(1)(a) The Nebraska Investment Council is created. For purposes of the Nebraska State Funds Investment Act, council means the Nebraska Investment Council. The council shall consist of five members, appointed by the Governor with the approval of the Legislature. The State Treasurer, the director of the Nebraska Public Employees Retirement Systems, and except as provided in subdivision (1)(b) of this section, beginning January 1, 2017, the administrator of each retirement system provided for under the Class V School Employees Retirement Act shall serve as nonvoting, ex officio members. One of the appointed members shall be designated chairperson by the Governor.

(b) Beginning September 1, 2024, the director of the Nebraska Public Employees Retirement Systems shall also represent each retirement system provided for under the Class V School Employees Retirement Act.

(2) Each of the appointed members of the council shall serve for a term of five years that begins on January 1 and may be removed by the Governor for cause after notice and an opportunity to be heard. A member may serve until his or her successor's appointment is effective. A member may be reappointed. A successor shall be appointed in the same manner as provided for the members first appointed, and in case of a vacancy caused by death, resignation, or otherwise, the Governor shall appoint a qualified person to fill the vacancy for the unexpired term.

(3) No member of the council shall be personally liable, except in cases of willful dishonesty, gross negligence, or intentional violation of law, for actions relating to his or her duties as a member of the council.

(1) Prior to July 1, 2005, the appointed members of the council shall have at least ten years of experience in the financial affairs of a public or private organization or have at least five years of experience in the field of investment management or analysis. For members appointed on or after July 1, 2005, the appointed members of the council shall have at least seven years of experience in the field of investment management or analysis or have at least twelve years of experience in the financial management of a public or private organization. There is a preference for members who are appointed to have experience in investment management or analysis.

(2) The members serving on July 1, 2005, shall serve for the remainder of their five-year terms which will be extended until the date on which the successor's appointment is effective.

The purpose of the council is to formulate and establish such policies as it may deem necessary and proper which shall govern the methods, practices, and procedures followed by the state investment officer for the investment or reinvestment of state funds and funds described in section 83-133 and the purchase, sale, or exchange of securities as provided by the Nebraska State Funds Investment Act. The council shall meet from time to time as directed by the Governor or the chairperson or as requested by the state investment officer. The members of the council, except the State Treasurer, the director of the Nebraska Public Employees Retirement Systems, and beginning January 1, 2017, each administrator of a retirement system provided for under the Class V School Employees Retirement Act, shall be paid seventy-five dollars per diem. The members shall be reimbursed for expenses incurred in connection with the performance of their duties as members as provided in sections 81-1174 to 81-1177.

(1)(a) The appointed members of the council shall have the responsibility for the investment management of the assets of the retirement systems administered by the Public Employees Retirement Board as provided in section 84-1503, the assets of the Nebraska educational savings plan trust created pursuant to sections 85-1801 to 85-1817, the assets of the achieving a better life experience program pursuant to sections 77-1401 to 77-1409, and beginning January 1, 2017, the assets of each retirement system provided for under the Class V School Employees Retirement Act. Except as provided in subsection (4) of this section, the appointed members shall be deemed fiduciaries with respect to the investment of the assets of the retirement systems, of the Nebraska educational savings plan trust, and of the achieving a better life experience program and shall be held to the standard of conduct of a fiduciary specified in subsection (3) of this section. The nonvoting, ex officio members of the council shall not be deemed fiduciaries.

(b) As fiduciaries, the appointed members of the council and the state investment officer shall discharge their duties with respect to the assets of the retirement systems, of the Nebraska educational savings plan trust, and of the achieving a better life experience program solely in the interests of the members and beneficiaries of the retirement systems or the interests of the participants and beneficiaries of the Nebraska educational savings plan trust and the achieving a better life experience program, as the case may be, for the exclusive purposes of providing benefits to members, members' beneficiaries, participants, and participants' beneficiaries and defraying reasonable expenses incurred within the limitations and according to the powers, duties, and purposes prescribed by law.

(2)(a) The appointed members of the council shall have the responsibility for the investment management of the assets of state funds. The appointed members shall be deemed fiduciaries with respect to the investment of the assets of state funds and shall be held to the standard of conduct of a fiduciary specified in subsection (3) of this section. The nonvoting, ex officio members of the council shall not be deemed fiduciaries.

(b) As fiduciaries, the appointed members of the council and the state investment officer shall discharge their duties with respect to the assets of state funds solely in the interests of the citizens of the state within the limitations and according to the powers, duties, and purposes prescribed by law.

(3) The appointed members of the council shall act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims by diversifying the investments of the assets of the retirement systems, the Nebraska educational savings plan trust, the achieving a better life experience program, and state funds so as to minimize risk of large losses, unless in light of such circumstances it is clearly prudent not to do so. No assets of the retirement systems, the Nebraska educational savings plan trust, or the achieving a better life experience program shall be invested or reinvested if the sole or primary investment objective is for economic development or social purposes or objectives.

(4) Neither the appointed members of the council nor the state investment officer shall be deemed fiduciaries with respect to investments of the assets of a retirement system provided for under the Class V School Employees Retirement Act made by or on behalf of the board of education as defined in section 79-978 or the board of trustees provided for in section 79-980. Neither the council nor any member thereof nor the state investment officer shall be liable for the action or inaction of the board of education or the board of trustees with respect to the investment of the assets of a retirement system provided for under the Class V School Employees Retirement Act, the consequences of any such action or inaction of the board of education or the board of trustees, and any claims, suits, losses, damages, fees, and costs related to such action or inaction or consequences thereof.

The council shall appoint a state investment officer. The appointment shall be subject to the approval of the Governor and a majority of the Legislature. The state investment officer shall be a person well qualified by training to administer and invest the money available for investment, and he or she shall have at least five years of experience in the management of investment portfolios. The state investment officer's salary shall be fixed by the council at not less than twenty-five thousand dollars per year. The state investment officer shall serve without term and may be removed for cause by the council.

The state investment officer shall devote his or her entire time and attention to the duties of his or her office. The state investment officer shall not engage in any other occupation or profession or hold any other public office, appointive or elective. If for any reason the state investment officer is unable to perform the duties of his or her office, or the office is vacant due to death, resignation, or otherwise, the council shall designate an acting state investment officer to serve until the state investment officer is able to act or the vacancy is filled. With the approval of the council, the state investment officer may designate a deputy to perform such acts and duties as the state investment officer shall authorize, subject to the same restrictions as apply to the state investment officer. The deputy shall be bonded or insured as required by section 11-201. The state investment officer shall be responsible for all official acts of the deputy.

The state investment officer shall employ qualified personnel as may be required to carry out the duties and responsibilities required under the Nebraska State Funds Investment Act. Such employees shall be deemed state employees and covered by the State Personnel System pursuant to sections 81-1301 to 81-1368 and other personnel rules or regulations. At the discretion of the Nebraska Investment Council, investment managers who are employees of the council may be exempted from the State Personnel System. The state investment officer shall be exempt from the State Personnel System. All employees shall comply with state accounting regulations and applicable state and federal laws in the discharge of their duties. With the approval of the Governor, the state investment officer may retain counsel, auditors, financial advisors and private consultants on a contract basis or otherwise to render such professional service or advice as he or she may require in the performance of his or her duties.

(1) Except as otherwise specifically provided by law, the state investment officer shall direct the investment and reinvestment of money in all state funds not currently needed and all funds described in section 83-133 and order the purchase, sale, or exchange of securities for such funds. He or she shall notify the State Treasurer of any payment, receipt, or delivery that may be required as a result of any investment decision, which notification shall be the authorization and direction for the State Treasurer to make such disbursement, receipt, or delivery from the appropriate fund.

(2) The council shall have an analysis made of the investment returns that have been achieved on the assets of each retirement system administered by the Public Employees Retirement Board as provided in section 84-1503 and on the assets of each retirement system provided for under the Class V School Employees Retirement Act. By March 31 of each year, the analysis shall be presented to the board and the Nebraska Retirement Systems Committee of the Legislature. The analysis shall be prepared by an independent organization which has demonstrated expertise to perform this type of analysis and for which there exists no conflict of interest in the analysis being provided. The analysis may be waived by the council for any retirement system with assets of less than one million dollars.

(3) By April 10 of each year, the council shall prepare a written plan of action and shall present such plan to the Nebraska Retirement Systems Committee of the Legislature at a public hearing. The plan shall include, but not be limited to, the council's investment portfolios, investment strategies, the duties and limitations of the state investment officer, and an organizational structure of the council's office.

The State Treasurer shall notify the state investment officer as to the amount of money in the General Fund and the funds of any board, commission, department, agency, or official charged with the control of any other state fund not currently needed and available for investment. When it shall appear to the State Treasurer that any such invested money is needed, he or she shall notify the state investment officer who shall make available from the pooled investments the amount required.

The state investment officer shall invest in investments of the nature which individuals of prudence, discretion, and intelligence acquire or retain in dealing with the property of another, and if the state investment officer has special skills or is named on the basis of representations of special skills or expertise, he or she is under a duty to use such skills, subject to the direction of the Nebraska Investment Council.

The Nebraska Investment Council, out of funds available to it, upon the application of any qualified lending agent as defined under the Federal Higher Education Act of 1965, may purchase all student loans which are federally guaranteed, as to principal and interest, and made to Nebraska residents attending Nebraska institutions, which are offered to the Nebraska Investment Council for purchase and shall give preference to such loans when an investment in such loans would be equally as good as any other investment; Provided, such offers shall be in amounts of five thousand dollars or more from a single lending agent.

The Nebraska Investment Council may hold such loans or offer them for sale or resale on such terms and conditions as shall be negotiated with purchasers. Conditions of such sale or resale may be, but shall not be limited to, amounts to be retained for service, degree of servicing requirements, conditions of repurchase and responsibility for collection and reports to the guaranteeing agency of the federal government.

The Nebraska Investment Council may negotiate with the Board of Trustees of the Nebraska State Colleges for the servicing of such loans which may be purchased by the council, retained in its investment portfolio or resold as provided in section 72-1246.02. The council may require such security for the performance of the servicing duties as it may deem necessary to insure full compliance with a servicing agreement.

The Nebraska Investment Council shall obtain the approval of the United States Department of Education before purchasing, selling, or servicing loans pursuant to sections 72-1246.01 to 72-1246.03.

The Nebraska Investment Council may give priority to the investments authorized by section 72-1246.01 and shall liquidate other investments if necessary to meet the demand for such loans; Provided, that any investments made prior to May 24, 1971, may be retained in kind, notwithstanding the provisions of section 72-1246, until such time as in the discretion of the Nebraska Investment Council the same may be sold for the best advantage of the retirement fund. All interest received on such loans shall be credited to the fund from which the loan was made.

Interest, premium, and other income received from investments pursuant to sections 72-1244 and 72-1267 shall be credited to the fund from which the investment was made except as otherwise provided by law.

(1) Any expenses with respect to the purchase, sale, or exchange of any security shall be charged to the fund or funds on behalf of which such purchase, sale, or exchange was made. All other expenses of the state investment officer shall be paid out of appropriations for the office of the state investment officer.

(2) Beginning on March 31, 2016, any expenses with respect to the transfer to and assumption by the council and the state investment officer of the duty and authority to invest the assets of a retirement system provided for under the Class V School Employees Retirement Act shall be charged to the Class V School Employees Retirement Fund established in section 79-9,115. Such expenses shall be paid without the approval of the board of education as defined in section 79-978 or the board of trustees provided for in section 79-980.

(3) Management, custodial, and service costs which are a direct expense of investing the assets of a retirement system provided for under the Class V School Employees Retirement Act may be paid from the income of such assets when it is not prohibited by statute or the Constitution of Nebraska. For purposes of this section, management, custodial, and service costs include investment counsel fees for managing assets, real estate mortgage loan service fees, real estate management fees, and custody fees for fund securities. All such fees shall be approved by the council and the state investment officer.

The State Investment Officer's Cash Fund is created. A pro rata share of the budget appropriated for the council shall be charged to the income of each fund managed, and such charges shall be transferred to the State Investment Officer's Cash Fund. The allocation of charges may be made by any method determined to be reasonably related to actual costs incurred by the council. Approval of the agencies and boards administering these funds shall not be required.

It is the intent of this section to have funds managed by the state investment officer pay a pro rata share of the investment management expense when this is not prohibited by statute or the constitution.

Management, custodial, and service costs which are a direct expense of state funds may be paid from the income of such funds when this is not prohibited by statute or the Constitution of Nebraska. For purposes of this section, management, custodial, and service costs shall include, but not be limited to, investment counsel fees for managing assets, real estate mortgage loan service fees, real estate management fees, and custody fees for fund securities. All such fees shall be approved by the council and the state investment officer.

Beginning on March 31, 2016, a pro rata share of the budget appropriated for the council shall be charged to the income of the Class V School Employees Retirement Fund, and such charges shall be transferred to the State Investment Officer's Cash Fund. The allocation of charges among a retirement system provided for under the Class V School Employees Retirement Act and the other funds managed by the council may be made by any method determined to be reasonably related to actual costs incurred by the council. Approval of the board of education, the board of trustees, or the retirement board, as defined in section 79-978 and as provided for in section 79-980, shall not be required.

All securities purchased or held shall be in the custody of the State Treasurer who may deposit with a fiscal agent in any financial institution, approved by the Nebraska Investment Council, such securities as he shall consider advisable to be held in safekeeping by such agent for collection of principal and interest, or of the proceeds of sale thereof or, at the direction of the state investment officer, the State Treasurer shall have such securities held in the name of a nominee. The State Treasurer shall join with the deputy state treasurer in obtaining for the State of Nebraska a registered nominee from the American Society of Corporate Secretaries and shall hold securities registered in the nominee's name in the same manner as he shall consider appropriate for holding other securities.

Whenever cash funds belonging to the State of Nebraska shall be deposited with any fiscal agent authorized by section 72-1250, the holding thereof shall be and constitute an investment made pursuant to direction of the state investment officer for purposes of subdivision (7) of section 84-602.

The State Treasurer shall collect the interest, premium or other income on and the principal of such securities in his custody as the same become due and payable.

The available money from the General Fund and each board, commission, department, agency, or official charged with the control of any other state funds shall be invested by the state investment officer. On a monthly basis the state investment officer shall notify the Department of Administrative Services and the State Treasurer as to the earned income to be credited pursuant to section 72-1248.

The state investment officer shall report no later than fifteen days after the close of each month to the Governor, the State Treasurer, the Auditor of Public Accounts, the Department of Administrative Services, and the members of the council on the operations for the pooled accounts during such month. The report shall include a summary of investments, purchases, and dealers utilized. Such reports shall be available for public inspection in the office of the state investment officer.

The Auditor of Public Accounts shall conduct, at such time as he or she determines necessary, postaudits of the investment transactions provided for in the Nebraska State Funds Investment Act and shall submit annually a report of his or her findings to the Governor and the state investment officer.

In the event of default in the payment of principal of, or interest on, any investment made by the state investment officer, the State Treasurer may institute the proper proceedings to collect such matured principal or interest, and may, with the approval of the state investment officer, accept for exchange purposes refunding bonds or other evidences of indebtedness. The State Treasurer, with the approval of the state investment officer, may make such compromise, adjustment, or other disposition of the past-due interest or principal in default, or make such compromises, adjustments or other disposition as to future payments of interest or principal as deemed advisable to protect the money invested.

Except as otherwise provided in sections 72-1244 and 72-1267, each board, commission, department, agency, or official that previously was charged with the investment of state funds shall continue in all other respects as provided by law and shall continue to have all other powers and shall exercise all the functions and duties fixed or imposed upon it by law.

The state investment officer may provide assistance and furnish advice regarding the investment of money to any political subdivision of the State of Nebraska whenever such advice is requested by a political subdivision. In connection with the rendering of such service, the state investment officer may charge and collect any fee he determines to be reasonable.

Sections 72-1237 to 72-1260 shall be known and may be cited as the Nebraska State Funds Investment Act.