SB 867 — AN ACT CONCERNING INVESTMENT OF CERTAIN MUNICIPAL FUNDS.

Senate General Assembly RaisedFile Bill No.

86781 January Session, 2021 LCOSenate Bill No.

3263867 ReferredSenate, toMarch 17, 2021 The Committee on PLANNINGPlanning ANDand DEVELOPMENTDevelopment Introducedreported by:through SEN.

(PD)CASSANO ANof ACTthe CONCERNING4th INVESTMENTDist., OFChairperson CERTAINof MUNICIPALthe FUNDS.Committee on the part of the Senate, that the bill ought to pass.

AN ACT CONCERNING INVESTMENT OF CERTAIN MUNICIPAL FUNDS.

(2) provide for the management and investment of such system and any such trust, including the establishment of a board or commission or the LCOSB867 3263/ \\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-00867-R01File of 3 SB.docx Raised Bill No.

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81 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:

None Municipal Impact:

Municipalities Effect FY 22 $ FY 23 $ Various Municipalities Potential See Below See Below Savings Explanation The bill allows municipalities that do not currently participate in the Connecticut Municipal Employees Retirement System to invest their pension fund assets with those invested by the State Treasurer.

To the extent that the bill provides municipalities access to investment classes with lower administrative fees, there are potential savings to municipalities that opt to pool their funds with the Treasurer.

While it is anticipated that the bill will also provide such municipalities with access to more investment classes, resulting in more diversification and less risk, it is unknown how choosing this option would impact investment returns.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

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81 OLR Bill Analysis SB 867 AN ACT CONCERNING INVESTMENT OF CERTAIN MUNICIPAL FUNDS.

SUMMARY This bill allows a municipality that does not participate in the Connecticut Municipal Employees Retirement System (CMERS) to invest its retirement system’s assets with the state’s combined retirement plansand trust fundsthat are administered,held,or invested by the state treasurer (i.e., the Connecticut Retirement Plans and Trust Funds).

The bill authorizes the treasurer to adopt regulations to allow for the funds’ investment.

The investment andmanagement ofthetrust’sassets must comply with the prudent investor standard, as existing law requires for municipalities managing their own pension, retirement, or other postemployment health and life benefit systems.

The bill places these retirement systems’ trust funds under the same oversight and requirements established in the trust statutes for funds that include the Teachers' Pension Fund, the State Employee Retirement Fund, and the Connecticut Municipal Employees' Retirement Fund.

As this change applies to all such retirement systems’ trust funds, and not only those that are invested by the treasurer pursuant to the bill, it is unclear what effect, if any, it will have.

The bill also makes technical and conforming changes.

EFFECTIVE DATE:

Upon passage BACKGROUND Connecticut Municipal Employees Retirement System (CMERS) SB867 / File No.

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81 CMERS is the optional municipal retirement system administered by the State Retirement Commission and the state treasurer is responsible for its investment (CGS chapter 113).

Membership includes over 200 employee groups from more than 80 municipalities (e.g., a single town may have separate groups for police officers, firefighters, general town employees, and housing authority employees).

Prudent Investor Standard Under Connecticut law, trustees must follow certain standards when investing and managing trust assets when the trust provisions are not explicit.

For example, trustees must invest and manage assets as “prudent investors” would and use any special skills or expertise they have (CGS § 45a-541 et seq.).

COMMITTEE ACTION Planning and Development Committee Joint Favorable Yea 26 Nay 0 (03/02/2021) SB867 / File No.

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