§ 13 — Management of funds

§ 13. Management of funds. a. The funds of the retirement system shall\nbe managed in accordance with this section.\n b. The comptroller shall be trustee of the several funds of the\nretirement system. Such funds shall be invested by the comptroller in\nsecurities in which he is authorized by law to invest the funds of the\nstate, except that he may invest in obligations consisting of notes,\nbonds, debentures, or equipment trust certificates issued under an\nindenture, which are the direct obligations of, or in the case of\nequipment trust certificates are secured by direct obligations of, a\nrailroad or industrial corporation, or a corporation engaged directly\nand primarily in the production, transportation, distribution, or sale\nof electricity or gas, or the operation of telephone or telegraph\nsystems or waterworks, or in some combination of them; provided the\nobligor corporation is one which is incorporated under the laws of the\nUnited States, or any state thereof, or of the District of Columbia, and\nsaid obligations shall be rated at the time of purchase within the three\nhighest classifications established by at least two standard rating\nservices. The maximum amount that the comptroller may invest in such\nobligations shall not exceed thirty per centum of the assets of the New\nYork state employees' retirement system's funds; and provided further\nthat not more than two and one half per centum of the assets of the New\nYork state employees' retirement system's funds shall be invested in the\nobligations of any one corporation of the highest classification and\nsubsidiary or subsidiaries thereof, that not more than two per centum of\nthe assets of the New York state employees' retirement system's funds\nshall be invested in the obligations of any one corporation of the\nsecond highest classification and subsidiary or subsidiaries thereof,\nthat not more than one and one half per centum of the assets of the New\nYork state employees' retirement system's funds shall be invested in the\nobligations of any one corporation of the third highest classification\nand subsidiary or subsidiaries thereof. He shall, however, be subject to\nall terms, conditions, limitations and restrictions imposed by this\narticle and by law upon the making of such investments. The comptroller\nshall have full power:\n 1. To hold, purchase, sell, assign, transfer or dispose of any of the\nsecurities or investments, in which any of the funds of the retirement\nsystem shall be invested, including the proceeds of such investments and\nany monies belonging to such funds, and\n 2. In his name as trustee, to foreclose mortgages upon default or to\ntake title to real property in such proceedings in lieu thereof and to\nlease and sell real property so acquired.\n c. The comptroller annually shall credit to each of the funds of the\nretirement system regular interest on the mean amount therein for the\npreceding year.\n d. The custody of all funds of the retirement system shall be in the\ncharge of the head of the division of the treasury of the department of\ntaxation and finance, subject to the supervision and control of the\ncommissioner of taxation and finance.\n e. Payment of all pensions, annuities and other benefits shall be made\nas provided in this article. For the purpose of meeting disbursements\nfor pensions, annuities and other payments ordered by the comptroller,\nthe head of such division may keep on deposit an available fund which\nshall not exceed ten per centum of the total amount of the several funds\nof the retirement system. Every such deposit shall be kept only in a\nbank or trust company organized under the laws of this state, or in a\nnational bank located in this state, which shall furnish adequate\nsecurity therefor.\n f. The comptroller, however, shall have a fund in his immediate\npossession. Such fund shall be used for the immediate payment of:\n 1. All pensions, annuities and other benefits, and\n 2. Such expenses as may necessarily be incurred in acquiring,\nservicing and foreclosing mortgages and in acquiring, managing and\nprotecting investments, and\n 3. Such special expenditures for which the retirement system will be\npaid by the state or a participating employer.\n Such fund shall be reimbursed from time to time by the head of such\ndivision on the warrant of the comptroller.\n g. Neither the comptroller nor any person employed on the work of the\nretirement system shall:\n 1. Except as herein provided, have any interest, direct or indirect,\nin the gains or profits of any investment of the retirement system, nor,\nin connection therewith, directly or indirectly, receive any pay or\nemolument for his services.\n 2. Except as provided in section fifty of this article:\n (a) Directly or indirectly, for himself or as an agent or partner of\nothers, borrow any of its funds or deposits or in any manner use the\nsame except to make such current and necessary payments as are\nauthorized by the comptroller, or\n (b) Become an endorser, surety or an obligor in any manner of monies\nloaned by or borrowed of such funds.\n h. The retirement system may use a part of its funds, not exceeding\nten per centum of its assets, (1) for purchasing or leasing of land in\nthe city of Albany and the construction thereon of a suitable office\nbuilding or buildings for the transaction of the business of the\nretirement system and (2) for purchasing or leasing of land in the\ncities of Albany, Syracuse, Buffalo, Binghamton, New York, Rochester and\nUtica and the construction thereon of a suitable office building or\nbuildings for purposes of lease or sale to the state and (3) for\npurchasing or leasing of land in the city of Albany on the north and\nsouth sides of Washington avenue commonly known as the "Campus Site"\nacquired by the state for a state buildings site pursuant to the\nprovisions of chapter five hundred seventy-two of the laws of nineteen\nhundred forty-seven and the construction thereon of power plants\nincluding service connections, electric substations including service\nconnections, garages, warehouses and restaurant facilities deemed\nnecessary for the efficient and economical operation of the office\nbuilding or buildings constructed on such land and (4) for purchasing or\nleasing of land in the city of Albany acquired by the state for suitable\nparking facilities for the use primarily of employees of the state and\npersons having business with state departments and state agencies and\nthe construction thereon of such structures, appurtenances and\nfacilities deemed necessary for the efficient and economical operation\nof the parking facilities constructed on such land and (5) for\npurchasing or leasing of land in locations approved by the state\nuniversity trustees and the construction, acquisition, reconstruction,\nrehabilitation or improvement of suitable buildings or facilities\nthereon for purposes of lease or sale to the state university\nconstruction fund, such buildings or facilities to be used by the state\nuniversity or by state-operated institutions or statutory or contract\ncolleges under the jurisdiction of the state university or by the\nstudents, faculty and staff of the state university or of any such\nstate-operated institution or statutory or contract college, and their\nfamilies and (6) for purchasing of lands from the New York state thruway\nauthority and the construction thereon of an office building or other\nbuildings for purposes of lease or sale to the thruway authority for its\nown use under such terms and conditions, including consideration and\nlength of term, as shall be agreed upon between the retirement system\nand the thruway authority.\n The retirement system from time to time may lease to any public agency\nany portion of a building constructed for the transaction of its\nbusiness which may not be required for such purpose, upon such terms and\nconditions as shall be deemed to be for the best interest of the\nretirement system.\n Real property of the retirement system acquired or constructed\npursuant to this subdivision shall be exempt from taxation.\n i. At the close of each fiscal year, the average rate of investment\nearnings of the retirement system shall be computed by the actuary and\ncertified to the comptroller. This rate shall be determined from the\ninvestment earnings during the calendar year which ended three months\nprior to the close of the fiscal year. For any year that such average\nrate of earnings is in excess of three per centum but not in excess of\nfour per centum, the comptroller shall declare a rate of special\ninterest, for members earning regular interest of three per centum,\nequal to the difference between such average rate of earnings and three\nper centum expressed to the lower one-tenth of one per centum, but not\nin excess of one per centum. For any year, commencing with the fiscal\nyear the first day of which is April first, nineteen hundred seventy,\nthat such average rate of earnings is in excess of four per centum, the\nspecial rate of interest for members earning regular interest of three\nper centum shall be equal to the difference between such average rate of\nearnings and three per centum expressed to the lower one-tenth of one\nper centum, but not in excess of two per centum, and for members earning\nregular interest of four per centum, it shall be the difference between\nsuch average rate of earnings and four per centum, expressed to the\nlower one-tenth of one per centum, but not in excess of one per centum.\nSpecial interest at such rates, shall be credited by the comptroller at\nthe same time that regular interest is credited, to the individual\nannuity savings accounts of persons who are members as of the close of\nthe fiscal year. Special interest shall not be considered in determining\nrates of contribution of members. In the case of persons who last became\nmembers on or after July first, nineteen hundred seventy-three, the\nprovisions of this subdivision shall apply only to the fiscal years\nbeginning April first, nineteen hundred seventy-two and ending March\nthirty-first, nineteen hundred seventy-three.\n j. The retirement system may invest, within the limitations authorized\nfor investments in conventional mortgages, a part of its funds in first\nmortgages on real property located anywhere within the boundaries of the\nUnited States and leased to the government of the United States,\nprovided however, that no such investment shall be made unless the terms\nof the mortgage shall provide for amortization payments in an amount\nsufficient to completely amortize the loan within the period of the\nlease.\n k. The funds of the retirement system may be invested in the purchase\nof promissory notes or bonds from the farmers home administration issued\nin connection with the purchase or improvement of real property and\nwhich are insured by the farmers home administration.\n