Bill Summary for Bill Number HB08-1002

Date: 01/24/2008

Final
BILL SUMMARY for HB08-1002

HOUSE COMMITTEE ON EDUCATION

Votes: View-->	Action Taken:
Moved amendment L.001 (Attachment B). The motion Moved to refer House Bill 08-1002, as amended, to	Pass Without Objection PASS

02:46 PM -- Call to Order

The chairman, Representative Merrifield, called the committee to order.

02:47 PM -- House Bill 08-1002

Representative King, prime sponsor, presented House Bill 08-1002, concerning the investment authority of Mesa State College and Colorado State University (CSU). Representative King explained that the bill would allow CSU and Mesa State College to direct and control investments that are currently controlled by the Colorado State Treasurer on behalf of the schools.

02:49 PM -- The following persons testified on the bill:

02:49 PM -- Rich Schwiegert, representing CSU, testified in support of the bill. Mr. Schweigert commented that the State Treasurer does a good job of managing short term investments for the school, but that CSU could invest its reserve funds better by having control over its long term investments.

02:52 PM -- Cary Kennedy, Colorado State Treasurer, testified on the bill. Ms. Kennedy provided information on the impact that this bill would have on the State Treasurer's office, and shared a handout with the committee (Attachment A). She also explained the investment limitations of the state treasurer. Ms. Kennedy raised concerns about what the moral obligation of the state would be in the case that a university suffers financial losses from controlling its own investments. She also recommended that the bill contain benchmark requirements as part of the investment plan and that the schools annually report their investment plans to the Joint Budget Committee.

03:01 PM

Representative Massey inquired if the viability of the treasurer's investment pool would be affected if other schools followed suit in pulling out their money. Ms. Kennedy replied that it could have implications on the state's cash fund borrowing, and that the core policy issue that the committee members need to consider is the risk tolerance for the universities.

03:08 PM

Representative Peniston inquired why Mesa State College and CSU are the schools that are included on the bill. Representative King responded that it originally included only Mesa State College, but CSU asked to be included, and Mesa State College agreed to that addition. Committee members discussed the types of funds that the schools would be allowed to invest in under the bill, how the schools' leaving the state treasury's investment pool affects the credit rating of the state, and why schools would want to divest themselves of the state treasury's investment pool.

03:18 PM

A discussion ensued about risk reward and risk management and what the responsibility of the General Assembly would be in the case that these schools suffered catastrophic financial losses. Committee members also discussed whether it would be possible for the General Assembly to call the schools back into the treasury investment pool.

03:27 PM

Representative Rose asked Ms. Kennedy for recommendations on what the benchmarks should be. Representative Summers inquired about accountability and oversight of the treasury over the investments under this bill's provisions. Ms. Kennedy replied that it would not be appropriate for the treasurer to have fiduciary responsibilities over the schools' investments because under the bill the state treasurer has no authority to control the investments that a school makes.

03:35 PM -- Mike Feeley, representing the Mesa State College Board of Trustees, testified in support of the bill. He addressed some of the questions that the committee members raised during the State Treasurer's testimony. Mr. Feeley explained that the corporate stock clause is intended to allow people to donate corporate stocks to the university. He also discussed the fiduciary responsibilities of the Mesa State Board and emphasized that the bill requires the school to annually develop an investment plan, which will help ensure that the investments stay on track. A discussion ensued about the liability of the school in the event of market trouble and financial losses.

03:47 PM -- David May, representing the Fort Collins Area Chamber of Commerce, testified in support of the bill, because it strengthens the financial viability of the school, and can generate a better return on investment than is currently possible through the investments made by the state treasurer.


BILL:	HB08-1002
TIME:	03:52:40 PM
MOVED:	Benefield
MOTION:	Moved amendment L.001 (Attachment B). The motion passed without objection.
SECONDED:	Rose
		VOTE
	Benefield
	Casso
	Fischer
	Gardner C.
	Kerr A.
	Massey
	Peniston
	Rose
	Summers
	Todd
	Witwer
	Solano
	Merrifield
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

03:56 PM

A discussion ensued among committee members about issues that should be addressed prior to the second reading of the bill. Representative King agreed to work with the committee members and Ms. Kennedy to address the concerns that were raised during the meeting.


BILL:	HB08-1002
TIME:	03:57:20 PM
MOVED:	Massey
MOTION:	Moved to refer House Bill 08-1002, as amended, to the Committee on Appropriations. The motion passed on a 13-0 vote.
SECONDED:	Benefield
		VOTE
	Benefield	Yes
	Casso	Yes
	Fischer	Yes
	Gardner C.	Yes
	Kerr A.	Yes
	Massey	Yes
	Peniston	Yes
	Rose	Yes
	Summers	Yes
	Todd	Yes
	Witwer	Yes
	Solano	Yes
	Merrifield	Yes
Final YES: 13 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS