Wisconsin Stat. § 25.182 now states that SWIB may manage the Core and Variable Funds “in any manner” consistent with the standard of prudence “in addition to” the management authority that is enumerated elsewhere in the statutes, and “notwithstanding” any limitation provided elsewhere in the statutes. SWIB’s investment of monies in the Variable Fund remains subject to Wis. Stat. § 25.17(5), which requires Variable Fund assets to be invested primarily in equity securities. See Wis. Stat. § 25.182. MAY SWIB MANAGE THE MONIES IN WAYS OTHER
THAN THOSE ARTICULATED ON THE LEGAL LIST?
Your first question turns on the meaning of “in addition to” and “notwithstanding” in Wis. Stat. § 25.182, as amended. “Statutory interpretation begins with the language of the statute. If the meaning of the statute is plain, we ordinarily stop the inquiry. Statutory language is given its common, ordinary, and accepted meaning, except that technical or specially-defined words or phrases are given their technical or special definitional meaning.” See State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 45, 271 Wis.2d 633, 681 N.W.2d 110 (citations omitted). “Notwithstanding,” commonly used in our statutes, has generally been accepted by courts as meaning “in spite of.” In Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993), the U.S. Supreme Court held, “the use of such a ‘notwithstanding’ clause clearly signals the drafter’s intention that the notwithstanding section overrides conflicting provisions of any other section.” See also Bartholomew v. Wisconsin Patients Compensation Fund, 2006 WI 91, ¶ 84, 293 Wis. 2d 38, 717 N.W.2d 216. A dictionary is used to ascertain the meaning of non-technical statutory terms. See Garcia v. Mazda Motor of America, Inc., 2004 WI 93, ¶ 14, 273 Wis. 2d 612, 682 N.W.2d 365. The dictionary definition of “in addition to” is “over and above.” Webster’s Third New International Dictionary (1986). Wisconsin Stat. § 25.182 gives SWIB the power to invest “in addition to”—“over and above”—its other powers. It allows SWIB to make such management decisions “notwithstanding”—“in spite of”—any other limitations in the statutes. Answering your first question, I conclude that SWIB’s management authority over the Core and Variable Funds thus now includes the authority to manage the monies in ways other than those articulated on the “legal list,” as long as its management meets the standard of prudence under Wis. Stat. § 25.15(2), and as long as the assets of the Variable Fund are invested primarily in equity securities. The legislative history confirms this reading. Courts have approved the use of legislative history to confirm the plain meaning of statutory language. See State v. Burris, 2004 WI 91, ¶ 32, 273 Wis. 2d 294, 682 N.W.2d 812. The legislative history of 2007 Act 212 indicates that its purpose was to expand SWIB’s management authority beyond the “legal list”:
Under this bill, instead of its investment authority being limited to the authorized lists, SWIB may manage the money and property of the core trust and the variable trust in any manner that does not violate SWIB’s standard of responsibility. However, SWIB must continue to invest assets of the variable trust primarily in equity securities.
2007 Assem. Bill 623, Analysis by the Legislative Reference Bureau.
IS THE “LEGAL LIST” OF INVESTMENTS SWIB
MAY MAKE TO BE GIVEN PRECEDENCE?
Your second question is whether the statute articulates a presumption for investments on the “legal list” over other investments that SWIB could make—i.e., that SWIB should confine its investments to the “legal list” unless it finds that it would not be prudent to do so. I find no indication of such a preference or presumption in 2007 Wisconsin Act 212. IS SWIB REQUIRED TO MEET A HIGHER STANDARD
WHEN MAKING INVESTMENTS OTHER THAN THOSE
ON THE “LEGAL LIST”?
Finally, your third question is whether SWIB must satisfy a higher standard of prudence in cases where it has chosen to make investments other than from those on the “legal list.” Again, I conclude that the answer is “no.” Prior to the passage of 2007 Wisconsin Act 212, SWIB was held to a standard of prudence in making investments. See Wis. Stat. § 25.15(2)(a) (2005-06). The fact that a trustee selected an investment from the “legal list” did not in and of itself constitute prudence; the trustee is required to meet the standard in choosing from among those options. See, e.g. Estate of Collins v. Hughes, 72 Cal. App. 3d 663, 672-73 (Cal. Ct. App. 1977) (trustee’s choice of enumerated investment does not in itself satisfy the standard of care). The standard of prudence articulated in Wis. Stat. § 25.15(2), which considers the nature of the resources and circumstances surrounding a trust, implicitly takes into account the trustee’s scope of powers in assessing the duty of prudence. See Welch v. Welch, 235 Wis. 282, 312, 290 N.W. 758 (1940). A trustee’s ability to invest in a wide spectrum of investment options carries with it the duty to wield that power with care, skill, prudence and diligence. CONCLUSIONS
I conclude that 2007 Wisconsin Act 212 confers upon SWIB the power to make investments of assets in the Core and Variable Funds that meet the standard of prudence under Wis. Stat. § 25.15(2), even if those investments are not on the “legal list.” SWIB remains subject to Wis. Stat. § 25.17(5), which requires that Variable Fund assets be invested primarily in equity securities. SWIB is not required to determine that investing solely in the “legal list” would not meet the standard of prudence prior to choosing a different investment. The standard of prudence remains the same regardless of whether SWIB’s management choice is one enumerated on the “legal list.” The standard of prudence takes into account, however, SWIB’s expanded power to select among management options for the two Trusts. Sincerely,
J.B. Van Hollen
Attorney General
JBVH:CG:lkf
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