CHAPTER 3. BOARD
IC 5-10.4-3
Chapter 3. Board
IC 5-10.4-3-1
Members
Sec. 1. (a) The board consists of six (6) trustees.
(b) Five (5) trustees shall be appointed by the governor. At leasttwo (2) of the trustees appointed by the governor must be membersof the fund. The governor shall make these appointments after June30 and before July 16 of each year.
(c) The director of the budget agency or the director's designee isan ex officio voting member of the board. An individual appointedunder this subsection to serve as the director of the budget agency'sdesignee serves as a permanent designee until replaced by thedirector of the budget agency.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-2
Term of office
Sec. 2. A trustee shall serve a term of four (4) years, beginning onAugust 1 following appointment. Whenever a trustee is appointed tofill a vacancy caused by death or resignation, that trustee shall servethe unexpired term of the trustee's predecessor. A trustee shall serveuntil the trustee's successor is appointed and qualified.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-3
Officers
Sec. 3. On or before the September monthly meeting, the boardannually shall elect a president, vice president, and secretary from itsmembers to serve as officers of the board. An officer shall serve aterm of one (1) year or until the officer's successor is elected andqualified.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-4
Compensation; reimbursement of expenses
Sec. 4. (a) On the board's order:
(1) the trustees who are not state officers or employees shallreceive the same per diem, mileage, and travel allowances paidto members of the general assembly serving on interim studycommittees established by the legislative council; and
(2) the trustees who are state officers or employees are entitledto reimbursement for necessary expenses actually incurredthrough service on the board.
These costs shall be paid from resources at the disposal of the fund.
(b) Special meetings may be conducted on the call of the presidentor on the written call for a special meeting signed by three (3)trustees.
(c) A majority of the board constitutes a quorum at any meeting
for transacting business.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-5
Director
Sec. 5. (a) In conjunction with the board of trustees of the publicemployees' retirement fund, the board shall:
(1) appoint a director; and
(2) fix the salary of the director.
(b) The director shall perform all of the following:
(1) Maintain a record of the board's proceedings.
(2) Be responsible for the safekeeping of the books and recordsof the fund.
(3) Give a bond as specified by the board.
As added by P.L.2-2006, SEC.28. Amended by P.L.107-2010, SEC.3.
IC 5-10.4-3-6
Trustee bonds; duties of board
Sec. 6. (a) A trustee shall give bond as specified periodically bythe state board of finance.
(b) The board shall do all the following:
(1) Act on an application for benefits.
(2) Provide the necessary forms for administering the fund.
(3) Establish records and accounts, which:
(A) provide the necessary information for an actuary'sexamination; and
(B) are sanctioned by the state board of accounts.
(4) Maintain individual records for each member containing themember's:
(A) name;
(B) date of birth;
(C) age at beginning service;
(D) service record;
(E) address;
(F) contributions to the fund;
(G) amounts withdrawn; and
(H) benefits paid;
and other items considered necessary.
(5) Employ or contract with employees, auditors, technicalexperts, legal counsel, and other service providers as the boardconsiders necessary to transact the business of the fund withoutthe approval of any state officer, and fix the compensation ofthose persons.
(6) Make rules as required to administer the fund.
(7) Publish a summary of the fund's condition.
(8) Provide for a report for each member, at least annuallybefore June 1, of the value of the amount credited to themember in the annuity savings account in each investmentprogram under IC 5-10.2-2.
(9) Provide for the installation in the general office of a
complete system of:
(A) books;
(B) accounts, including reserve accounts; and
(C) records;
to give effect to all the requirements of this article and to ensurethe proper operation of the fund.
(10) Appoint an actuary.
(11) With the advice of the actuary, adopt actuarial tables andcompile data needed for actuarial studies necessary for thefund's operation.
(12) Adopt a budget on a calendar year or fiscal year basis thatis sufficient, as determined by the board, to perform the board'sduties and, as appropriate and reasonable, draw upon fundassets to fund the budget.
(13) Expend money, including income from the fund'sinvestments, for effectuating the fund's purposes.
(14) Establish personnel programs and policies for theemployees of the board.
(15) Submit a report of the board's activities to the governor, thepension management oversight commission, and the budgetcommittee before November 1 of each year. The report underthis subdivision shall set forth a complete operating andfinancial statement covering the board's operations during themost recent fiscal year, including information on the following:
(A) Investment performance.
(B) Investment and administrative costs as a percentage ofassets under management.
(C) Investment asset allocation strategy.
(D) Member services.
(E) Member communications.
(16) Establish a code of ethics or decide to be under thejurisdiction and rules adopted by the state ethics commission.
(17) Cooperate with the board of trustees of the publicemployees' retirement fund to the extent practicable andfeasible in:
(A) administering and investing the assets of the fund; and
(B) hiring investment managers, investment advisors, andother service providers.
As added by P.L.2-2006, SEC.28. Amended by P.L.107-2010, SEC.4.
IC 5-10.4-3-7
Financial information; annualization of data
Sec. 7. The board shall annually analyze the fund's:
(1) income and expenditures;
(2) actuarial condition;
(3) reserve accounts;
(4) investments; and
(5) such other data as necessary to interpret the fund's conditionand the board's administration of the fund;
for internal control purposes.As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-8
Powers
Sec. 8. (a) The board may do the following:
(1) Adopt and enforce rules regarding the fund's administrationand the control and investment of the fund.
(2) Give bond for an employee for the fund's protection.
(3) Receive the state's share of the cost of the pensioncontribution from the federal government for a member onleave of absence in order to work in a federally supportededucational project.
(4) Sue and be sued as the board of trustees of the Indiana stateteachers' retirement fund.
(5) Summon and examine witnesses when adjusting claims.
(6) When adjusting disability claims, require medicalexaminations by doctors approved or appointed by the board.Not more than two (2) examinations may be conducted in one(1) year.
(7) Conduct investigations to help determine the merit of aclaim.
(8) Meet an emergency that may arise in the administration ofthe board's trust.
(9) Determine other matters regarding the board's trust that arenot specified.
(10) Enter into agreements with an insurance company toprovide life, hospitalization, surgical, medical, dental, vision,long term care, or supplemental Medicare insurance, usingindividual or group insurance policies for retired teachers, anddeduct premium payments for the policies from the teachers'retirement benefits and remit the payments to the insurancecompanies when deduction is authorized by the respectiveretired teacher.
(11) Enter into agreements with one (1) or more insurancecompanies to provide annuities for retired teachers and upon amember's authorization transfer the amount credited to themember in the annuity savings account to the insurancecompanies.
(12) Exercise all powers necessary, convenient, or appropriateto carry out and effectuate the board's public and corporatepurposes and to conduct the board's business.
(13) Establish and amend rules:
(A) for the administration and regulation of the fund and theboard's affairs; and
(B) to effectuate the powers and purposes of the board;
without adopting a rule under IC 4-22-2.
(b) An agreement under subsection (a)(10) may be for a durationof three (3) years.
(c) This subsection does not apply to:
(1) an agreement under subsection (a)(10); or (2) investments of the board.
A contract that the board enters into under section 10(b) of thischapter or any other provision may be for a term of not more thanfive (5) years, with the ability to renew.
(d) The board's powers and the fund's powers specified in thischapter shall be interpreted broadly to effectuate the purposes of thischapter and may not be construed as a limitation of powers.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-9
Management of property
Sec. 9. (a) The board is responsible for the fund's property. Theboard may take and hold any property given outright or on conditionto the fund and shall perform the conditions accepted. Unlessrestricted by a condition, the board may transfer the property whennecessary for the fund's benefit.
(b) The board shall receipt:
(1) property belonging to or coming into the fund and shalljudiciously invest the property; and
(2) money coming into the fund and, except as specified insections 13 and 14 of this chapter, shall deposit the money asauthorized by the board.
(c) The board shall direct the fund's disbursements on itemizedvouchers approved by the president of the board and the director or,in the absence or incapacity of both officers, by another trusteedirected by order of the board.
As added by P.L.2-2006, SEC.28. Amended by P.L.115-2009,SEC.13.
IC 5-10.4-3-10
Investments
Sec. 10. (a) The board shall invest its assets with the care, skill,prudence, and diligence that a prudent person acting in a likecapacity and familiar with such matters would use in the conduct ofan enterprise of a like character with like aims. The board also shalldiversify investments in accordance with prudent investmentstandards, subject to the limitations and restrictions set forth inIC 5-10.2-2-18.
(b) The board may:
(1) make or have investigations made concerning investments;and
(2) contract for and employ investment counsel to advise andassist in the purchase and sale of securities.
(c) The board is not subject to IC 4-13, IC 4-13.6, or IC 5-16 whenmanaging real property as an investment. A management agreemententered into by the board shall ensure that the management agent actsin a prudent manner regarding the purchase of goods and services.Contracts for the management of investment property shall besubmitted to the governor, the attorney general, and the budgetagency for approval. A contract for the management of real property
as an investment:
(1) may not exceed a four (4) year term and must be based uponguidelines established by the board;
(2) may provide that the property manager may collect rent andmake disbursements for routine operating expenses such asutilities, cleaning, maintenance, and minor tenant finish needs;
(3) shall establish, consistent with the board's duty underIC 30-4-3-3(c), guidelines for the prudent management ofexpenditures related to routine operation and capitalimprovements; and
(4) may provide specific guidelines for the board to:
(A) purchase new properties;
(B) contract for the construction or repair of properties; and
(C) lease or sell properties;
without individual transactions requiring the approval of thegovernor, the attorney general, the Indiana department ofadministration, and the budget agency. However, eachindividual contract involving the purchase or sale of realproperty is subject to review and approval by the attorneygeneral at the specific request of the attorney general.
(d) Whenever the board takes bids in managing or selling realproperty, the board shall require a bid submitted by a trust (asdefined in IC 30-4-1-1(a)) to identify all the following:
(1) Each beneficiary of the trust.
(2) Each settlor empowered to revoke or modify the trust.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-11
Compliance with federal law
Sec. 11. The board's transactions under section 10 of this chapterare subject to IC 5-10.2-2-1.5.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-12
Form of securities
Sec. 12. Each security may be held in bearer form or registered inthe name of:
(1) the fund;
(2) a nominee created by the board; or
(3) a nominee of a custodian bank or safekeeping bank,approved by the board.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-13
Custodial agreements
Sec. 13. (a) The board may enter into a custodial agreement onterms the board considers in the best interest of the fund with a bankor trust company that is domiciled in the United States and approvedby the board to:
(1) act in a fiduciary capacity; and (2) manage custodial accounts;
on behalf of the fund.
(b) The agreement described in subsection (a) may authorize thecustodian to:
(1) hold the fund's securities and other investments in the nameof the fund or a nominee, or in bearer form;
(2) collect the income and other receipts from the securities andother investments and deposit them subject to the instructionsof the board or the board's representative;
(3) reinvest the receipts on the direction of the board or theboard's representative;
(4) maintain accounting records and prepare reports as may berequired for use by the fund and the state board of accounts; and
(5) perform other services for the board that are appropriate andcustomary for the custodian.
(c) The custodian is responsible for all securities held in the nameof its nominee for the fund.
As added by P.L.2-2006, SEC.28. Amended by P.L.90-2008, SEC.3.
IC 5-10.4-3-14
Management of custodial account
Sec. 14. All income and other receipts from securities may be:
(1) collected by the custodian bank or safekeeping bankapproved for that purpose by the board and deposited in thecustodial account or a checking account of the board;
(2) reinvested from the custodial account or checking accountwhen the board determines that the receipts may be safelyinvested; or
(3) withdrawn by the board for the immediate needs of the fundfrom the checking account or custodial account.
As added by P.L.2-2006, SEC.28. Amended by P.L.115-2009,SEC.14.
IC 5-10.4-3-15
Conflict of interest prohibited
Sec. 15. (a) Except as otherwise provided, a trustee or employeeof the board may not have any direct interest in the income of aninvestment made by the board or may not receive any pay oremolument for services connected with any investment made by theboard.
(b) The board may purchase a security or financial interest issuedor owned by a:
(1) custodian bank or trust company; or
(2) subsidiary, parent corporation, or holding company of acustodian bank or trust company.
(c) A trustee or employee may not become an obligor for moneyloaned by or borrowed from the fund.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-3-16
Criminal penalties
Sec. 16. A person who recklessly violates:
(1) IC 21-6.1-3-9 (repealed), IC 21-6.1-3-11 (repealed),IC 21-6.1-3-15 (repealed), or IC 21-6.1-3-18 (repealed), beforeJuly 1, 2006; or
(2) section 10, 12, 14, or 15 of this chapter, after June 30, 2006;
commits a Class A misdemeanor.
As added by P.L.2-2006, SEC.28.