House Bill 506 / SL 2025-6 (=S709)
House Bill 506 enacts the 2025 State Investment Modernization Act and substantially reorganizes North Carolina’s investment statutes in Chapter 147. The bill creates the North Carolina Investment Authority as a new body corporate and politic within, but independent from, the Department of State Treasurer, and transfers to it the management of state investment programs. It establishes a board of directors, a chief investment officer, ethics and conflict-of-interest rules, reporting and audit requirements, and detailed governance standards for investment decision-making, staffing, contracting, and compensation.
The bill also revises the investment framework for the General Fund, Highway Fund, retirement systems, the Escheats Fund, and numerous special funds. It expands and modernizes the list of permissible investments, sets portfolio limits and liquidity requirements, authorizes third-party managers and internal management, and allows certain funds to participate in broader investment strategies subject to fees and minimum balances. The act phases in the new authority beginning July 1, 2025, with the Investment Authority beginning to manage investments and carry out statutory duties on January 1, 2026.
HB 506 makes extensive conforming and technical changes across the General Statutes, including Chapter 147, Chapter 126, Chapter 128, Chapter 135, and Chapter 143C. It shifts investment authority from the State Treasurer to the new Investment Authority, exempts the Authority’s funds from the State Budget Act and related budget provisions, and updates custodial and administrative references throughout state law. It also creates new reporting obligations to the General Assembly and other oversight bodies, and authorizes market-based compensation structures for certain investment personnel outside standard state personnel rules.
The bill appears to have been broadly supported, as reflected by its enactment into Session Law 2025-6 and approval by the Governor. Although no committee transcripts or recorded votes were provided, the measure’s title states that it was recommended by the State Treasurer, suggesting executive and treasury support. The overall tone of the legislation is technocratic and reform-oriented, emphasizing modernization, professional investment management, and stronger governance rather than partisan policy change.
The main points of potential contention are the bill’s creation of an independent investment authority, the transfer of investment management power away from the State Treasurer’s office, and the broad exemption from normal budget and personnel controls. The bill also authorizes performance-based compensation, expanded use of outside investment managers, confidentiality for certain records, and larger allocations to alternative and less liquid investments, all of which could raise concerns about oversight, transparency, and risk. By contrast, supporters would likely emphasize fiduciary independence, professionalization, and the ability to pursue higher long-term returns for retirement and other state funds.