An Act relating to property; amending 6 O.S. 1991, Section 1020, which relates to existing trust powers of certain corporations; expanding grant of powers; enacting the Oklahoma Charitable Fiduciary Act; making legislative findings; defining terms; specifying fiduciary capacities of charitable organizations; authorizing charitable organizations to exercise certain powers as trustees; requiring certain fidelity bonds; prescribing procedures related to fidelity bonds; defining terms; specifying powers of charitable organizations acting as trustees of charitable trusts; prohibiting certain actions by charitable organizations with respect to common charitable trust funds; prescribing standards; requiring records; requiring periodic reporting; specifying content of report; providing for communication of report to certain persons; authorizing recovery of costs; providing accounting not required unless pursuant to judicial action; authorizing accounting under certain circumstances; prescribing procedures; prohibiting certain persons from deriving economic benefit from administration of trust funds; prohibiting certain financial transactions; requiring audit; prescribing procedures with respect to audit; providing for construction of audit provisions; specifying inapplicability of Oklahoma Open Records Act and Oklahoma Open Meeting Act; providing for applicability of act to entities and certain fiduciary relationships; providing for inapplicability of act to certain acts of charitable organizations; providing conflicting provisions of certain statutory enactments not applicable; providing exception; authorizing amendment of trusts for purposes of act; amending 70 O.S. 1991, Section 3206, which relates to powers of the Oklahoma State Regents for Higher Education; adding requirement regarding investment of monies; amending 70 O.S. 1991, Section 3954, as last amended by Section 1, Chapter 391, O.S.L. 1992 (70 O.S. Supp. 1996, Section 3954), which relates to the Oklahoma State Regents for Higher Education duties as trustees of certain funds; deleting restrictions on investments; providing for codification; and declaring an emergency.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:

SECTION 1. AMENDATORY 6 O.S. 1991, Section 1020, is amended to read as follows:

Section 1020. Section 1002 of this act shall not be construed to deny to religious, charitable, educational, benevolent or scientific corporations the right to exercise any trust powers granted to them by existing law or any trust agreement.

SECTION 2. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.1 of Title 60, unless there is created a duplication in numbering, reads as follows:

This act shall be known and may be cited as the "Oklahoma Charitable Fiduciary Act".

SECTION 3. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.2 of Title 60, unless there is created a duplication in numbering, reads as follows:

A. The Legislature finds that:

1. Charitable, religious, and educational and eleemosynary organizations perform essential and needed services in the state;

2. Clarification is needed regarding the capability of charitable, religious, educational, and eleemosynary organizations to act as a fiduciary in obtaining and administering present and future gifts benefitting the charitable, religious, educational, and eleemosynary purposes of such organizations and their affiliates; and

3. Clarification is needed regarding the fiduciary powers of charitable, religious, educational, and eleemosynary organizations in the administration of trusts which provide for present or future gifts benefitting the charitable, religious, educational, and eleemosynary purposes of such organizations.

B. The purpose of this act is to authorize charitable, religious, educational, and eleemosynary organizations to act as a fiduciary and to clarify the powers of such organizations when acting in a permitted fiduciary capacity.

SECTION 4. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.3 of Title 60, unless there is created a duplication in numbering, reads as follows:

As used in this act:

1. "Charitable organization" means an incorporated or unincorporated organization:

a. domiciled in the State of Oklahoma,

b. recognized under Section 501(c)(3) of the Internal Revenue Code as being organized and operated exclusively for charitable, religious, educational, or other eleemosynary purposes,

c. which has been in existence for at least five (5) years if the organization administers charitable trusts which benefit private individuals,

d. having a governing board of which a majority of its members are persons who are qualified by education or experience to provide direction of the charitable organization in the administration of its charitable trusts,

e. having a governing board of which at least forty percent (40%) of its members are residents of the State of Oklahoma, provided that upon proper application the Attorney General may waive this requirement, and

f. which has filed the comprehensive annual audit required by Section 10 of this act;

2. "Charitable trust" means:

a. a trust which qualifies as a charitable remainder unitrust under the Internal Revenue Code,

b. a trust which qualifies as a charitable remainder annuity trust under the Internal Revenue Code,

c. a trust which is described as a charitable lead trust in the Internal Revenue Code,

d. a fund which qualifies as a pooled income fund under the Internal Revenue Code,

e. an institutional endowment fund as that term is defined in the Oklahoma Uniform Management of Institutional Endowment Funds Act,

f. a trust providing for the welfare, maintenance, support, and education of minor issue of a decedent who has made a gift in the document creating the trust for the benefit of the minor issue to the charitable organization administering the trust or one or more of its affiliated charitable organizations at the decedent's death and the total of all gifts made to the charitable organization administering the trust or one or more of its affiliated charitable organizations at the decedent's death is as large as the largest distribution made to another person who is not a charitable organization, but in no event shall the total of all gifts made to the charitable organization administering the trust or one or more of its affiliated charitable organizations be less than twenty-five percent (25%) of the property which is available for distribution, or

g. any other irrevocable or revocable trust in which:

            (1) one or more gifts of either trust income or principal, whether outright or in trust, are irrevocably made to or for the benefit of a charitable organization,

            (2) if the irrevocable gift is of income or principal which is distributed before the termination of the trust, the total of all such irrevocable gifts of income or principal made to the charitable organization administering the trust or one or more of its affiliated charitable organizations is as large as the largest distribution to another beneficiary entitled to receive distributions of income or principal from the trust before the termination of the trust who is not the charitable organization administering the trust or an affiliated charitable organization, but in no event shall the total of all such irrevocable gifts of income or principal made to the charitable organization administering the trust or one or more of its affiliated charitable organizations before the termination of the trust be less than twenty-five percent (25%) of the income or principal available for distribution from the trust,

            (3) if the irrevocable gift is of the remainder of the trust which is distributed upon the termination of the trust, the total of all irrevocable gifts of the remainder of the trust made to the charitable organization administering the trust or one or more of its affiliated charitable organizations is as large as the largest distribution made to another remainderman who is not the charitable organization administering the trust or an affiliated charitable organization, but in no event shall the total of all irrevocable gifts of the remainder of the trust made to the charitable organization administering the trust or one or more of its affiliated charitable organizations be less than twenty-five percent (25%) of the remainder of the trust which is available for distribution at the termination of the trust, and

            (4) if distributions of income from the trust are made to beneficiaries who are not charitable organizations, such distributions are in an amount specified by the donor in the governing instrument, or, if not in an amount specified by the donor in the governing instrument, are in an amount not less than five percent (5%) of the value of the principal of the trust determined annually, reduced by distributions of current income from the trust to charitable organizations, if any; and

3. "Affiliated charitable organization" means another charitable organization which directly or indirectly controls or is under direct or indirect common control with the charitable organization acting in a fiduciary capacity.

SECTION 5. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.4 of Title 60, unless there is created a duplication in numbering, reads as follows:

Charitable organizations shall be permitted to act in the following fiduciary capacities within this state:

1. To act as trustee under charitable trusts created by will, inter vivos declaration of trust or trust agreement, corporate resolution, or order, judgment or decree of any of the courts of record of this state or of any state or of the United States;

2. To accept and execute all charitable trusts and perform such duties of every description as may be committed to them under such trust by any person or persons, any corporation, or any order, judgment or decree of any of the courts of record of this state or of any state or of the United States provided that such duties are not inconsistent with the charitable, religious, educational, or other eleemosynary purposes of the charitable organization;

3. To take, accept and hold by gift, grant, assignment, transfer, devise or bequest of any person or persons, any corporation, or any order, judgment or decree of any of the courts of record of this state or of any state or of the United States any real or personal property as a charitable trust;

4. To execute and perform any and all charitable trusts upon the terms, conditions, limitations and restrictions which may be declared, imposed, established or agreed upon in and by the person or persons, corporation, or order, judgment, decree, gift, grant, assignment, transfer, devise or bequest establishing such trust;

5. To act as attorney-in-fact for any person establishing a charitable trust; and

6. To act as personal representative in the probate of the will of any decedent, whether such decedent was a resident of this state or not, and whether the probate of the will of such decedent is by original or ancillary proceeding, where the will makes a present or future gift to or confers a present or future benefit on the charitable organization serving as personal representative or one or more of its affiliated charitable organizations and the total of all gifts made to the charitable organization serving as personal representative or one or more of its affiliated charitable organizations in the will is as large as the largest distribution made to another person who is not a charitable organization, but in no event shall the total of all gifts made to the charitable organization serving as personal representative or one or more of its affiliated charitable organizations in the will be less than twenty-five percent (25%) of the estate which is available for distribution.

SECTION 6. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.5 of Title 60, unless there is created a duplication in numbering, reads as follows:

In addition to the powers conferred on fiduciaries by the Oklahoma Trust Act, the Oklahoma Uniform Management of Institutional Endowment Funds Act, and the Oklahoma Uniform Prudent Investor Act, all charitable organizations acting as trustees of charitable trusts shall expressly be permitted to exercise the following powers:

1. To limit the investment of property received in trust to investments in real or personal property; securities including bonds, stocks, all kinds of negotiable and nonnegotiable paper; and other investment instruments, which are consistent with the charitable, religious, educational, or other eleemosynary purposes of the charitable organization;

2. To make distributions from an institutional endowment fund as that term is defined in the Oklahoma Uniform Management of Institutional Endowment Funds Act in a manner that will provide a consistent source of funds to charitable organizations benefited by such charitable trusts;

3. For assets held in an institutional endowment fund as that term is defined in the Oklahoma Uniform Management of Institutional Endowment Funds Act, to invest in loans of money upon adequate collateral security to affiliated charitable organizations provided that the charitable organization serving in a fiduciary capacity conforms to the standard for care set forth in the document creating the trust or, in the absence of a standard of care in the document creating the trust, to the standard of care for fiduciaries as set forth in the Oklahoma Trust Code, the Oklahoma Uniform Institutional Endowment Funds Act, and the Oklahoma Uniform Prudent Investor Act, and provided further that the loan furthers the charitable, religious, educational and other eleemosynary purposes of the affiliated charitable organization;

4. To recover costs and expenses to include a reasonable charge for administrative overhead incurred in administering charitable trusts to include costs incurred for investment counselors, advisors and agents; and

5. To delegate the investment of assets of charitable trusts and the administration of charitable trusts to state banks in Oklahoma having trust powers, national banking associations having trust powers, and trust companies having trust powers.

SECTION 7. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.6 of Title 60, unless there is created a duplication in numbering, reads as follows:

A. Governing board must require fidelity bonds. The governing board of a charitable organization serving as trustee of a charitable trust shall require good and sufficient fidelity bonds on all officers and employees who are involved in the funding and administration of a charitable trust, whether or not they are paid a salary or other compensation. The fidelity bonds shall indemnify the charitable trusts administered by a charitable organization for loss sustained to a charitable trust as the result of dishonest, fraudulent, or criminal conduct by the officers and employees of the charitable organization, whether acting independently or in collusion with any person or persons.

B. Form and premiums of fidelity bonds. The governing board of a charitable organization serving as trustee of a charitable trust shall determine the amount and form of its fidelity bonds. The premiums for its fidelity bonds shall be paid by the charitable organization and the cost of premiums may be included in the administrative overhead of the charitable organization.

C. Annual review of fidelity bonds. At least once each calendar year the governing board of a charitable organization serving as trustee of a charitable trust shall evaluate all known elements and factors constituting its risk of loss due to dishonest, fraudulent, or criminal conduct by its officers and employees and determine if the amount and form of its fidelity bonds are sufficient. The governing board shall then require fidelity bonds in such amounts and form as are sufficient to protect its charitable trusts from such risk or hazard. The action of the governing board in determining the amount and form of its fidelity bonds shall be recorded in the minutes of the governing board.

SECTION 8. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.7 of Title 60, unless there is created a duplication in numbering, reads as follows:

A. Definitions. For purposes of this section:

1. "Common charitable trust fund" means a fund composed of assets from two or more charitable trusts and other charitable assets which are pooled for investment;

2. "Other charitable assets" means assets owned by an affiliated charitable organization or assets contributed to the charitable organization administering the common charitable trust fund in exchange for the issuance of charitable gift annuity contracts; and

3. "Affiliated charitable organization" means another charitable organization which directly or indirectly controls or is under direct or indirect common control with the charitable organization administering a common charitable trust fund.

B. Powers. Any charitable organization acting as a trustee of charitable trusts in this state may:

1. Establish one or more common charitable trust funds for the exclusive purpose of furnishing investments to itself as fiduciary, to itself and others as cofiduciaries, or to affiliated charitable organizations;

2. Invest funds which it holds for investment in such common charitable trust funds, unless:

            a. the investment is prohibited by the instrument, judgment, decree, or order creating the fiduciary relationship,

            b. consent to investment in the common charitable trust fund is intentionally withheld in writing by a cofiduciary, or

            c. a cofiduciary that is not a charitable organization has the right to direct the management of the common charitable trust fund; and

3. Employ and delegate to investment advisors, investment counselors, state banks in Oklahoma having trust powers, national banking associations having trust powers, and trust companies having trust powers the discretion to make specific investment decisions provided that the charitable organization shall at all times maintain ultimate control of the management of the common charitable trust fund.

C. Common charitable trust fund investments.

1. A charitable organization administering a common charitable trust fund shall not commingle its administrative and operating funds with its common charitable trust funds but may place its endowment and funds its governing board has designated as endowment in its common charitable trust funds.

2. Each charitable trust and each other charitable asset shall be deemed to own a proportionate share of each asset of the common charitable trust fund.

3. In determining whether the investment in the common charitable trust fund by the charitable trust is a proper investment for assets held by a fiduciary, the charitable organization acting as fiduciary may consider the common charitable trust fund as a whole and shall not be prohibited from making the investment if any one or more of the assets of the common charitable trust fund are nonincome producing or might not otherwise be considered proper investments for a fiduciary account.

4. The charitable organization administering a common charitable trust fund may limit investments in its common charitable trust funds to investments which are compatible with or further the charitable, religious, educational, or other eleemosynary purposes of the charitable organization administering the common charitable trust fund.

5. The charitable organization administering a common charitable trust fund consisting solely of assets held in an institutional endowment fund, as that term is defined in the Oklahoma Uniform Management of Institutional Endowment Funds Act, may invest such assets in loans upon adequate collateral security to an affiliated charitable organization provided that the charitable organization administering the common charitable trust fund conforms to the standard for care set forth in the documents creating the trusts or, in the absence of a standard of care in the documents creating the trusts, to the standard of care for fiduciaries as set forth in the Oklahoma Trust Code, the Oklahoma Uniform Institutional Endowment Funds Act, and the Oklahoma Uniform Prudent Investor Act, and provided further that the loan furthers the charitable, religious, educational and other eleemosynary purposes of the affiliated charitable organization.

6. In selecting investments and when making investment decisions pursuant to this subsection, the charitable organization shall be bound by the provisions of this act, the Oklahoma Trust Act, the Oklahoma Uniform Management of Institutional Endowment Funds Act, and the Oklahoma Uniform Prudent Investor Act, unless otherwise provided by law.

7. Nothing in this subsection shall diminish the standard of care of a fiduciary of charitable trust funds or institutional endowment funds.

D. Reporting.

1. The charitable organization administering a common charitable trust fund shall keep records which shall at all times show all necessary and proper matters related to the administration of the common charitable trust fund to include the proportionate interest in the common charitable trust fund of each trust or investment account of an affiliated charitable organization.

2. Within one hundred twenty (120) days following the end of the common charitable trust fund's fiscal year, the charitable organization administering a common charitable trust fund shall make a report of the condition of the common charitable trust fund. This report shall include, as of the date of the report, a list of the investments comprising the common charitable trust fund and the value placed on each investment on such list by the charitable organization. The report shall also include a statement of income and disbursements since the last report and appropriate comments as to any investment in default as to payment of principal or interest. The reasonable expenses of preparing the report may be charged to the common charitable trust fund.

3. The charitable organization shall send a copy of the latest report required by this subsection annually to each person to whom a regular periodic accounting of the trusts or other charitable assets participating in the common charitable trust fund ordinarily would be rendered, or shall advise each such person annually that the report is available and that a copy will be furnished without charge upon request.

E. Recovery of costs. The charitable organization administering a common charitable trust fund may recover its costs of administration of the common charitable trust fund to include a reasonable charge for administrative overhead and the fees and costs of investment advisors, counselors and agents.

F. Accounting to court. Unless ordered by a court of competent jurisdiction, the charitable organization administering common charitable trust funds is not required to render an accounting to the court with regard to such funds. The charitable organization administering a common charitable trust fund may, by application to the district court, secure approval of such an accounting after such notice, and on such conditions as the court may establish.

SECTION 9. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.8 of Title 60, unless there is created a duplication in numbering, reads as follows:

No private inurement.

1. Employees, officers, and members of the governing board of the charitable organization administering a charitable trust or the common charitable trust fund shall not receive commissions, bonuses, or other remuneration based on the solicitation of charitable trusts or investment of assets in the common charitable trust fund.

2. Employees, officers, and members of the governing board of the charitable organization administering a charitable trust or the common charitable trust fund shall not receive loans, gifts, or other pecuniary benefits from a charitable trust or the common charitable trust fund except that employees and officers of the charitable organization may receive reasonable compensation for their employment as a part of the administrative overhead of the charitable organization administering a charitable trust or the common charitable trust fund.

SECTION 10. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.9 of Title 60, unless there is created a duplication in numbering, reads as follows:

Each year a charitable organization administering charitable trusts shall have prepared a comprehensive annual audit conforming to generally accepted accounting principles which is certified by an independent certified public accounting firm. A copy of this annual audit shall be delivered to the Oklahoma Banking Department within ninety (90) days of receipt of the final audit report by the charitable organization. The Oklahoma Banking Department shall serve only as a depository of the annual audits received by it but the audit reports shall be made available for inspection by the public. Nothing in this provision shall be construed either to authorize the Oklahoma Banking Department to exercise regulatory authority over charitable organizations exercising the powers and rights granted by this act or to create any duty on the Oklahoma Banking Department to enforce any provision of this act, including the obligation of a charitable organization to submit an annual audit.

SECTION 11. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.10 of Title 60, unless there is created a duplication in numbering, reads as follows:

Nothing herein shall be construed to subject a charitable organization to the Oklahoma Open Records Act or the Oklahoma Open Meeting Act, provided however that the annual audit reports which are in the possession of the Oklahoma Banking Department because of having been delivered by charitable organizations pursuant to Section 10 of this act shall be deemed a "record" as defined in the Oklahoma Open Records Act.

SECTION 12. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.11 of Title 60, unless there is created a duplication in numbering, reads as follows:

Subject to Section 14 of this act, the provisions of this act shall apply to charitable trusts and fiduciary relationships of charitable organizations in existence at the time this act takes effect or thereafter established and to resolve the uncertainties surrounding the administration of charitable trusts by charitable organizations and the exercise of the fiduciary powers set forth in this act. Nothing in this act shall govern, control, or restrict the activities of a charitable organization when acting in a nonfiduciary capacity on behalf of any third party.

SECTION 13. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.12 of Title 60, unless there is created a duplication in numbering, reads as follows:

The provisions of Section 161 of Title 60 of the Oklahoma Statutes and of the Oklahoma Trust Act, Sections 175.1 to 175.56, inclusive, of Title 60 of the Oklahoma Statutes which are in conflict with this act are not applicable to charitable trusts. Provided however, with the exception of such provisions that are in conflict, charitable organizations shall be subject to all other provisions of law, now existing and hereafter adopted or adjudicated, which affect fiduciary responsibilities.

SECTION 14. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 301.13 of Title 60, unless there is created a duplication in numbering, reads as follows:

Charitable organizations administering trusts that are not charitable trusts as defined in this act as of ninety (90) days after the effective date of this act or September 1, 1997, whichever date is the first to occur, shall be permitted to continue administering those trusts until these trusts terminate.

SECTION 15. AMENDATORY 70 O.S. 1991, Section 3206, is amended to read as follows:

Section 3206. As provided in Article XIII-A of the Constitution of Oklahoma, the State Regents shall constitute a coordinating board of control for all state educational institutions, with the following specific powers:

(a) It shall prescribe standards of higher education applicable to each institution.

(b) It shall determine the functions and courses of study in each of the institutions to conform to the standards prescribed.

(c) It shall grant degrees and other forms of academic recognition for completion of the prescribed courses in all of such institutions.

(d) It shall recommend to the State Legislature the budget allocations to each institution.

(e) It shall have the power to recommend to the Legislature proposed fees for all of such institutions, and any such fees shall be effective only within the limits prescribed by the Legislature, after taking due cognizance of expressed legislative intent.

(f) It shall allocate funds to each institution according to its needs and functions from appropriations made by the Legislature.

(g) It may coordinate private, denominational and other institutions of higher learning with the State System under regulations set forth by the State Regents.

Among other powers and duties, the State Regents shall:

(h) Prescribe standards for admission to, retention in, and graduation from state educational institutions.

(i) Accept federal funds and grants and use the same in accordance with federal requirements; and accept and disburse grants, gifts, devises, bequests and other monies and property from foundations, corporations and individuals; and establish, award and disburse scholarships and scholarship funds and rewards for merit from any funds available for such purpose.

(j) Allocate revolving and other non-state-appropriated educational and general funds.

(k) Transfer from one institution to another any property belonging to such institution when no longer needed by it and when needed by another institution to accomplish its functions.

(l) Prepare and publish biennially a report to the Governor, the Legislature, and institutions, setting forth the progress, needs, and recommendations of state educational institutions and of the State Regents; conduct studies, surveys and research projects to gather information about the needs of state educational institutions and make such additional reports and recommendations as it deems necessary or as the Governor or the Legislature may direct, and publish such information obtained as may be considered worthy of dissemination.

(m) Any monies which it is authorized to invest shall be invested with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(n) Exercise all powers necessary or convenient to accomplish the purposes and objectives of Article XIII-A of the Constitution of Oklahoma.

SECTION 16. AMENDATORY 70 O.S. 1991, Section 3954, as last amended by Section 1, Chapter 391, O.S.L. 1992 (70 O.S. Supp. 1996, Section 3954), is amended to read as follows:

Section 3954. A. The Oklahoma State Regents for Higher Education shall discharge their duties as trustees of the Oklahoma State Regents' Endowment Trust Fund, as trustees of the Oklahoma State Regents' Academic Scholars Trust Fund, and as trustees of the Oklahoma Higher Learning Access Trust Fund, hereafter "Trust Funds":

1. With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

2. By diversifying the investments of the Trust Funds so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

3. In accordance with the laws, documents and instruments governing the Trust Funds.

B. The monies of the Trust Funds shall be invested only in assets eligible for the investment of funds of legal reserve life insurance companies in this state as provided for in Sections 1602 through 1611, 1613 through 1620, and 1622 through 1624 of Title 36 of the Oklahoma Statutes. The term "admitted assets" shall mean the amount of the monies of the Trust Funds, and the provisions relating to limitation of investments as a percentage of surplus and loans to policyholders shall be inapplicable with respect to investment of the monies of the Trust Funds. The monies of the Trust Funds may be invested in certificates of indebtedness or such other enforceable evidences of obligation as may be utilized in rights-of-way acquisitions by the Oklahoma Department of Transportation. The monies of the Trust Funds may also be invested in bonds secured by first mortgages, pass-through securities, and insured participation certificates representing interests in first mortgages or insured mortgage pass-through certificates on one- to four-family residences located within this state.

C. The State Regents may procure insurance indemnifying the members of the State Regents from personal loss or accountability from liability resulting from a member's action or inaction as a trustee.

D. C. The State Regents may establish an investment committee for any of the Trust Funds or any combination of such Trust Funds. Such investment committee shall be composed of members of the State Regents appointed by the chairman of the State Regents. The committee shall make recommendations to the entire membership of the State Regents on all matters related to the choice of custodians and managers of the assets of the Trust Funds, on the establishment of investment and fund management guidelines, and in planning future investment policy. The committee shall have no authority to act on behalf of the State Regents in any circumstances whatsoever. No recommendation of the committee shall have effect as an action of the State Regents nor take effect without the approval of the State Regents.

E. D. The State Regents may retain qualified investment managers to provide for the investment of the monies of the Trust Funds and may pay the fees for the services of such inves tment managers from the investment proceeds attributable to each of the Trust Funds. The investment managers shall be chosen by a solicitation of proposals on a competitive bid basis pursuant to standards set by the State Regents. Subject to the overall investment guidelines set by the State Regents, the investment managers shall have full discretion in the management of those monies of the Trust Funds allocated to the investment managers. The State Regents shall manage those monies not specifically allocated to the investment managers. The monies of the Trust Funds allocated to the investment managers shall be actively managed by the investment managers, which may include selling investments and realizing losses if such action is considered advantageous to longer term return maximization. Because of the total return objective, no distinction shall be made for management and performance evaluation purposes between realized and unrealized capital gains and losses.

F. E. Funds and revenues for investment by the investment managers or the State Regents shall be placed with a custodian selected by the State Regents. Payment of the fees for the custodians' services may be paid from the applicable Trust Fund. The custodian shall be a bank or trust company offering pension fund master trustee and master custodial services. The custodian shall be chosen by a solicitation of proposals on a competitive bid basis pursuant to standards set by the State Regents. In compliance with the investment policy guidelines of the State Regents, the custodian bank or trust company shall be contractually responsible for ensuring that all monies of the Trust Funds are invested in income-producing investment vehicles at all times. If a custodian bank or trust company has not received direction from the investment managers of the Trust Funds as to the investment of the monies of the Trust Funds in specific investment vehicles, the custodian bank or trust company shall be contractually responsible to the State Regents for investing the monies in appropriately collateralized short-term interest-bearing investment vehicles.

G. F. By November 1, 1989, and prior to August 1 of each year thereafter, the State Regents shall develop written investment plans for the Trust Funds.

H. G. The State Regents shall compile quarterly financial reports of all the funds and accounts of the Oklahoma State Regents' Endowment Trust Fund, the Oklahoma State Regents' Academic Scholars Trust Fund, and the Oklahoma Higher Learning Access Trust Fund on a fiscal year basis. The reports shall include several relevant measures of investment value, including acquisition cost and current fair market value with appropriate summaries of total holdings and returns. The reports shall contain combined and individual rates of returns of the investment managers by category of investment, over periods of time. The reports shall be distributed to the Director of the Legislative Service Bureau and the Chairman of the Joint Committee on Fiscal Operations.

I. H. After July 1 and before October 1 of each year, the State Regents shall publish three annual reports presented in simple and easily understood language. The reports shall be submitted to the Governor, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Director of the Legislative Service Bureau, and the Chairman of the Joint Committee on Fiscal Operations. The annual reports shall cover the operation of the Oklahoma State Regents' Endowment Trust Fund, the Oklahoma State Regents' Academic Scholars Trust Fund, and the Oklahoma Higher Learning Access Trust Fund during the past fiscal year, including income, disbursements, and the financial condition of the Trust Funds at the end of the fiscal year. The annual reports shall also contain the information issued in the quarterly reports required pursuant to subsection H G of this section as well as a summary of the results of the most recent actuarial valuation to include total assets, total liabilities, unfunded liability or over-funded status, contributions and any other information deemed relevant by the State Regents.

SECTION 17. It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval.

Passed the House of Representatives the 9th day of April, 1997.

/s/______________________________________________
Speaker of the House
 of Representatives

Passed the Senate the 2nd day of April, 1997.

/s/______________________________________________
President of the Senate

Approved by the Governor of the State of Oklahoma this 15^th day of April, 1997.

/s/______________________________________________
Governor of the State of Oklahoma