HB1241 (As Introduced) - 1998 Regular Session

MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Public Health and Welfare; Appropriations

By: Representatives Moody, Flaggs, Holland, Barnett (92nd), Bourdeaux, Fredericks, Grist, Holden, Howell, Hudson, Miller, Moak, Peranich, Read, Robertson, Stevens, Clarke

House Bill 1241

AN ACT TO CREATE NEW SECTIONS TO BE CODIFIED AS SECTIONS 43-13-501 THROUGH 43-13-513, MISSISSIPPI CODE OF 1972, TO ESTABLISH A HEALTH CARE TRUST FUND INTO WHICH SHALL BE DEPOSITED MONIES FROM THE SETTLEMENT OF THE LAWSUIT AGAINST TOBACCO COMPANIES BY THE STATE OF MISSISSIPPI; TO SPECIFY THAT MONIES IN THE TRUST FUND SHALL BE USED ONLY FOR FINANCING CERTAIN HEALTH CARE PROGRAMS; TO PROVIDE THAT THE TRUST FUND SHALL BE ADMINISTERED BY THE HEALTH CARE TRUST AUTHORITY; TO PROVIDE FOR THE MEMBERSHIP OF AND PRESCRIBE THE POWERS AND DUTIES OF THE TRUST AUTHORITY; TO SPECIFY THE PERMISSIBLE INVESTMENTS IN WHICH THE MONIES IN THE TRUST FUND MAY BE INVESTED; TO ALLOW THE INVASION OF THE PRINCIPAL OF THE TRUST FUND UNDER CERTAIN CIRCUMSTANCES; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The following shall be codified as Section 43-13-501, Mississippi Code of 1972:

43-13-501. Title of article. This article is entitled and may be cited as the "Mississippi Health Care Trust Fund Act of 1998."

SECTION 2. The following shall be codified as Section 43-13-503, Mississippi Code of 1972:

43-13-503. Purposes. It is declared by the Legislature that the monies received by the State of Mississippi from tobacco companies in settlement of a certain lawsuit brought against those companies by the State of Mississippi, or as a result of the settlement of any lawsuit brought against tobacco companies by another state, should be applied toward improving the health and health care of the citizens and residents of the state. It is the intent of the Legislature by this article to provide the manner and means necessary to carry out those purposes.

SECTION 3. The following shall be codified as Section 43-13-505, Mississippi Code of 1972:

43-13-505. Definitions. When used in this article, the following definitions shall apply, unless the context requires otherwise.

(a) "Act" means the Mississippi Health Care Trust Fund Act of 1998.

(b) "Health Care Trust Authority" means the authority created under Section 43-13-509 to administer the Health Care Trust Fund.

(c) "Health Care Trust Fund" means the trust fund established by Section 43-13-507 for the deposit of monies received by the State of Mississippi as a result of the tobacco settlement and such other monies as the state may determine are appropriate.

(d) "Tobacco settlement" means the settlement of the case of Mike Moore, Attorney General ex rel. State of Mississippi v. The American Tobacco Company et al. (Chancery Court of Jackson County, Mississippi, Cause No. 94-1429) and the settlement of any case brought against tobacco companies by another state.

SECTION 4. The following shall be codified as Section 43-13-507, Mississippi Code of 1972:

43-13-507. Establishment of Health Care Trust Fund. In accordance with the purposes of this article, there is established in the State Treasury the Health Care Trust Fund, into which shall be deposited monies, including interest earnings, received by the State of Mississippi as a result of the tobacco settlement and such other monies as the state may determine are appropriate. Monies in the Health Care Trust Fund shall be used only for financing (a) the expansion of the Mississippi Medicaid Program, (b) the Mississippi Children's Health Care Act of 1998, (c) other current or future governmental programs providing for medical assistance to the uninsured, the underinsured and the working poor, and (d) public health education programs.

SECTION 5. The following shall be codified as Section 43-13-509, Mississippi Code of 1972:

43-13-509. Administering authority. (1) The Health Care Trust Fund shall be administered by the Health Care Trust Authority, which shall be composed of fourteen (14) members as follows:

(a) The State Health Officer;

(b) The Executive Director of the Division of Medicaid;

(d) The Vice Chancellor for Health Affairs of the University of Mississippi Medical Center;

(e) The Attorney General;

(f) The State Treasurer;

(g) The Executive Director of the Department of Finance and Administration;

(h) The Commissioner of Insurance;

(i) The Chairmen of the Public Health and Welfare Committees of the House of Representatives and the Senate;

(j) The Chairmen of the Appropriations Committees of the House of Representatives and the Senate; and

(k) The Chairmen of the Insurance Committees of the House of Representatives and the Senate;

(2) The legislative members of the Health Care Trust Authority shall not have any vote on any matter coming before the authority other than procedural matters, but shall have the full right of discussion and debate. For attending meetings of the Health Care Trust Authority, the legislative members shall receive per diem and expenses that shall be paid from the contingent expense funds of their respective houses in the same amounts as provided for committee meetings when the Legislature is not in session; however, no per diem and expenses for attending meetings of the Health Care Trust Authority will be paid while the Legislature is in session. No per diem and expenses will be paid except for attending meetings of the Health Care Trust Authority without prior approval of the proper committee in their respective houses.

(3) Each member of the Health Care Trust Authority other than the legislative members may designate another individual who is employed by the same agency or institution as the member, and each legislative member may designate another member of the committee that he chairs, to attend any meeting of the authority on behalf of the member. Any such designee shall have the same rights and privileges at meetings of the Health Care Trust Authority as the member who designated him.

(4) The members of the Health Care Trust Authority shall elect a chairman and vice chairman of the authority at the first meeting after the effective date of this act, and at a meeting in the month of April in each succeeding year.

(5) The Health Care Trust Authority shall have the duty of administering all functions and responsibilities of the Health Care Trust Fund.

(6) In carrying out its functions under this article, the Health Care Trust Authority is empowered to:

(a) Make applications for and accept monies from the tobacco settlement and to receive and administer such other monies received by the Health Care Trust Fund as are appropriate for accomplishment of the purposes of this article;

(b) Employ personnel as necessary, which personnel shall be employees of the state;

(c) Delegate to or contract with any department, division or agency of the state, or any political subdivision thereof, or any private corporation, organization or association for administering any programs, duties or functions provided for in this article;

(d) Prescribe and promulgate such reasonable rules and regulations as may be necessary for the implementation of the purposes of this article, complying with Section 25-43-1 et seq.;

(e) Create advisory councils to assist in the performance and discharge of its duties; and

(f) Pay out of the income of the Health Care Trust Fund all costs and expenses incurred as a result of the administration of the Health Care Trust Fund.

SECTION 6. The following shall be codified as Section 43-13-511, Mississippi Code of 1972:

43-13-511. Investments. (1) The Health Care Trust Authority may invest any monies of the Health Care Trust Fund, at such periodic intervals as the authority may determine, as follows:

(a) Monies may be invested in bonds, notes, certificates and other valid general obligations of the State of Mississippi, or of any county, or of any city, or of any supervisors district of any county of the State of Mississippi, or of any school district bonds of the State of Mississippi; notes or certificates of indebtedness issued by the Veterans' Home Purchase Board of Mississippi, provided such notes or certificates of indebtedness are secured by the pledge of collateral equal to two hundred percent (200%) of the amount of the loan, which collateral is also guaranteed at least for fifty percent (50%) of the face value by the United States Government, and provided that not more than five percent (5%) of the total investment holdings of the Health Care Trust Fund shall be in Veterans' Home Purchase Board notes or certificates at any time; real estate mortgage loans one hundred percent (100%) insured by the Federal Housing Administration on single family homes located in the State of Mississippi, where monthly collections and all servicing matters are handled by Federal Housing Administration approved mortgagees authorized to make such loans in the State of Mississippi.

(b) Monies may be invested in State of Mississippi highway bonds.

(d) Monies may be invested in corporate bonds and taxable municipal bonds of investment grade as rated by Standard and Poor's or by Moody's Investment Service, with bonds rated BAA/BBB not to exceed five percent (5%) of the book value of the total fixed income investments; or corporate short-term obligations of corporations or of wholly owned subsidiaries of corporations, whose short-term obligations are rated A-3 or better by Standard and Poor's or rated P-3 or better by Moody's Investment Service.

(e) Monies may be invested in bonds of the Tennessee Valley Authority.

(f) Monies may be invested in bonds, notes, certificates and other valid obligations of the United States, and other valid obligations of any federal instrumentality that issues securities under authority of an act of Congress and are exempt from registration with the Securities and Exchange Commission.

(g) Monies may be invested in bonds, notes, debentures and other securities issued by any federal instrumentality and fully guaranteed by the United States, and direct security repurchase agreements and reverse direct security repurchase agreements of any federal book entry of only those securities enumerated in paragraph (f) above and in this paragraph (g). "Direct security repurchase agreement" means an agreement under which the trust buys, holds for a specified time, and then sells back those securities and obligations enumerated in paragraph (f) above and in this paragraph (g). "Reverse direct securities repurchase agreement" means an agreement under which the trust sells and after a specified time buys back any of the securities and obligations enumerated in paragraph (f) above and in this paragraph (g).

(h) Monies may be invested in interest-bearing bonds or notes which are general obligations of any other state in the United States or of any city or county therein, provided such city or county had a population as shown by the federal census next preceding such investment of not less than twenty-five thousand (25,000) inhabitants and provided that such state, city or county has not defaulted for a period longer than thirty (30) days in the payment of principal or interest on any of its general obligation indebtedness during a period of ten (10) calendar years immediately preceding such investment.

(i) Monies may be invested in shares of stock, common and/or preferred, of corporations created by or existing under the laws of the United States or any state, district or territory thereof, provided that:

(i) The maximum investments in stocks shall not exceed fifty percent (50%) of the book value of the Health Care Trust Fund;

(ii) The stock of such corporation shall:

1. Be listed on a national stock exchange; or

2. Be traded in the over-the-counter market, provided price quotations for such over-the-counter stocks are quoted by the National Association of Securities Dealers Automated Quotation System (NASDAQ);

(iii) The outstanding shares of such corporation shall have a total market value of not less than Fifty Million Dollars ($50,000,000.00);

(iv) The amount of investment in any one (1) corporation shall not exceed three percent (3%) of the book value of the Health Care Trust Fund; and

(v) The shares of any one (1) corporation owned by the Health Care Trust Fund shall not exceed five percent (5%) of that corporations's outstanding stock.

(j) Monies may be invested in bonds rated Single A or better, stocks and convertible securities of established non-United States companies, which companies are listed on only primary national stock exchanges of foreign nations, and in foreign government securities rated Single A or better by a recognized rating agency. However, total book value of investments under this paragraph shall at no time exceed twenty percent (20%) of the total book value of the Health Care Trust Fund. The Health Care Trust Authority may take requisite action to effectuate or hedge such transactions through foreign banks, including the purchase and sale, transfer, exchange, or otherwise disposal of, and generally deal in foreign exchange through the use of foreign currency, interbank forward contracts, futures contracts, options contracts, swaps and other related derivative instruments, notwithstanding any other provisions of this article to the contrary.

(k) Monies may be invested in covered call and put options on securities traded on one or more of the regulated exchange.

(l) Monies may be invested in pooled or commingled funds managed by a corporate trustee or by a Securities and Exchange Commission registered investment advisory firm retained as an investment manager by the Health Care Trust Authority, and shares of investment companies and unit investment trusts registered under the Investment Company Act of 1940, where such pooled or commingled funds or shares are comprised of common or preferred stocks, bonds, money market instruments or other investments authorized under this section. Such investment in commingled funds or shares shall be held in trust. However, the total book value of investments under this paragraph shall at no time exceed five percent (5%) of the total book value of all investments of the Health Care Trust Fund. Any investment manager approved by the Health Care Trust Authority shall invest such commingled funds or shares as a fiduciary.

(m) Monies may be invested in pooled or commingled real estate funds or real estate securities managed by a corporate trustee or by a Securities and Exchange Commission registered investment advisory firm retained as an investment manager by the Health Care Trust Authority. Such investment in commingled funds or shares shall be held in trust. However, the total book value of investments under this paragraph shall at no time exceed five percent (5%) of the total book value of all investments of the Health Care Trust Fund. Any investment manager approved by the Health Care Trust Authority shall invest such commingled funds or shares as a fiduciary. The five percent (5%) limitation in this paragraph shall not be subject to the five percent (5%) limitation in paragraph (l) of this subsection.

(2) All investments shall be acquired by the Health Care Trust Authority at prices not exceeding the prevailing market values for such securities.

(3) Any limitations set forth in this section shall be applicable only at the time of purchase and shall not require the liquidation of any investment at any time. All investments shall be clearly marked to indicate ownership by the Health Care Trust Fund and to the extent possible shall be registered in the name of the Health Care Trust Fund.

(4) Subject to the above terms, conditions, limitations and restrictions, the Health Care Trust Authority shall have power to sell, assign, lend, transfer and dispose of any of the securities and investments of the Health Care Trust Fund, provided that the sale, assignment, lending or transfer has the majority approval of the Health Care Trust Authority. The Health Care Trust Authority may employ or contract with investment managers, evaluation services or other such services as determined by the Health Care Trust Authority to be necessary for the effective and efficient operation of the Health Care Trust Fund.

(5) Except as otherwise provided in this section, no member or employee of the Health Care Trust Authority shall have any direct or indirect interest in the income, gains or profits of any investment made by the Health Care Trust Authority, nor shall any such person receive any pay or emolument for his services in connection with any investment made by the Health Care Trust Authority. No member or employee of the Health Care Trust Authority shall become an endorser or surety, or in any manner an obligor for money loaned by or borrowed from the Health Care Trust Fund.

(6) All interest derived from investments and any gains from the sale or exchange of investments shall be credited by the Health Care Trust Authority to the account of the Health Care Trust Fund.

(7) For the purpose of meeting disbursements for financing health care programs under Section 43-13-507 and the costs and expenses of administering the Health Care Trust Fund, cash may be kept available, not exceeding the requirements of the Health Care Trust Fund for a period of ninety (90) days, on deposit in one or more banks or trust companies organized under the laws of the State of Mississippi or the laws of the United States, provided that the sum on deposit in any one (1) bank or trust company shall not exceed thirty-five percent (35%) of the paid-up capital and regular surplus of such bank or trust company.

(8) The Health Care Trust Authority shall discharge its duties with respect to the investments of the Health Care Trust Fund solely for the interest of the Health Care Trust Fund 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, including diversifying the investments of the Health Care Trust Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

SECTION 7. The following shall be codified as Section 43-13-513, Mississippi Code of 1972:

43-13-513. The Health Care Trust Authority shall spend all of the income from the Health Care Trust Fund in furtherance of the purposes of this act, less six percent (6%) of the annual income of the Health Care Trust Fund, which shall be added to the principal amount of the fund each year. Notwithstanding anything in this act to the contrary, upon a vote by at least seven (7) of the voting members of the Health Care Trust Authority, the authority may invade the principal of the Health Care Trust Fund to the extent of five percent (5%) of the amount of the principal of the fund in the event of extraordinary circumstances.

SECTION 8. Sections 1 through 7 of this act shall be inserted as a new article in Title 43, Chapter 13, Mississippi Code of 1972.

SECTION 9. This act shall take effect and be in force from and after its passage.