasurer Ted
Wheeler)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Directs Oregon Investment Council and State Treasurer to try to
ensure that moneys in Public Employees Retirement Fund are not
invested in companies with interest in Sudan. Applies to
investments for which federal law allows divestment by public
pension plans.
Directs State Treasurer to adopt engagement policy with private
investment fund managers and to encourage managers to end
investments with companies with interest in Sudan. Requires
notices to fund managers, companies and Oregon Investment Council
{ + about Sudan investment limitations + }. Specifies contents
of notices.
{ - Applies subject to specified fiduciary standards. - }
{ - Applies subject to appropriate funding. - }
{ + Allows extension to Article XI-Q bonds.
Eliminates requirement that Oregon Investment Council approve
Deferred Compensation Fund investments in mutual funds.
Modifies State Treasurer authority concerning security pledges
for school district bonds. + }
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to state finance; creating new provisions; amending ORS
286A.818, 293.736, 293.812, 328.331 and 328.346; repealing ORS
293.814, 293.815, 293.816 and 293.817; and declaring an
emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 293.812 is amended to read:
293.812. As used in ORS 293.811 to 293.817:
(1) 'Company' means any sole proprietorship, organization,
firm, association, corporation, utility, partnership, venture,
public franchise, franchisor, franchisee or its wholly owned
subsidiary that exists for profit-making purposes or otherwise to
secure economic advantage.
{ - (2) 'Doing business' means maintaining equipment,
facilities, personnel or any other apparatus of business or
commerce in Sudan, including the ownership or possession of real
or personal property located in Sudan. - }
{ - (3) 'Investment' or 'Invest' means the commitment of
funds or other assets to a company, including a loan or other
extension of credit made to that company, or the ownership or
control of a share or interest in that company or of a bond or
other debt instrument issued by that company. - }
{ - (4) 'Subject investment funds' means: - }
{ - (a) The Public Employees Retirement Fund referred to in
ORS 238.660; - }
{ - (b) The Industrial Accident Fund referred to in ORS
656.632; - }
{ - (c) The Common School Fund referred to in ORS
327.405; - }
{ - (d) The Oregon War Veterans' Fund referred to in ORS
407.495; and - }
{ - (e) Investment funds of the State Board of Higher
Education available for investment or reinvestment by the Oregon
Investment Council. - }
{ + (2) 'Fund of funds' means investment funds that function
by secondary investment in a portfolio of other investments,
including investment funds.
(3) 'Index funds' means pooled investments that are passively
managed with an intent to match or track the performance of a
market index.
(4)(a) 'Invest' means to commit funds or other assets to a
company. 'Invest' includes making a loan or other extension of
credit to a company, or owning or controlling a share or interest
in a company or a bond or other debt instrument issued by a
company.
(b) 'Investment' means the commitment of funds or other assets
to a company for an interest in the company. 'Investment '
includes the ownership or control of a share or interest in a
company or of a bond or other debt instrument issued by a
company.
(5) 'Scrutinized company' means any company that currently has
an investment, in the Sudan, from which federal law specifically
allows public pension plans to divest. + }
{ - (5) - } { + (6) + } 'Sudan' means the Republic of the
Sudan and any territory under the administration, legal or
illegal, of Sudan, including but not limited to the Darfur
region.
SECTION 2. { + Sections 3 to 6 of this 2013 Act are added to
and made a part of ORS 293.811 to 293.817. + }
SECTION 3. { + (1) The Oregon Investment Council and the State
Treasurer, in the State Treasurer's role as investment officer
for the council, shall act reasonably and in a manner consistent
with fiduciary standards, including the provisions of ORS 293.721
and 293.726, to try to ensure that managers who are engaged by
the council or the State Treasurer for the active management of
investment funds consisting of the Public Employees Retirement
Fund referred to in ORS 238.660, through the purchase and sale of
publicly traded equities, are not investing in publicly traded
equities of any scrutinized company.
(2) Subsection (1) of this section does not apply to investment
indirectly made through index funds, fund of funds or privately
placed investments. + }
SECTION 4. { + (1) Consistent with fiduciary standards,
including the provisions of ORS 293.721 and 293.726, the State
Treasurer shall adopt a statement of policy that describes a
process of engagement with managers who:
(a) Are engaged by the Oregon Investment Council or the State
Treasurer for the active management of investment funds
consisting of the Public Employees Retirement Fund referred to in
ORS 238.660 through the purchase and sale of publicly traded
equities; and
(b) Have invested such funds in scrutinized companies.
(2) The policy required under subsection (1) of this section
must require the State Treasurer, to the extent practicable, to
identify and send a written notice to the managers described in
subsection (1) of this section. The notice shall encourage the
managers, consistent with fiduciary standards, including the
provisions of ORS 293.721 and 293.726, to:
(a) Notify scrutinized companies with which the managers have
made investments of the State Treasurer's policy adopted pursuant
to subsection (1) of this section; and
(b) Not later than 90 days after giving the notice, end
investments in the scrutinized companies and avoid future
investments in the scrutinized companies, as long as the managers
may do so without monetary loss through reasonable, prudent and
productive investments in companies generating returns that are
comparable to the returns generated by the scrutinized companies.
(3) A notice provided by a manager to a scrutinized company
under subsection (2) of this section shall advise the scrutinized
company that the company may comment in writing to the State
Treasurer to dispute the identification of the company as a
scrutinized company.
(4) If the State Treasurer determines under subsection (3) of
this section that a company is not a scrutinized company, the
State Treasurer shall notify the relevant manager of the State
Treasurer's determination.
(5) The State Treasurer shall advise the Oregon Investment
Council of a notice the State Treasurer provides under subsection
(2) of this section if the manager to whom the notice was given
has not informed the State Treasurer within 180 days after the
date the notice was given that the manager has ended the
manager's investment in scrutinized companies or plans to divest
from its investment in scrutinized companies. + }
SECTION 5. { + On or before March 15 of each year, the State
Treasurer shall make available on the State Treasurer's website a
summary of actions taken during the previous year in accordance
with ORS 293.811 to 293.817. The summary shall include a list of
identified scrutinized companies. + }
SECTION 6. { + Sections 4 (2) to (5) and 5 of this 2013 Act
apply only if the Legislative Assembly appropriates sufficient
moneys to the State Treasurer, other than moneys described by ORS
293.718 or moneys in the Public Employees' Retirement Fund, to
administer sections 4 (2) to (5) and 5 of this 2013 Act. + }
SECTION 7. ORS 286A.818 is amended to read:
286A.818. (1) In accordance with the applicable provisions of
this chapter, the State Treasurer, at the request of the Director
of the Oregon Department of Administrative Services, may issue
Article XI-Q bonds:
(a) For any of the purposes specified in Article XI-Q of the
Oregon Constitution, plus an amount determined by the State
Treasurer to pay estimated bond-related costs; and
(b) Subject to the budget authorization for Article XI-Q bond
issuance established under ORS 286A.035 for the biennium.
(2) The State Treasurer may issue Article XI-Q bonds for the
purpose of:
(a) Refunding Article XI-Q bonds.
(b) Subject to subsection (3) of this section, refinancing
borrowings issued before December 2, 2010, to finance or
refinance costs described in { - section 1 (1), - } Article
XI-Q { + , section 1 (1), + } of the Oregon Constitution.
(c) Paying bond-related costs.
(3) When Article XI-Q bonds are issued to refinance borrowings
issued before December 2, 2010, { + and an extension of the
maturity date is necessary or desirable to establish a uniform
repayment schedule for Article XI-Q bonds, + } the maturity date
of the Article XI-Q bonds may { - not be later than - }
{ + be extended up to six months beyond + } the maturity date of
the refinanced borrowings.
(4) The State Treasurer shall deposit the net proceeds of
Article XI-Q bonds issued in one or more project funds
established in the State Treasury or with a third party approved
by the State Treasurer. Net proceeds must be expended in
accordance with procedures established by the Oregon Department
of Administrative Services for the purposes described in each
project agency's budget authorization.
(5) If at any time the Oregon Department of Administrative
Services and the project agency determine that the net proceeds
of Article XI-Q bonds deposited in a project fund pursuant to
subsection (4) of this section exceed the amount necessary for
the purpose described in the project agency's budget
authorization, the department may allocate and transfer the
excess amount as determined by the department to other project
funds, the Article XI-Q Bond Fund established under ORS 286A.820
or the Article XI-Q Bond Administration Fund established under
ORS 286A.822.
(6) Article XI-Q bonds are a general obligation of the State of
Oregon and must contain a direct promise on behalf of the State
of Oregon to pay the principal of, the interest on and the
premium, if any, on the Article XI-Q bonds. The State of Oregon
shall pledge its full faith and credit and taxing power to the
payment of the principal of, the interest on and the premium, if
any, on Article XI-Q bonds, except that the ad valorem taxing
power of the State of Oregon may not be pledged to pay Article
XI-Q bonds.
SECTION 8. { + The State Treasurer shall first make available
on the State Treasurer's website the information required under
section 5 of this 2013 Act not later than March 15, 2014. + }
SECTION 9. { + Sections 3 to 5 of this 2013 Act and the
amendments to ORS 293.812 by section 1 of this 2013 Act apply to
investments made prior to, on or after the effective date of this
2013 Act. + }
SECTION 10. ORS 293.736 is amended to read:
293.736. (1) Except as provided in ORS 293.741, in amounts
available for investment purposes and subject to the policies
formulated by the Oregon Investment Council, the investment
officer shall invest and reinvest moneys in the investment funds
and acquire, retain, manage, including exercise of any voting
rights, and dispose of investments of the investment funds.
(2) Subject to the direction of the council, the investment
officer shall perform the functions described in subsection (1)
of this section with respect to the investment in mutual funds of
moneys in the Deferred Compensation Fund. { - The council must
approve all mutual funds in which Deferred Compensation Fund
moneys are invested. - }
SECTION 11. ORS 328.331 is amended to read:
328.331. (1) Any school district may request that the State
Treasurer issue a certificate evidencing qualification of its
school bonds for the state guaranty.
(2) The State Treasurer may, in accordance with ORS chapter
183, adopt and enforce rules that prescribe procedures for school
district applications to qualify for the certificate of
qualification and state guaranty and rules that prescribe the
{ + conditions and + } standards a school district must meet to
qualify and to maintain qualification. The State Treasurer, by
rule, may establish, but shall not be limited to:
(a) A requirement that a school district pay a processing fee,
sufficient to defray the State Treasurer's costs in processing
and verifying applications, for each application and each
application for annual renewal of a certificate of qualification.
(b) Deadlines or application periods in which school districts
must submit applications.
(c) The character, quality and currency of the information on
the financial affairs and condition of a school district that
must be submitted for a school district's application to be
considered.
(d) The form and character of any certifications or affidavits
required of officials of the applying school districts concerning
the accuracy and completeness of the information provided in
conjunction with the district's application.
(e) Any other matters necessary to making reliable assessments
of the fiscal and financial affairs and condition of applying
school districts.
{ + (f) Requirements related to additional conditions the
school district must meet, which may include requiring a pledge
of school district revenues or the grant of a security in other
assets of the school district, to assure the State Treasurer that
the school district will be able to fully reimburse the state for
amounts transferred by the State Treasurer and any interest or
penalties applicable to the transferred amounts. + }
{ - (f) - } { + (g) + } The manner of designating the
particular school bonds to which the State Treasurer's
certificate of qualification and the state guaranty applies.
{ - (g) - } { + (h) + } Subject to Article XI-K of the
Oregon Constitution, reasonable limitations on:
(A) The total aggregate outstanding amount of all school bonds
the state may guarantee; and
(B) The outstanding amount of the school bonds of any single
school district the state may guarantee.
{ - (h) - } { + (i) + } The method of providing notice of
denial of a certificate of qualification.
{ - (i) - } { + (j) + } The method of providing notice of
disqualification to school districts that fail to qualify or for
which changes in financial affairs or condition or failure to
provide the State Treasurer current or updated information
warrant disqualification of the school district.
{ - (j) - } { + (k) + } Requirements for promptly reporting
to the State Treasurer any changes in condition or occurrences
that may affect a school district's eligibility to qualify or
maintain its qualification to participate in the state guaranty
program.
(3)(a) After reviewing the request, if the State Treasurer
determines that the school district is eligible, the State
Treasurer shall promptly issue the certificate of qualification
and provide it to the requesting school district.
(b)(A) Unless the certificate of qualification is revoked by
the State Treasurer, and subject to the fulfillment of any
conditions or requirements imposed by the State Treasurer, the
school district receiving the certificate and all other persons
may rely on the certificate as evidencing eligibility for the
state guaranty for one year from and after the date of the
certificate.
(B) { - No - } { + A + } revocation of a certificate of
qualification
{ - shall - } { + does not + } affect the state guaranty of
any outstanding school bonds previously issued under a valid
certificate.
(4) Any qualified school district that chooses to forgo the
benefits of the state guaranty for a particular issue of school
bonds may do so by not referring to ORS 328.321 to 328.356 on the
face of its school bonds.
(5) { - No - } { + A + } school district that has school
bonds, the principal of or interest on which has been paid in
whole or in part by the state under ORS 328.341, { - may be - }
{ + is not + } eligible to issue any additional school bonds
with the state guaranty until:
(a) All payment obligations of the school district to the state
under ORS 328.346 are satisfied; and
(b) The State Treasurer certifies in a writing, to be kept on
file by the State Treasurer, that the school district is fiscally
solvent.
SECTION 12. ORS 328.346 is amended to read:
328.346. (1)(a) If one or more payments on school bonds are
made by the State Treasurer as provided in ORS 328.341, the State
Treasurer shall pursue recovery from the school district of all
moneys necessary to reimburse the state for all amounts paid by
the treasurer to the paying agent, as well as interest, penalties
and any additional costs incurred by the treasurer as described
in this section. In seeking recovery, the State Treasurer may:
(A) Intercept any payments from the General Fund, the State
School Fund, the income of the Common School Fund and any other
source of operating moneys provided by or through the state to
the school district that issued the school bonds that would
otherwise be paid to the school district by the state;
{ - and - }
{ + (B) Exercise the rights of a secured creditor in any
moneys or assets pledged by the school district to secure the
district's reimbursement obligation to the state; and + }
{ - (B) - } { + (C) + } Apply any intercepted payments
{ + and pledged moneys or assets + } to reimburse the state for
payments made pursuant to the state guaranty until all
obligations of the school district to the state arising from
those payments, including interest and penalties, and any
additional costs incurred by the treasurer as described in this
section are paid in full.
(b) The state has no obligation to the school district or to
any person or entity to replace any moneys { + or assets + }
intercepted { + or pledged + }under authority of this section.
(c) The authority of the State Treasurer to intercept payments
{ + and the lien in any pledged moneys + } under this subsection
{ - has - } { + have + } priority over all claims against
money provided by the state to a school district, including a
claim that is based on a funds diversion agreement under ORS
238.698. A funds diversion agreement under ORS 238.698 has
priority over all other claims against money provided by the
state to a school district.
(2) The school district that issued school bonds for which the
state has made all or part of a debt service payment shall:
(a) Reimburse all moneys drawn or paid by the State Treasurer
on its behalf;
(b) Pay interest to the state on all moneys paid by the state
from the date the moneys were drawn to the date they are repaid
at a rate to be determined by the State Treasurer, in the State
Treasurer's discretion, to be sufficient to cover the costs of
funds to the state plus the costs of administration of the state
guaranty obligation and of collection of reimbursement; and
(c) Pay any applicable penalties as described in subsection (3)
of this section.
(3)(a) The State Treasurer shall establish the reimbursement
interest rate after considering the circumstances of any prior
draws by the school district on the state, market interest and
penalty rates and the cost of funds, if any, that were required
to be used or borrowed by the state to make payment on the school
bonds. The State Treasurer shall have authority to establish, by
negotiations with the school district or otherwise, any plan of
reimbursement by the school district that will result in full and
complete reimbursement to the state. Subject to the requirement
for full and complete reimbursement, the State Treasurer may
consider incorporating into the reimbursement plan the means and
methods to allow the school district to continue its operations
during the time the reimbursement plan is in effect.
(b) The State Treasurer may, after considering the
circumstances giving rise to the failure of the school district
to make payment on its school bonds in a timely manner, impose on
the school district a penalty of not more than five percent of
the amount paid by the state pursuant to the state guaranty for
each instance in which a payment by the state is made.
(4)(a) If the State Treasurer determines that amounts obtained
under this section will not reimburse the state in full within
the time determined by the State Treasurer or incorporated in the
reimbursement plan from the state's payment of a school
district's debt service payment, the State Treasurer shall pursue
any legal action, including but not limited to mandamus, against
the school district or school district board to compel the school
district to:
(A) Levy and provide property tax revenues to pay debt service
on its school bonds and other obligations when due; and
(B) Meet its repayment obligations to the state.
(b) With respect to any school bonds for which the State
Treasurer has made payment under the state guaranty, and in
addition to any other rights or remedies available at law or in
equity, the state shall have the same substantive and procedural
rights as would a holder of the school bonds of a school
district.
(c) The Attorney General shall assist the State Treasurer in
the discharge of the duties under this section.
(d) The school district shall pay the attorney fees, expenses
and costs of the State Treasurer and the Attorney General.
(5)(a) Except as provided in paragraph (c) of this subsection,
any school district whose funds were intercepted { + or
otherwise paid to the State Treasurer + } under this section may
replace those funds from other school district moneys or from ad
valorem property taxes, subject to the limitations provided in
this subsection.
(b) A school district may use ad valorem property taxes or
other moneys to replace intercepted funds { + or other funds
paid to the State Treasurer + } only if the ad valorem property
taxes or other moneys were derived from:
(A) Taxes originally levied to make the payment, but which were
not timely received by the school district;
(B) Taxes from a special levy imposed to make up the missed
payment or to replace the intercepted { - moneys - } { +
funds or funds otherwise paid to the State Treasurer + };
(C) Moneys transferred from any lawfully available funds of the
school district or the undistributed reserves, if any, of the
school district; or
(D) Any other source of moneys on hand and legally available.
(c) Notwithstanding paragraphs (a) and (b) of this subsection,
a school district may not replace operating funds intercepted by
the state { + or otherwise paid to the State Treasurer + } with
moneys collected and held to make payments on school bonds if
that replacement would divert moneys from the payment of future
debt service on the school bonds and increase the risk that the
state guaranty would be called upon a second time.
SECTION 13. { + Section 14 of this 2013 Act is added to and
made a part of ORS 328.321 to 328.356. + }
SECTION 14. { + (1) Except for moneys subject to the intercept
provided in ORS 328.346 (1)(a), a school district may pledge as
security for its obligation to reimburse the state under ORS
328.346 (2) any:
(a) Revenues received or held by the school district; or
(b) Real or personal property held by the school district.
(2) The lien of any pledge, mortgage or security interest
granted by a school district under this section is valid and
binding from the time the pledge is granted. The revenue or
property is immediately subject to the lien without physical
delivery, filing or other act, and the lien is superior to all
other claims and liens of any kind whatsoever.
(3) The lien may be foreclosed by a proceeding brought in the
circuit courts of the state and any tangible real or personal
property subject to the lien may be sold upon an order of the
court. The proceeds of the sale must be applied first to the
payment of the costs of foreclosure and then to the amounts owing
under ORS 328.346 (2), with any remaining balance paid to the
school district. + }
SECTION 15. { + ORS 293.814, 293.815, 293.816 and 293.817 are
repealed. + }
SECTION 16. { + This 2013 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2013 Act takes effect on
its passage. + }
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