HCS CSSB 89(FIN): "An Act relating to the members of the board and staff of the Alaska Permanent Fund Corporation."

00HOUSE CS FOR CS FOR SENATE BILL NO. 89(FIN) 01 "An Act relating to the members of the board and staff of the Alaska 02 Permanent Fund Corporation." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 37.13.050(a) is amended to read: 05  (a) The Board of Trustees of the Alaska Permanent Fund Corporation consists 06 of seven [SIX] members appointed by the governor. Two of the members must be 07 heads of principal departments of state government, one of whom shall be the 08 commissioner of revenue. Five [FOUR] members shall be appointed by the governor 09 from the public and may not hold any other state or federal office, position, or 10 employment, either elective or appointive, except as a member of the armed forces of 11 either the United States or of this state. 12 * Sec. 2. AS 37.13.050(b) is amended to read: 13  (b) The [FOUR] public members of the board must have recognized 14 competence and wide experience in finance, investments, or other business

01 management-related fields and at least one of the public members must have 02 recognized competence and experience in investment portfolio management. 03 * Sec. 3. AS 37.13.060 is amended to read: 04  Sec. 37.13.060. TERM OF OFFICE. The public members of the board shall 05 be appointed for terms of four years, and they may be reappointed. The terms of the 06 public members shall be staggered so that the terms of no more than two [ONE 07 TERM OF A] public members expire [MEMBER EXPIRES] each year. 08 * Sec. 4. AS 37.13.070(a) is amended to read: 09  (a) The governor may remove a public member of the board from office only 10 for cause. A removal by the governor must be in writing and must state the reason 11 for the removal. A member who is removed by the governor may not participate in 12 board business and may not be counted for purposes of establishing a quorum after the 13 member receives written notice of removal from the governor. In this subsection, 14 "cause" means 15  (1) incompetency, which is the inability or the unintentional or 16 intentional failure to perform the duties of the trustee; or 17  (2) misfeasance or malfeasance in office, which includes the failure 18 of the trustee to exercise prudent judgment in the affairs of the corporation or 19 intentionally taking action for reasons other than the financial best interest of the 20 corporation. 21 * Sec. 5. AS 37.13 is amended by adding a new section to read: 22  Sec. 37.13.075. LIMITATIONS ON GOVERNOR. (a) The governor shall 23 base the decision to appoint a board member solely on the financial best interest of the 24 fund. 25  (b) The governor may not influence or attempt to influence the board to make 26 an investment decision that violates prudent investment principles. 27  (c) Violation of this section constitutes a violation of AS 39.52. 28 * Sec. 6. AS 37.13.100 is amended to read: 29  Sec. 37.13.100. CORPORATION STAFF. The board may employ and 30 determine the salary of an executive director. The executive director may, with the 31 approval of the board, select and employ additional staff as necessary. The executive

01 director and other employees with investment responsibilities serve at the pleasure 02 of the board, except that the board may enter into employment contracts that do 03 not exceed two years' duration. An employee of the corporation, including the 04 executive director, may not be a member of the board. The executive director and the 05 other employees of the board are in the exempt service under AS 39.25. 06 * Sec. 7. AS 37.13.120(a) is amended to read: 07  (a) The prudent-investor rule shall be applied by the board in the management 08 and investment of fund assets. The prudent-investor rule as applied to investments of 09 the fund means that, in making investments, the board shall exercise the judgment and 10 care under the circumstances then prevailing that an institutional investor of ordinary 11 prudence, discretion, and intelligence exercises in the management of large investments 12 entrusted to it not in regard to speculation but in regard to the permanent disposition 13 of funds, considering probable safety of capital as well as probable income. Each 14 board member has a fiduciary duty to the fund, and each member shall perform 15 official actions solely in accordance with that duty.