Section 13. Management of funds

a. The funds of the retirement system shall
  be managed in accordance with this section.
    b.  The  comptroller  shall  be  trustee  of  the several funds of the
  retirement system. Such funds shall be invested by  the  comptroller  in
  securities  in  which he is authorized by law to invest the funds of the
  state, except that he may invest in  obligations  consisting  of  notes,
  bonds,  debentures,  or  equipment  trust  certificates  issued under an
  indenture, which are the direct  obligations  of,  or  in  the  case  of
  equipment  trust  certificates  are  secured by direct obligations of, a
  railroad or industrial corporation, or a  corporation  engaged  directly
  and  primarily  in the production, transportation, distribution, or sale
  of electricity or gas,  or  the  operation  of  telephone  or  telegraph
  systems  or  waterworks,  or  in  some combination of them; provided the
  obligor corporation is one which is incorporated under the laws  of  the
  United States, or any state thereof, or of the District of Columbia, and
  said obligations shall be rated at the time of purchase within the three
  highest  classifications  established  by  at  least two standard rating
  services. The maximum amount that the comptroller  may  invest  in  such
  obligations  shall not exceed thirty per centum of the assets of the New
  York state employees' retirement system's funds;  and  provided  further
  that  not more than two and one half per centum of the assets of the New
  York state employees' retirement system's funds shall be invested in the
  obligations of any one corporation of  the  highest  classification  and
  subsidiary or subsidiaries thereof, that not more than two per centum of
  the  assets  of  the New York state employees' retirement system's funds
  shall be invested in the obligations  of  any  one  corporation  of  the
  second  highest  classification  and subsidiary or subsidiaries thereof,
  that not more than one and one half per centum of the assets of the  New
  York state employees' retirement system's funds shall be invested in the
  obligations  of  any one corporation of the third highest classification
  and subsidiary or subsidiaries thereof. He shall, however, be subject to
  all terms, conditions, limitations  and  restrictions  imposed  by  this
  article  and by law upon the making of such investments. The comptroller
  shall have full power:
    1. To hold, purchase, sell, assign, transfer or dispose of any of  the
  securities  or  investments, in which any of the funds of the retirement
  system shall be invested, including the proceeds of such investments and
  any monies belonging to such funds, and
    2. In his name as trustee, to foreclose mortgages upon default  or  to
  take  title  to real property in such proceedings in lieu thereof and to
  lease and sell real property so acquired.
    c. The comptroller annually shall credit to each of the funds  of  the
  retirement  system  regular  interest on the mean amount therein for the
  preceding year.
    d. The custody of all funds of the retirement system shall be  in  the
  charge  of the head of the division of the treasury of the department of
  taxation and finance, subject to the  supervision  and  control  of  the
  commissioner of taxation and finance.
    e. Payment of all pensions, annuities and other benefits shall be made
  as  provided  in  this article. For the purpose of meeting disbursements
  for pensions, annuities and other payments ordered by  the  comptroller,
  the  head  of  such division may keep on deposit an available fund which
  shall not exceed ten per centum of the total amount of the several funds
  of the retirement system. Every such deposit shall be  kept  only  in  a
  bank  or  trust  company organized under the laws of this state, or in a
  national bank located  in  this  state,  which  shall  furnish  adequate
  security therefor.

    f.  The  comptroller,  however,  shall  have  a  fund in his immediate
  possession. Such fund shall be used for the immediate payment of:
    1. All pensions, annuities and other benefits, and
    2.  Such  expenses  as  may  necessarily  be  incurred  in  acquiring,
  servicing and foreclosing  mortgages  and  in  acquiring,  managing  and
  protecting investments, and
    3.  Such  special expenditures for which the retirement system will be
  paid by the state or a participating employer.
    Such fund shall be reimbursed from time to time by the  head  of  such
  division on the warrant of the comptroller.
    g.  Neither the comptroller nor any person employed on the work of the
  retirement system shall:
    1. Except as herein provided, have any interest, direct  or  indirect,
  in the gains or profits of any investment of the retirement system, nor,
  in  connection  therewith,  directly  or  indirectly, receive any pay or
  emolument for his services.
    2. Except as provided in section fifty of this article:
    (a) Directly or indirectly, for himself or as an agent or  partner  of
  others,  borrow  any  of  its funds or deposits or in any manner use the
  same  except  to  make  such  current  and  necessary  payments  as  are
  authorized by the comptroller, or
    (b)  Become  an endorser, surety or an obligor in any manner of monies
  loaned by or borrowed of such funds.
    h. The retirement system may use a part of its  funds,  not  exceeding
  ten  per  centum of its assets, (1) for purchasing or leasing of land in
  the city of Albany and the construction thereon  of  a  suitable  office
  building  or  buildings  for  the  transaction  of  the  business of the
  retirement system and (2) for purchasing  or  leasing  of  land  in  the
  cities of Albany, Syracuse, Buffalo, Binghamton, New York, Rochester and
  Utica  and  the  construction  thereon  of a suitable office building or
  buildings for purposes of lease  or  sale  to  the  state  and  (3)  for
  purchasing  or  leasing  of  land in the city of Albany on the north and
  south sides of Washington avenue commonly known  as  the  "Campus  Site"
  acquired  by  the  state  for  a  state  buildings  site pursuant to the
  provisions of chapter five hundred seventy-two of the laws  of  nineteen
  hundred  forty-seven  and  the  construction  thereon  of  power  plants
  including service connections, electric  substations  including  service
  connections,   garages,  warehouses  and  restaurant  facilities  deemed
  necessary for the efficient  and  economical  operation  of  the  office
  building or buildings constructed on such land and (4) for purchasing or
  leasing of land in the city of Albany acquired by the state for suitable
  parking  facilities  for the use primarily of employees of the state and
  persons having business with state departments and  state  agencies  and
  the   construction   thereon   of  such  structures,  appurtenances  and
  facilities deemed necessary for the efficient and  economical  operation
  of  the  parking  facilities  constructed  on  such  land  and  (5)  for
  purchasing or leasing  of  land  in  locations  approved  by  the  state
  university  trustees  and the construction, acquisition, reconstruction,
  rehabilitation  or  improvement  of  suitable  buildings  or  facilities
  thereon   for  purposes  of  lease  or  sale  to  the  state  university
  construction fund, such buildings or facilities to be used by the  state
  university  or  by  state-operated institutions or statutory or contract
  colleges under the jurisdiction  of  the  state  university  or  by  the
  students,  faculty  and  staff  of  the  state university or of any such
  state-operated institution or statutory or contract college,  and  their
  families and (6) for purchasing of lands from the New York state thruway
  authority  and  the  construction thereon of an office building or other
  buildings for purposes of lease or sale to the thruway authority for its

  own use under such terms and  conditions,  including  consideration  and
  length  of  term,  as shall be agreed upon between the retirement system
  and the thruway authority.
    The retirement system from time to time may lease to any public agency
  any  portion  of  a  building  constructed  for  the  transaction of its
  business which may not be required for such purpose, upon such terms and
  conditions as shall be deemed  to  be  for  the  best  interest  of  the
  retirement system.
    Real  property  of  the  retirement  system  acquired  or  constructed
  pursuant to this subdivision shall be exempt from taxation.
    i. At the close of each fiscal year, the average  rate  of  investment
  earnings  of  the retirement system shall be computed by the actuary and
  certified to the comptroller. This rate shall  be  determined  from  the
  investment  earnings  during  the calendar year which ended three months
  prior to the close of the fiscal year. For any year  that  such  average
  rate  of  earnings is in excess of three per centum but not in excess of
  four per centum,  the  comptroller  shall  declare  a  rate  of  special
  interest,  for  members  earning  regular  interest of three per centum,
  equal to the difference between such average rate of earnings and  three
  per  centum  expressed to the lower one-tenth of one per centum, but not
  in excess of one per centum. For any year, commencing  with  the  fiscal
  year  the  first  day of which is April first, nineteen hundred seventy,
  that such average rate of earnings is in excess of four per centum,  the
  special  rate  of interest for members earning regular interest of three
  per centum shall be equal to the difference between such average rate of
  earnings and three per centum expressed to the lower  one-tenth  of  one
  per centum, but not in excess of two per centum, and for members earning
  regular  interest of four per centum, it shall be the difference between
  such average rate of earnings and four  per  centum,  expressed  to  the
  lower  one-tenth of one per centum, but not in excess of one per centum.
  Special interest at such rates, shall be credited by the comptroller  at
  the  same  time  that  regular  interest  is credited, to the individual
  annuity savings accounts of persons who are members as of the  close  of
  the fiscal year. Special interest shall not be considered in determining
  rates of contribution of members. In the case of persons who last became
  members  on  or  after  July  first, nineteen hundred seventy-three, the
  provisions of this subdivision shall apply  only  to  the  fiscal  years
  beginning  April  first,  nineteen  hundred seventy-two and ending March
  thirty-first, nineteen hundred seventy-three.
    j. The retirement system may invest, within the limitations authorized
  for investments in conventional mortgages, a part of its funds in  first
  mortgages on real property located anywhere within the boundaries of the
  United  States  and  leased  to  the  government  of  the United States,
  provided however, that no such investment shall be made unless the terms
  of the mortgage shall provide for amortization  payments  in  an  amount
  sufficient  to  completely  amortize  the  loan within the period of the
  lease.
    k. The funds of the retirement system may be invested in the  purchase
  of promissory notes or bonds from the farmers home administration issued
  in  connection  with  the  purchase  or improvement of real property and
  which are insured by the farmers home administration.