A Bill for an Act
Page 1, Line 101Concerning the investment of state fund money to benefit
Page 1, Line 102Colorado communities, and, in connection therewith,
Page 1, Line 103making an appropriation.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
Section 1 of the bill requires at least one member of the public school fund investment board (board) to have expertise in community investments, requires the board to direct the state treasurer to securely invest money deposited in the public school fund in a manner that prioritizes new investment objectives, and authorizes the board to enter into contracts with investment advisors or other investment professionals to provide advice on community investments. Section 2 makes conforming changes in order to expand the types of investments the state treasurer can make using public school fund money and extends the amount of time the treasurer has to offset an aggregate loss of principal to the public school fund from 18 to 24 months.
Section 3 creates the new community investment portfolio within the permanent school fund, and requires the state treasurer to invest at least 6% of the money in the permanent school fund into the community investment portfolio by July 1, 2027. The state treasurer is required to invest at least 20% of the money in the permanent school fund into the community investment portfolio by July 1, 2032.
Money in the portfolio must be invested in community investments, and allowable community investments include:
- Bonds issued by Colorado school districts and charter schools;
- Certificates of participation issued by Colorado school districts and charter schools;
- Mortgage pass-through securities and collateralized mortgage obligations secured by residential real estate, the majority of which is owned by public school employees;
- Loans to the Colorado middle income housing authority for a revolving loan fund that funds rental housing developments that include preferences for public school employees;
- Bonds issued by the middle income housing authority that fund rental housing developments which include preferences for public school employees;
- Bonds issued by the Colorado housing and finance authority that fund rental housing developments that include preferences for public school employees;
- Mortgage revenue bonds that support public school employee mortgages with interest rates of 3% or less;
- Loans to community development financial institutions that fund:
- The construction of housing developments that include preferences for public school employees; or
- Low-interest mortgages secured by residential real estate that is owned by public school employees; and
- Other venture capital, private equity, or public equity funds that support education in Colorado.
- By July 1, 2027, the greater of 6% of the fund's value or $100 million; and
- By July 1, 2028, the greater of 12% of the fund's value or $200 million.
- 75% of the money in the program shall be administered by the program administrator and used for a shared equity down payment assistance program that:
- Provides at least 15% of the total cost of a home to public school employees; and
- Allows appreciation-sharing between the program and the homeowner, with the program's share of appreciation capped at 10%.
- 25% of the money in the program must be invested in allowable community investments with the purpose of increasing the supply of houses for sale and access to home ownership in rural and other underserved communities.
- $100 million on July 1, 2025, that the department of local affairs shall use to create a new zero-interest revolving loan program for affordable housing developers; and
- $50 million that the department of local affairs shall use to create a new zero-interest revolving loan program to benefit fire protection districts and ambulance districts experiencing cash flow issues.
- The community investment portfolio;
- Bonds issued by Colorado school districts, charter schools, local governments, special districts, state enterprises, Indian tribes, or special purpose authorities;
- Certificates of participation issued by Colorado school districts, charter schools, local governments, special districts, state enterprises, Indian tribes, or special purpose authorities;
- Mortgage pass-through securities and collateralized mortgage obligations secured by Colorado residential real estate that is owned by Coloradans;
- Bonds issued by the middle income housing authority;
- Bonds issued by the Colorado housing and finance authority;
- Loans to community development financial institutions that fund:
- The construction of housing developments in Colorado; or
- Mortgages secured by Colorado residential real estate that is owned by Coloradans;
- Bonds issued by businesses headquartered in Colorado;
- Asset-backed securities supported by loans to small businesses in Colorado;
- The venture capital authority within the office of economic development and international trade; or
- Other venture capital, private equity, or public equity funds that support communities in Colorado.
The educator first home ownership program (program) is created within the community investment portfolio. The treasurer shall invest the following amounts in the program by the following dates:
The treasurer shall invest the money in the program as follows:
The program administrator shall ensure that mortgages in the shared equity down payment assistance program bear interest rates that are at least as low as prevailing mortgage rates at the time the mortgages in the shared equity down payment assistance program are entered into. The program administrator shall present an annual report to the public school fund investment board on program outcomes.
Sections 4 and 5 clarify that the state treasurer may invest state money in direct and indirect equity investments and other asset classes including mutual funds, exchange-traded funds, direct and indirect real estate investments, and education-related community investments.
Section 6 requires the state treasurer to invest at least 20% of the money in the unclaimed property trust fund in direct and indirect equity investments, mutual funds, exchange-traded funds, direct and indirect real estate investments, and other asset classes by July 1, 2032. The state treasurer is also required to make 2 loans of money from the unclaimed property trust fund to the department of local affairs, both of which must be paid back in full by July 1, 2045, including:
Section 7 creates the new Colorado investment portfolio (Colorado portfolio) within the unclaimed property trust fund. The treasurer is required to invest at least 5% of the money in the unclaimed property trust fund into the Colorado portfolio by July 1, 2027, and at least 20% of the money in the unclaimed property trust fund into the Colorado portfolio by July 1, 2032.
Money in the Colorado portfolio must be invested in:
Section 8 reduces the amount credited to the housing development grant fund from the general fund by $15 million for state fiscal year 2026-27.
This Unofficial Version Includes Committee
Amendments Not Yet Adopted on Second Reading
Page 4, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 4, Line 2SECTION 1. In Colorado Revised Statutes, 22-41-102.5, amend (1)(a)(III), (3), (4)(a)(II), and (5) as follows:
Page 4, Line 322-41-102.5. Public school fund investment board - creation
Page 4, Line 4- working group - report. (1) (a) There is hereby created the public
Page 5, Line 1school fund investment board, referred to in this section as the "board". The board consists of five members as follows:
Page 5, Line 2(III) Three members appointed by the state treasurer
SuchPage 5, Line 3
appointees must have diversity in party affiliation andPage 5, Line 4party affiliations. At least one appointee required by this
Page 5, Line 5subsection (1)(a)(III) must have expertise in community
Page 5, Line 6investments, as defined in section 22-41-104.7 (1), and the other
Page 5, Line 7two must have professional qualifications regarding the prudent
Page 5, Line 8investment of trust fund money or expertise in institutional investment management.
Page 5, Line 9(3) The board shall direct the state treasurer on how to securely invest money deposited in the public school fund:
Page 5, Line 10(a) For the intergenerational benefit of public schools;
andPage 5, Line 11(b) In a manner that complies with the "Uniform Prudent Investor Act", article 1.1 of title 15;
C.R.S.Page 5, Line 12(c) In a manner that targets the following investment objectives:
Page 5, Line 13(I) Preserving the principal of the public school fund; and
Page 5, Line 14(II) Providing substantial benefit to the beneficiaries of
Page 5, Line 15the public school fund through community investing as outlined in section22-41-104.7.
Page 5, Line 17(4) (a) No later than March 31, 2017, the board shall establish
Page 5, Line 18policies that are necessary and proper for the administration of this section, including but not limited to:
Page 5, Line 19(II) A policy establishing allowable investments that comply with
Page 5, Line 20section 22-41-104, section 22-41-104.7, and section 3 of article IX of the state constitution; and
Page 6, Line 1(5) The board may enter into contracts with private professional
Page 6, Line 2fund managers, investment advisors, or other investment
Page 6, Line 3professionals to provide expertise, technical support, and advice on
Page 6, Line 4investment market conditions and to provide support for the
Page 6, Line 5implementation of the community investment portfolio. Such
Page 6, Line 6
contract orPage 6, Line 7practices including, but not limited to, the use of requests for information,
Page 6, Line 8requests for proposals, or any other standard vendor selection practices
Page 6, Line 9determined by the board to be best suited to selecting an appropriate
Page 6, Line 10private professional fund manager. Payments for these services will be
Page 6, Line 11paid from the interest and income of the public school fund subject to the requirements set forth in section 22-41-102.
Page 6, Line 12SECTION 2. In Colorado Revised Statutes, 22-41-104, amend (1) and (2); and add (4) as follows:
Page 6, Line 1322-41-104. Lawful investments - legislative declaration.
Page 6, Line 14(1) The state treasurer, as directed by the public school fund investment
Page 6, Line 15board, may invest and reinvest
moneysPage 6, Line 16public school fund in the types of deposits and investments authorized in
Page 6, Line 17sections 24-36-109, 24-36-112, and 24-36-113,
C.R.S.,Page 6, Line 18by school districts. The
moneysin stocksPage 6, Line 19
and other financial assetsPage 6, Line 20investment board investment policy established as required in section
Page 6, Line 2122-41-102.5 (4)(b); except that investment includes only mutual funds,
Page 6, Line 22index funds, and any other instrument that is not a direct investment in a corporation.
Page 6, Line 23(2) The state treasurer has authority, to be exercised at the state
Page 7, Line 1treasurer's discretion, to effect exchanges or sales whenever such
Page 7, Line 2exchanges or sales will not result in an aggregate loss of principal to the
Page 7, Line 3public school fund. An aggregate loss of principal to the public school
Page 7, Line 4fund occurs only when an exchange or sale that resulted in an initial loss
Page 7, Line 5of principal is not offset by a gain on an exchange or sale in the fund
Page 7, Line 6within
eighteenPage 7, Line 7loss must also include any gains that were realized in the twelve months prior to the loss of principal.
Page 7, Line 8(4) The general assembly finds and declares that:
Page 7, Line 9(a) The mission of the public school fund is to support
Page 7, Line 10Colorado children and Colorado schools. The strategic
Page 7, Line 11investment of capital can achieve positive social outcomes and
Page 7, Line 12beneficial financial returns. The fund's intergenerational
Page 7, Line 13mission is best served by investing a portion of the fund's corpus
Page 7, Line 14in a way that advances clear, meaningful, and measurable
Page 7, Line 15outcomes through the community investment portfolio.
Page 7, Line 16Investments should be aligned with the fund's mission and should benefit Colorado schools and children.
Page 7, Line 17(b) Investment in communities can lead to increased
Page 7, Line 18construction of housing and affordable home ownership for
Page 7, Line 19teachers and public school employees, scaling of innovative
Page 7, Line 20educational tools, provision of capital for early childhood
Page 7, Line 21businesses, and subsidization of school facilities. These
Page 7, Line 22investments can improve the lives of Colorado families, increase
Page 7, Line 23educational opportunities, and advance the intergenerational mission of the fund.
Page 7, Line 24(c) The public purpose of the community investment
Page 8, Line 1portfolio within the public school fund is to amplify the benefit
Page 8, Line 2provided to Colorado schools and children by investing in Colorado children, families, and communities.
Page 8, Line 3(d) Investing money in the public school fund into the
Page 8, Line 4community investment portfolio complies with the "Uniform
Page 8, Line 5Prudent Investor Act", article 1.1 of title 15, and specifically
Page 8, Line 6section 15-1.1-102.5, because the assets have a "special
Page 8, Line 7relationship or special value" to the purposes of the trust and
Page 8, Line 8to one or more of the beneficiaries. Community investments
Page 8, Line 9benefit Colorado school children and advance "the
Page 8, Line 10intergenerational benefit of public schools" in accordance with section 22-41-102.5 (3).
Page 8, Line 11(e) Housing developments that include preferences for
Page 8, Line 12public school employees: promote a substantial, legitimate, and
Page 8, Line 13nondiscriminatory state interest that cannot be served by
Page 8, Line 14another practice with a less discriminatory effect; do not
Page 8, Line 15constitute source of income discrimination under section
Page 8, Line 1624-34-501 (4.5) or 24-34-502; and comply with the federal "Fair
Page 8, Line 17Housing Act", 42 U. S.C. sec. 3601 et seq., part 5 of article 34 of
Page 8, Line 18title 24, and other state and local laws, ordinances, and resolutions.
Page 8, Line 19(f) The state treasurer may invest in asset classes
Page 8, Line 20including mutual funds and education-related community
Page 8, Line 21investments. Investment in these asset classes furthers the
Page 8, Line 22public purpose of increasing the fund balance for fund beneficiaries.
Page 8, Line 23SECTION 3. In Colorado Revised Statutes, add 22-41-104.7 as follows:
Page 9, Line 122-41-104.7. Community investment portfolio - required
Page 9, Line 2investments - creation - legislative declaration - definitions.
Page 9, Line 3(1) Definitions.As used in this section, unless the context otherwise requires:
Page 9, Line 4(a) "Community investment" means an investment that is
Page 9, Line 5intended to generate positive, measurable impact for Colorado
Page 9, Line 6school children, families, or communities while simultaneously
Page 9, Line 7generating financial returns. Community investments may have below-market rates of return.
Page 9, Line 8(b) "Fund" means the public school fund of the state created in section 3 of article IX of the state constitution.
Page 9, Line 9(c) "Portfolio" means the community investment portfolio created in this section.
Page 9, Line 10(d) "Program" means the educator first home ownership program created in this section.
Page 9, Line 11(e) "Program manager" means the Colorado housing and
Page 9, Line 12finance authority; except that, if the Colorado housing and
Page 9, Line 13finance authority elects at any time not to serve as program
Page 9, Line 14manager, the public school fund investment board shall select a replacement entity that agrees to serve as program manager.
Page 9, Line 15(f) "Public school employee" means any employee of a
Page 9, Line 16Colorado school district, charter school, institute charter school, or innovation zone.
Page 9, Line 17(2) Portfolio created.The community investment portfolio
Page 9, Line 18is created within the fund. By July 1, 2032, the treasurer
Page 9, Line 19shall invest at least twenty percent of the fund's value into the portfolio.
Page 10, Line 1(3) Allowable portfolio investments.Money in the portfolio
Page 10, Line 2must be invested in community investments. Allowable community investments include but are not limited to:
Page 10, Line 3(a) Bonds issued by Colorado school districts and charter schools;
Page 10, Line 4(b) Certificates of participation issued by Colorado school districts and charter schools;
Page 10, Line 5(c) Mortgage pass-through securities and collateralized
Page 10, Line 6mortgage obligations secured by residential real estate, the majority of which is owned by public school employees;
Page 10, Line 7(d) Loans to the Colorado middle income housing
Page 10, Line 8authority for a revolving loan fund that funds rental housing
Page 10, Line 9developments that include preferences for public school employees;
Page 10, Line 10(e) Bonds issued by the middle income housing authority
Page 10, Line 11that fund rental housing developments that include preferences for public school employees;
Page 10, Line 12(f) Bonds or mortgage-backed securities issued by the
Page 10, Line 13Colorado housing and finance authority that fund housing
Page 10, Line 14developments that include preferences for public school
Page 10, Line 15employees or mortgages secured by residential real estate, the majority of which is owned by public school employees;
Page 10, Line 16(g) Mortgage revenue bonds that support public school
Page 10, Line 17employee mortgages with interest rates of three percent or less;
Page 10, Line 18(h) Loans to community development financial institutions that fund:
Page 11, Line 1(I) Housing that includes preferences for public school employees; or
Page 11, Line 2(II) Low-interest mortgages secured by residential real estate that is owned by public school employees;
Page 11, Line 3(i) Down payment shared appreciation products secured
Page 11, Line 4by residential real estate that is owned by public school employees; and
Page 11, Line 5(j) Other investments that support the public purpose of the fund.
Page 11, Line 6(4) Educator first home ownership program. (a) The
Page 11, Line 7educator first home ownership program is created within the
Page 11, Line 8portfolio. In order to support public school employee home
Page 11, Line 9ownership, address educator shortages, and support the
Page 11, Line 10retention of public school employees, the treasurer shall invest
Page 11, Line 11the following amounts into the program, except that the total
Page 11, Line 12investment amount shall never exceed the sum of the
Page 11, Line 13investments made in accordance with subsection (4)(b)(II) of this
Page 11, Line 14section plus the total amount of shared equity down payment
Page 11, Line 15assistance that has been granted by the program manager through the program, by the following dates:
Page 11, Line 16(I) By July 1,2028,the greater of six percent of the fund's value or one hundred million dollars;
Page 11, Line 17(II) By July 1,2030,the greater of twelve percent of the fund's value or two hundred million dollars.
Page 11, Line 18(b) The treasurer shall aim to invest a target of
Page 11, Line 19seventy-five percent of the money in the program into a home
Page 12, Line 1ownership program for public school employees to be managed
Page 12, Line 2by the program manager. The home ownership program must be
Page 12, Line 3fully established by July 1, 2026. Once the home ownership program is fully established:
Page 12, Line 4(I) The public school investment board shall purchase
Page 12, Line 5from the program fund manager the mortgage products created
Page 12, Line 6through the home ownership program in tranches of reasonable
Page 12, Line 7amounts that are mutually agreed upon by the public school investment board and the program manager; and
Page 12, Line 8(II) The public school investment board may provide
Page 12, Line 9notice of any discontinuation in future investment the program
Page 12, Line 10manager has not already committed to the home ownership
Page 12, Line 11program, which notice must be provided at least six months prior to discontinuation.
Page 12, Line 12(c) The treasurer shall aim to invest a target of
Page 12, Line 13twenty-five percent of the money in the program into allowable
Page 12, Line 14community investments described in subsection (3) of this section
Page 12, Line 15with the purpose of increasing the supply of houses for sale and
Page 12, Line 16access to home ownership in rural and other underserved communities.
Page 12, Line 17(d) The program manager shall establish guidelines and
Page 12, Line 18underwriting criteria for the home ownership program and shall ensure that the home ownership program:
Page 12, Line 19(I) Prioritizes first-time home buyers that use the home as a primary residence;
Page 12, Line 20(II) Provides shared equity down payment assistance to
Page 12, Line 21public school employees and aims to help as many public school employees as possible achieve affordable home ownership;
Page 13, Line 1(III) Allows appreciation-sharing between the home
Page 13, Line 2ownership program and homeowner with any profit or loss in the
Page 13, Line 3down payment assistance accruing to the program and the
Page 13, Line 4program's share never exceeding the percent of the purchase price of the home the down payment represents at purchase; and
Page 13, Line 5(IV) If the program manager is the Colorado housing and
Page 13, Line 6finance authority, is paired with a first mortgage loan provided
Page 13, Line 7through the program fund manager's participating lender
Page 13, Line 8network that bears an interest rate that is at or below the prevailing mortgage rates.
Page 13, Line 9(e) The program manager is entitled to normal and
Page 13, Line 10customary fees for managing the fund, including but not limited
Page 13, Line 11to any carrying costs required to accommodate tranche
Page 13, Line 12payments, paid by the fund or the program fund manager's products and services paired with the home ownership program.
Page 13, Line 13(f) The program manager shall annually publish and
Page 13, Line 14present a report to the public school fund investment board on program outcomes, including:
Page 13, Line 15(I) The number of program borrowers;
(II) The geographic distribution of program borrowers;
Page 13, Line 16(III) The area median income of program borrowers; and
Page 13, Line 17(IV) The median purchase price, median loan amount, and
Page 13, Line 18average interest rate on first mortgages for public school employees that benefit from the program.
Page 13, Line 19(g) Nothing in this section prevents the use of other
Page 13, Line 20sources of state or local funding to be leveraged with the program.
Page 14, Line 2SECTION 4. Appropriation. (1) For the 2025-26 state fiscal
Page 14, Line 3year, $375,900 is appropriated to the department of the treasury for use
Page 14, Line 4by administration. This appropriation is from the interest or income
Page 14, Line 5earned on the investment of the money in the public school fund pursuant
Page 14, Line 6to section 22-41-102 (3)(h)(I), C.R.S. To implement this act, administration may use this appropriation as follows:
Page 14, Line 7(a) $300,000 for personal services, which amount is based on an assumption that the department will require an additional 2.0 FTE; and
Page 14, Line 8(b) $75,900 for operating expenses.
Page 14, Line 9SECTION 5. Safety clause. The general assembly finds,
Page 14, Line 10determines, and declares that this act is necessary for the immediate
Page 14, Line 11preservation of the public peace, health, or safety or for appropriations for
Page 14, Line 12the support and maintenance of the departments of the state and state institutions.