Bill Summary for Bill Number HB08-1002

Date: 03/13/2008

Final
BILL SUMMARY for HB08-1002

SENATE COMMITTEE ON EDUCATION

Votes: View-->	Action Taken:
Amend House Bill 08-1002 to add a safety clause. Moved amendment L.006 (Attachment E). The motion Refer House Bill 08-1002, as amended, to the Commi	PASS Pass Without Objection PASS

03:08 PM -- House Bill 08-1002

Senator Bacon, sponsor of House Bill 08-1002, presented the bill. The bill grants investment authority and fiduciary responsibility to the Board of Trustees of Mesa State College (Mesa State) and the Board of Governors of the Colorado State University (CSU). Senator Bacon described the history of the idea put forth in the bill. Senator Bacon responded to questions from the committee. Senator Tupa asked what the impact on the treasury would be if all the higher education institutions decided to seek this authority as well. Senator Bacon said he has not talked to all other institutions to find out if those schools are looking for the authority, but he has heard antidotally that most are not interested. Senator Bacon provided a fact sheet on the bill (Attachment D).

03:12 PM

The following persons testified:

03:13 PM -- Cary Kennedy, State Treasurer, testified. She said she is not taking a position on the bill, but wants to talk about the implications of the bill to the state and answer questions. She said she supports the concept of allowing more control for higher education institutions. She said the state constitution gives institutions of higher education the right to control their own funds. Treasurer Kennedy described the investment strategy of the University of Colorado, which already has the authority stipulated for CSU and Mesa State in the bill. She said CSU currently has $390 million and Mesa State has $25 million with the state treasury. She said CSU and Mesa State intend to invest a small amount of this balance and to invest it in equities. She spoke to the impact on the state, saying there will not be a significant impact on the state's liquidity. She clarified that the bill states that if the institutions experience any losses, they cannot ask the state for a backfill. Treasurer Kennedy spoke to the amendment to the bill (L.006, Attachment E), saying her office is very comfortable with the amendment. She responded to questions from the committee.

03:23 PM

Committee discussion with Treasurer Kennedy continued, with more discussion about the impact on the state treasury if other institutions decided to seek the authority the bill grants to CSU and Mesa State. Treasurer Kennedy then responded to committee questions about the investment of foundation moneys at the institutions, saying the state does not invest foundation moneys. Treasurer Kennedy described amendment L.006, which she said requires the institutions to hire a fund manager to advise the investment advisory committee. She said the performance of the fund managers would be reported back to the General Assembly and to the Treasurer's Office. Discussion then returned to the issue of foundation moneys, which are private moneys, versus public reserve account moneys, which are those the bill gives the institutions authority to invest. Senator Tupa asked whether public and private moneys are ever commingled. Treasurer Kennedy responded, talking about constitutional provisions related to the management of public funds.

03:32 PM

Committee discussion with Treasurer Kennedy continued with more discussion about whether every institution would seek the authority extended in the bill. Senator Penry commented on this issue, saying the other institutions do not want the burden the authority would bring.

03:35 PM -- Richard Schweigert, Chief Financial Officer of Colorado State University, testified in support of the bill. Mr. Schweigert said the bill requires the Board of Governors to establish an investment policy. Then, he said, if CSU decides to use the authority granted in the bill, to form an investment committee and obtain an investment manager and to create a treasury department. Mr. Schweigert explained that foundation moneys will not commingled with operations moneys. He said CSU sits on a reserve, and those reserve funds are the funds that would be invested under the authority granted in the bill. He talked about the returns CSU might enjoy using the authority. Mr. Schweigert said the other higher education institutions have been polled and are not interested in the authority.

03:42 PM

Mr. Schweigert responded to questions from the committee. In response to a question from Senator Spence, Mr. Schweigert explained how the investment returns would be split between CSU's Fort Collins and Colorado Springs campuses. Senator Tupa asked Mr. Schweigert about foundation and operations moneys, and whether they can be commingled under the bill. He said public and private moneys cannot be, and are not, commingled.

03:45 PM -- Bob Osika, Treasurer of the Board of Governors for the Colorado State University system, testified in support of the bill. He spoke about standards in the industry, and standards in the bill, that CSU will follow in making investments. Mr. Osika talked about how the portfolio might be split, saying he would look at the options and liquidity needs in making decisions. He responded to committee questions.

03:49 PM -- Jake Zambrano, Mesa State University, came to the table. He explained that members of the Mesa State College Board were unavailable to testify to the bill.

03:50 PM

Senator Bacon described amendment L.006.


BILL:	HB08-1002
TIME:	03:51:34 PM
MOVED:	Bacon
MOTION:	Moved amendment L.006 (Attachment E). The motion passed without objection.
SECONDED:
		VOTE
	Bacon
	Kopp
	Penry
	Spence
	Williams
	Tupa
	Windels
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

03:51 PM

Senator Penry said the institutions were interested in adding a safety clause.


BILL:	HB08-1002
TIME:	03:52:11 PM
MOVED:	Penry
MOTION:	Amend House Bill 08-1002 to add a safety clause. The motion passed on a 6-1 vote.
SECONDED:
		VOTE
	Bacon	Yes
	Kopp	Yes
	Penry	Yes
	Spence	Yes
	Williams	Yes
	Tupa	No
	Windels	Yes
Not Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

03:53 PM

Senator Windels said she's uncomfortable with Mesa State College's inclusion in the bill without adding the other four-year institutions.


BILL:	HB08-1002
TIME:	03:54:46 PM
MOVED:	Bacon
MOTION:	Refer House Bill 08-1002, as amended, to the Committee of the Whole. The motion passed on a 6-1 vote.
SECONDED:
		VOTE
	Bacon	Yes
	Kopp	Yes
	Penry	Yes
	Spence	Yes
	Williams	Yes
	Tupa	Yes
	Windels	No
Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS