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2021 - 2022 LEGISLATURE
January 21, 2022 - Introduced by Representatives Wittke, Born, Macco,
Cabral-Guevara, Drake, Gundrum, Katsma, Kerkman, Knodl, Kuglitsch,
Magnafici, Murphy, Sinicki and Steffen, cosponsored by Senators Darling
and Cowles. Referred to Committee on State Affairs.
AB906,1,5 1An Act to repeal 25.18 (1) (o) and (p); to renumber and amend 25.167 and
225.187 (1); to amend 25.156 (3) and (4), 25.16 (2) and (3), 25.165 (2) (c), 25.17
3(3) (b) 3., 25.17 (3) (dg) 2., 25.17 (70) (intro.), 25.18 (1) (intro.), (a), (f) and (m)
4and 25.183 (3); and to create 25.167 (2m), 25.187 (1) (b) and (c) and 25.187 (4)
5of the statutes; relating to: investment board operations.
Analysis by the Legislative Reference Bureau
This bill makes various changes relating to the State of Wisconsin Investment
Board.
Under current law, among its powers and duties, SWIB may do any of the
following:
1. Employ special legal or investment counsel in any matters arising out of the
scope of its investment authority, notwithstanding certain other statutory provisions
relating to state procurement and state agency employment of attorneys, but
employment of special legal counsel paid by SWIB must be with the consent of the
attorney general.
2. Execute certain indemnification agreements related to securities.
3. Secure insurance against risks relating to SWIB's investments or properties.
4. Liquidate any corporation wholly owned by SWIB or operate the corporation
for up to five years until it can be liquidated.
5. Take necessary action to make investments in mortgage loans or purchase
real estate interests.

6. Maintain and repair any building that SWIB owns in fee or in which SWIB
owns the beneficial interest and, notwithstanding certain other statutory provisions
relating to state procurement or engineering, have exclusive authority to contract as
SWIB deems necessary for this purpose.
7. Engage in certain types of securities lending and repurchase agreement
transactions.
8. Sell securities that SWIB has the right to acquire by exercising conversion
rights.
9. Employ professionals, contractors, or other agents necessary to evaluate or
operate any property if a fund managed by SWIB has an interest in, or is considering
purchasing or lending money based upon the value of, that property,
notwithstanding certain other statutory provisions relating to state procurement.
10. For specified purposes, enter into certain swap transactions.
11. Invest assets of the permanent endowment fund in any investment that is
authorized for Wisconsin Retirement System accounts or in certain other
investments related to tobacco settlement revenues.
This bill specifies that SWIB's authorization, as provided in items 1 to 11, above,
applies notwithstanding any other statute except one restricting SWIB's investment
in certain derivatives and reverse repurchase agreements. The bill also modifies this
authorization as follows: with respect to item 1, it removes the attorney general
consent requirement and authorizes SWIB to employ special legal or investment
counsel in any matters arising out of the scope of its operations, not just investment
authority; with respect to item 6, it expands the authorized activities to include a
leasehold interest and to include, among others, improving, occupying, and
furnishing the building; and it repeals the provisions creating the authorization
under item 11.
The bill also makes changes related to SWIB's funding of operating expenses.
Current law defines, for certain purposes, SWIB's “operating expenditures" to
include all costs and expenses incurred by SWIB for the purpose of operating SWIB
and managing the assets of each fund for which SWIB has management
responsibility, but excludes certain costs or expenses such as those related to the
following: employing special legal or investment counsel; securing insurance against
certain risks; and contracting with external managers to manage SWIB's assets.
These costs and expenses excluded from the definition of “operating expenditures”
and are paid from the fund for which the costs or expenses are incurred.
The bill narrows the definition of “operating expenditures" by adding as
exclusions from the definition the following costs and expenses: information
technology purchases; business travel; recruitment of job applicants; subscriptions
to relevant news or industry publications; and office management expenses. The bill
also specifies that SWIB's expenditure of operating expenditures is not subject to
statutory provisions relating to state procurement but that SWIB may coordinate
purchases with the Department of Administration.
The bill further requires SWIB to adopt policies and procedures that specify all
of the following: when SWIB must publicly solicit proposals from multiple vendors
of goods or services; how SWIB is to evaluate proposals from multiple vendors; and

how SWIB is to assess any conflict of interest a vendor may have if the vendor sells
goods or services to SWIB. The bill also requires SWIB to establish travel policies
for SWIB employees and job applicants and a schedule for travel expense
reimbursement that takes into account the maximum rate for lodging expenses
under the uniform travel schedule for state officers and employees.
The bill makes additional changes, including the following:
1. Under current law, SWIB's executive director and internal auditor, certain
SWIB personnel appointed by the executive director, and other SWIB employees may
not have any financial interest, either directly or indirectly, in any firm engaged in
the sale or marketing of real estate or investments of any kind. The bill qualifies this
prohibition so that these individuals may not have such a financial interest if it
would create a conflict of interest for SWIB.
2. The bill removes a limit on the number of investment directors that may be
appointed by the executive director.
3. The bill makes clarifying changes related to the duties of SWIB's executive
director and chief investment officer when both titles are held by the same person.
4. The bill specifies that SWIB's biennial plan for investment in Wisconsin
must address potential investments in the next four years, rather than five years.
5. The bill changes a SWIB position title from executive assistant to the
executive director to deputy executive director.
6. The bill specifies that the SWIB internal auditor's compliance monitoring
duty is accomplished through periodic internal audits.
7. The bill makes minor changes relating to SWIB's investment authority with
respect to unsecured notes and commercial paper.
8. The bill specifies that current restrictions on reverse repurchase agreements
apply only in the state investment fund.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB906,1 1Section 1. 25.156 (3) and (4) of the statutes are amended to read:
AB906,3,62 25.156 (3) The members of the board shall appoint an investment director or
3the executive assistant to the deputy executive director, internal auditor, chief
4investment officer, chief financial officer, chief legal counsel , or chief risk officer to
5act as assistant director, except that until the appointment is made by the members
6of the board, the executive director may temporarily designate the assistant director.
AB906,4,8 7(4) The members of the board shall promulgate rules restricting the executive
8director, executive assistant to the deputy executive director, internal auditor, chief

1investment officer, chief financial officer, chief legal counsel, chief risk officer,
2investment directors, and employees from having financial interest, directly or
3indirectly, in firms or corporations providing services to the department and
4governing the receipt of gifts or favors therefrom, and also governing personal
5investments of all employees including the executive director, executive assistant to
6the
deputy executive director, internal auditor, chief investment officer, chief
7financial officer, chief legal counsel, chief risk officer, and investment directors to
8prevent conflicts of interest.
AB906,2 9Section 2. 25.16 (2) and (3) of the statutes are amended to read:
AB906,4,2310 25.16 (2) The executive director may appoint a chief legal counsel, chief
11financial officer, chief risk officer, and not more than 11 investment directors and,
12shall appoint a chief investment officer unless the executive director is also the chief
13investment officer,
and shall appoint all other employees necessary to carry out the
14functions of the board, except that the board shall appoint the internal auditor and
15shall participate in the selection of the chief investment officer and investment
16directors and the internal auditor shall appoint his or her staff. The executive
17director shall appoint all employees outside the classified service. Neither the
18executive director, the internal auditor, the chief investment officer, the chief legal
19counsel, the chief financial officer, the chief risk officer, any investment director, nor
20any other employee of the board shall have any financial interest, either directly or
21indirectly, in any firm engaged in the sale or marketing of real estate or investments
22of any kind if it would create a conflict of interest for the investment board, nor shall
23any of them render investment advice to others for remuneration.
AB906,5,3
1(3) The executive director may appoint an a deputy executive assistant
2director. The deputy executive assistant director shall perform the duties prescribed
3by the executive director.
AB906,3 4Section 3. 25.165 (2) (c) of the statutes is amended to read:
AB906,5,115 25.165 (2) (c) Monitor Through periodic internal audits, monitor for compliance
6with applicable legal requirements and with the board's contractual agreements any
7bank, savings and loan association, savings bank, or credit union with which the
8board has entered into a custodial agreement under s. 25.17 (11); any investment
9advisers with which the board has contracted to manage and control board assets
10under s. 25.18 (2) (e); and any other external parties with which the board has
11contracted to provide investment services to the board.
AB906,4 12Section 4. 25.167 of the statutes is renumbered 25.167 (1m), and 25.167 (1m)
13(intro.), as renumbered, is amended to read:
AB906,5,1614 25.167 (1m) (intro.) Under Except as provided in sub. (2m), under the
15supervision of the executive director, the chief investment officer shall do all of the
16following:
AB906,5 17Section 5. 25.167 (2m) of the statutes is created to read:
AB906,5,2018 25.167 (2m) If the executive director and chief investment officer are the same
19person, the executive director shall designate another investment director to take
20the actions specified in sub. (1m).
AB906,6 21Section 6. 25.17 (3) (b) 3. of the statutes is amended to read:
AB906,6,222 25.17 (3) (b) 3. Unsecured notes of corporate issuers, including financial and
23industrial issuers, maturing within 5 years or less from the date of settlement and
24having one of the 2 3 highest ratings given by a nationally recognized rating service,
25but if the corporation issuing such notes has any long-term senior debt issues

1outstanding which also have been rated, the rating must be one of the 3 highest
2ratings so given
.
AB906,7 3Section 7. 25.17 (3) (dg) 2. of the statutes is amended to read:
AB906,6,84 25.17 (3) (dg) 2. Commercial paper maturing within one year or less from the
5date of investment and rated not lower than prime by the national credit office, if the
6issuing corporation has one or more long-term senior debt issues outstanding, each
7of which has one of the 3 highest ratings issued by Moody's investors service or
8Standard & Poor's corporation
a nationally recognized rating service.
AB906,8 9Section 8. 25.17 (70) (intro.) of the statutes is amended to read:
AB906,6,1710 25.17 (70) (intro.) No later than December 31 of every even-numbered year,
11submit to the governor and to the presiding officer of each house of the legislature
12a plan for making investments in this state. The purpose of the plan is to encourage
13the board to make the maximum amount of investments in this state, subject to s.
1425.15 and consistent with the statutory purpose of each trust or fund managed by the
15board. The plan shall discuss potential investments to be made during the
16succeeding 5 4 years beginning in the year after submittal of the plan, and shall
17include, but not be limited to, the following:
AB906,9 18Section 9. 25.18 (1) (intro.), (a), (f) and (m) of the statutes are amended to read:
AB906,6,2119 25.18 (1) (intro.) In addition to the powers and duties enumerated in s. 25.17,
20but subject to s. 25.183, and notwithstanding any other statute except s. 25.183, the
21board may:
AB906,7,422 (a) Notwithstanding s. 20.930 and all provisions of subch. IV of ch. 16, except
23s. 16.753, employ special
Employ legal or investment counsel in any matters arising
24out of the scope of its investment authority. Section 16.753 does not apply to the
25employment of legal or investment counsel for the purpose of assisting the board with

1investments. The employment of special legal counsel shall be with the advice and
2consent of the attorney general whenever such special counsel is to be compensated
3by the board
or operations. Any expense of counsel so employed shall be borne by the
4fund for which the services shall be furnished.
AB906,7,135 (f) Maintain Improve, maintain, occupy, furnish, equip, supply, and repair any
6building or other structure or premises which it owns in fee or in which it owns the
7a beneficial or leasehold interest and, notwithstanding all provisions of subch. IV or
8V of ch. 16, except s. 16.753,
it shall have exclusive authority to make such
9agreements and enter into such contracts as it deems necessary for such purpose.
10Section 16.753 does not apply to agreements and contracts entered into by the board
11for the purpose of assisting the board with investments.
All noncapital costs under
12this paragraph shall be charged to the current income accounts of the funds having
13an interest in the building, structure, or premises.
AB906,7,2114 (m) Notwithstanding all provisions of subchs. IV and V of ch. 16, except s.
1516.753, employ
Employ professionals, contractors , or other agents necessary to
16evaluate or operate any property if a fund managed by the board has an interest in,
17or is considering purchasing or lending money based upon the value of, that property.
18Section 16.753 does not apply to the employment of any person for the purpose of
19assisting the board with investments.
Costs under this paragraph shall be paid by
20the fund and or charged to the appropriate account under s. 40.04 (3) for which the
21costs were incurred
.
AB906,10 22Section 10. 25.18 (1) (o) and (p) of the statutes are repealed.
AB906,11 23Section 11. 25.183 (3) of the statutes is amended to read:
AB906,8,224 25.183 (3) Reverse repurchase agreements. After May 7, 1996, the board may
25not enter into any reverse repurchase agreement in the state investment fund unless

1the repurchase of securities under the agreement is required to occur no later than
2the next business day.
AB906,12 3Section 12. 25.187 (1) of the statutes is renumbered 25.187 (1) (a) and
4amended to read:
AB906,8,125 25.187 (1) (a) In this section, “operating expenditures" include all costs and
6expenses incurred by the investment board for the purpose of operating the board
7and managing the assets of each fund for which the board has management
8responsibility, but does not include costs or expenses incurred under s. 25.18 (1) (a),
9(c), (f) or (m) or (2) (d) or (e)
or (2) or 40.04 (3) (intro.) or incurred in connection with
10information technology purchases, including those contemplated under s. 16.751,
11business travel, recruitment of job applicants, or subscriptions to relevant news or
12industry publications, or office management expenses
.
AB906,13 13Section 13. 25.187 (1) (b) and (c) of the statutes are created to read:
AB906,8,1714 25.187 (1) (b) The investment board's expenditure of operating expenditures
15contemplated by this section is not subject to the provisions of subch. IV of ch. 16, but
16the investment board may, in its discretion, coordinate purchases with the
17department of administration under s. 16.71.
AB906,8,1918 (c) The investment board shall adopt policies and procedures that specify all
19of the following:
AB906,8,2120 1. When the investment board is required to publicly solicit proposals from
21multiple vendors of goods or services.
AB906,8,2222 2. How the investment board is to evaluate proposals from multiple vendors.
AB906,8,2423 3. How the investment board is to assess any conflict of interest a vendor may
24have if the vendor sells goods or services to the investment board.
AB906,14 25Section 14. 25.187 (4) of the statutes is created to read:
AB906,9,6
125.187 (4) The investment board shall establish travel policies for investment
2board employees and job applicants and a schedule for the reimbursement of
3investment board employees and job applicants for travel expenses, which shall take
4into account the maximum rate for lodging expenses incurred in this state under the
5approved uniform travel schedule incorporated under s. 20.916 (8) (b) into the
6current compensation plan under s. 230.12 (1).
AB906,9,77 (End)
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