SB 453 — AN ACT CONCERNING INDEPENDENT REVIEW OF THE INVESTMENT PERFORMANCE OF THE STATE'S PENSION FUNDS.

Senate General Assembly RaisedFile Bill No.

453579 February Session, 2024 LCOSenate Bill No.

3463453 ReferredSenate, toApril 22, 2024 The Committee on FINANCE,Finance, REVENUERevenue ANDand BONDINGBonding Introducedreported by:through SEN.

(FIN)FONFARA ANof ACTthe CONCERNING1st INDEPENDENTDist., REVIEWChairperson OFof THEthe INVESTMENTCommittee PERFORMANCEon OFthe THEpart STATE'Sof PENSIONthe FUNDS.Senate, that the bill ought to pass.

AN ACT CONCERNING INDEPENDENT REVIEW OF THE INVESTMENT PERFORMANCE OF THE STATE'S PENSION FUNDS.

For purposes of this section, a conflict of interest exists if the advisory firm (A) has an existing contract with the office of the Treasurer or for investment management of the state's pension funds, (B) has accepted any fees for work related to the management of the state's pension funds, (C) employs an employee or employees who are affiliated with or connected to the management of the state's pension funds, or (D) is likely to engage in contract work related to the management of the state's pension funds within twelve monthsSB453 of/ theFile dateNo. a proposal is submitted.

LCO579 3463 1 ofSB453 3File Bill No.

453579 (2)months The Office of Legislative Management shall contract with an advisory firm not later than January 1, 2026, and shall notify the followingdate ofa theproposal firmis selected:submitted.

(2) The Office of Legislative Management shall contract with an advisory firm not later than January 1, 2026, and shall notify the following of the firm selected:

(b) The advisory firm shall submit a report annually to the joint standing committee of the General Assembly having cognizance of mattersrelatingtofinance,revenueandbonding,inaccordancewiththeSB453 LCO/ 3463File 2 of 3 Bill No.

453579 provisions2 ofSB453 sectionFile 11-4aNo. of the general statutes, for each year such firm is providing services under the contract executed pursuant to subsection (a) of this section.

579 mattersrelatingtofinance,revenueandbonding,inaccordancewiththe provisions of section 11-4a of the general statutes, for each year such firm is providing services under the contract executed pursuant to subsection (a) of this section.

Section 1 from passage New section FIN Joint Favorable LCOSB453 3463/ 3File ofNo. 3

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579 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 25 $ FY 26 $ Legislative Mgmt.

GF - Cost None 200,000- 500,000 Note:

GF=General Fund Municipal Impact:

None Explanation The bill requires the Office of Legislative Management (OLM) to hire a private advisory firm to conduct an annual review of the state's pension funds resulting in an estimated annual cost of $200,000 to $500,000 beginning in FY 26.

The final cost is dependent on the responses OLM receives from its Request for Proposals (RFP).

The Out Years The annualized ongoing fiscal impact identified in FY 26 will continue into the future subject to inflation.

SB453 / File No.

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579 OLR Bill Analysis SB 453 AN ACT CONCERNING INDEPENDENT REVIEW OF THE INVESTMENT PERFORMANCE OF THE STATE'S PENSION FUNDS.

SUMMARY This bill requires a private advisory firm to conduct an annual independent review of the investment performance of the state’s pension funds.

It requires the Office of Legislative Management (OLM), by January 1, 2025, to issue a request for proposals (RFP) for services from a private advisory firm with demonstrated expertise in asset management and financial services and contract with a firm by January 1, 2026.

The bill disqualifies any firm with a conflict of interest, as specified inthebill,fromsubmitting aproposal;specifiestheprocessfor handling a conflict of interest that arises during the contract’s term;

and prohibits contracted firms from conducting certain related business for two years after ending the contract with OLM.

It also requires OLM to notify specified individuals what firm it chose and, depending on the circumstances, what date it expects to enter into a contract.

Under the bill, the advisory firm must report annually to the Finance, Revenue and Bonding Committee for each year the firm is providing services under an OLM contract.

The report must include the following information, at a minimum:

a comparative analysis of the state’s investment performance, benchmarked against the performance of at least 50 peer state public pension funds across aggregate performance, individual asset class performance, and short-term and long-term time periods;

a comparison of the state’s investment performance for each asset class SB453 / File No.

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579 against commonly accepted financial benchmark indices used by a majority of other states;

and any recommendations for improving state pension fund investment management practices and processes.

EFFECTIVE DATE: