To amend sections 109.579, 4121.12, 4121.79, 4123.01, 4123.34, 4123.351, 4123.412, 4123.44, 4123.442, 4123.444, 4123.445, 4127.05, 4131.03, and 4131.13, to amend, for the purpose of adopting new section numbers as indicated in parentheses, sections 4123.443 (4123.448), 4123.444 (4123.445), and 4123.445 (4123.446), and to enact new sections 4123.443 and 4123.444 and section 4123.447 of the Revised Code to specify the classes of investments in which the Administrator of Workers' Compensation may invest the funds specified in the Workers' Compensation Law and to require the Administrator to have criminal records checks conducted for employees of investment consultants with whom the Administrator contracts to facilitate the investment of those funds.

Section 1. That sections 109.579, 4121.12, 4121.79, 4123.01, 4123.34, 4123.351, 4123.412, 4123.44, 4123.442, 4123.444, 4123.445, 4127.05, 4131.03, and 4131.13 be amended, sections 4123.443 (4123.448), 4123.444 (4123.445), and 4123.445 (4123.446) be amended for the purpose of adopting new section numbers as indicated in parentheses, and new sections 4123.443 and 4123.444 and section 4123.447 of the Revised Code be enacted to read as follows:

Sec. 109.579.  (A) On receipt of a request pursuant to division (B) of section 4123.444 4123.445 of the Revised Code, a completed form prescribed pursuant to division (C)(1) of this section, and a set of fingerprint impressions obtained in the manner described in division (C)(2) of this section, the superintendent of the bureau of criminal identification and investigation shall conduct a criminal records check in the manner described in division (B) of this section to determine whether any information exists that indicates that the person who is the subject of the request previously has been convicted of or pleaded guilty to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, drug trafficking, or any criminal offense involving money or securities, as set forth in Chapters 2909., 2911., 2913., 2915., 2921., 2923., and 2925. of the Revised Code or other law of this state, or the laws of any other state or of the United States that are substantially equivalent to those offenses.

(B) The superintendent shall conduct a criminal records check pursuant to division (A) of this section as follows:

(1) The superintendent shall review or cause to be reviewed any relevant information gathered and compiled by the bureau under division (A) of section 109.57 of the Revised Code that relates to the person who is the subject of the request, including any relevant information contained in records that have been sealed under section 2953.32 of the Revised Code.

(2) If the request received by the superintendent asks for information from the federal bureau of investigation, the superintendent shall request from the federal bureau of investigation any information it has with respect to the person who is the subject of the request. The superintendent shall review or cause to be reviewed any information that the superintendent receives from the federal bureau of investigation.

(3) The superintendent shall forward the results of a criminal records check conducted pursuant to this division to the administrator of workers' compensation.

(C)(1) The superintendent shall prescribe a form to obtain the information necessary to conduct a criminal records check from any person for whom a criminal records check is requested pursuant to division (B) of section 4123.444 4123.445 of the Revised Code. The form that the superintendent prescribes pursuant to this division may be in a tangible format, in an electronic format, or in both tangible and electronic formats.

(2) The superintendent shall prescribe standard impression sheets to obtain the fingerprint impressions of any person for whom a criminal records check is requested pursuant to section 4123.444 4123.445 of the Revised Code. Any person for whom the administrator requests the superintendent to conduct a criminal records check pursuant to that section shall have the person's fingerprint impressions made at a county sheriff's office, a municipal police department, or any other entity with the ability to make fingerprint impressions on the standard impression sheets prescribed by the superintendent. The office, department, or entity may charge the person a reasonable fee for making the impressions. The standard impression sheets the superintendent prescribes pursuant to this division may be in a tangible format, in an electronic format, or in both tangible and electronic formats.

(3) The superintendent may prescribe methods of forwarding fingerprint impressions and information necessary to conduct a criminal records check. The methods shall include, but are not limited to, electronic methods.

(D) A determination whether any information exists that indicates that a person previously has been convicted of or pleaded guilty to any offense listed or described in division (A) of this section that the superintendent makes pursuant to information considered in a criminal records check under this section is valid for the person who is the subject of that criminal records check for a period of one year after the date the superintendent makes that determination.

(E) The superintendent shall prescribe and charge a reasonable fee for providing a criminal records check requested under section 4123.444 4123.445 of the Revised Code. If another request for a criminal records check is made under this section for a person for whom a valid determination under division (D) of this section is available, the superintendent shall provide the determination for a reduced fee.

Sec. 4121.12.  (A) There is hereby created the bureau of workers' compensation board of directors consisting of eleven members to be appointed by the governor with the advice and consent of the senate. One member shall be an individual who, on account of the individual's previous vocation, employment, or affiliations, can be classed as a representative of employees; two members shall be individuals who, on account of their previous vocation, employment, or affiliations, can be classed as representatives of employee organizations and at least one of these two individuals shall be a member of the executive committee of the largest statewide labor federation; three members shall be individuals who, on account of their previous vocation, employment, or affiliations, can be classed as representatives of employers, one of whom represents self-insuring employers, one of whom is a state fund employer who employs one hundred or more employees, and one of whom is a state fund employer who employs less than one hundred employees; two members shall be individuals who, on account of their vocation, employment, or affiliations, can be classed as investment and securities experts who have direct experience in the management, analysis, supervision, or investment of assets and are residents of this state; one member who shall be a certified public accountant; one member who shall be an actuary who is a member in good standing with the American academy of actuaries or who is an associate or fellow with the society of actuaries; and one member shall represent the public and also be an individual who, on account of the individual's previous vocation, employment, or affiliations, cannot be classed as either predominantly representative of employees or of employers. The governor shall select the chairperson of the board who shall serve as chairperson at the pleasure of the governor.

None of the members of the board, within one year immediately preceding the member's appointment, shall have been employed by the bureau of workers' compensation or by any person, partnership, or corporation that has provided to the bureau services of a financial or investment nature, including the management, analysis, supervision, or investment of assets.

(B) Of the initial appointments made to the board, the governor shall appoint the member who represents employees, one member who represents employers, and the member who represents the public to a term ending one year after the effective date of this amendment June 11, 2007; one member who represents employers, one member who represents employee organizations, one member who is an investment and securities expert, and the member who is a certified public accountant to a term ending two years after the effective date of this amendment June 11, 2007; and one member who represents employers, one member who represents employee organizations, one member who is an investment and securities expert, and the member who is an actuary to a term ending three years after the effective date of this amendment June 11, 2007. Thereafter, terms of office shall be for three years, with each term ending on the same day of the same month as did the term that it succeeds. Each member shall hold office from the date of the member's appointment until the end of the term for which the member was appointed.

Members may be reappointed. Any member appointed to fill a vacancy occurring prior to the expiration date of the term for which the member's predecessor was appointed shall hold office as a member for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until a successor takes office or until a period of sixty days has elapsed, whichever occurs first.

(C) In making appointments to the board, the governor shall select the members from the list of names submitted by the workers' compensation board of directors nominating committee pursuant to this division. The nominating committee shall submit to the governor a list containing four separate names for each of the members on the board. Within fourteen days after the submission of the list, the governor shall appoint individuals from the list.

Within sixty days after a vacancy occurring as a result of the expiration of a term and within thirty days after other vacancies occurring on the board, the nominating committee shall submit an initial list containing four names for each vacancy. Within fourteen days after the submission of the initial list, the governor either shall appoint individuals from that list or request the nominating committee to submit another list of four names for each member the governor has not appointed from the initial list, which list the nominating committee shall submit to the governor within fourteen days after the governor's request. The governor then shall appoint, within seven days after the submission of the second list, one of the individuals from either list to fill the vacancy for which the governor has not made an appointment from the initial list. With respect to the filling of vacancies, the nominating committee shall provide the governor with a list of four individuals who are, in the judgment of the nominating committee, the most fully qualified to accede to membership on the board.

In order for the name of an individual to be submitted to the governor under this division, the nominating committee shall approve the individual by an affirmative vote of a majority of its members.

(D) All members of the board shall receive their reasonable and necessary expenses pursuant to section 126.31 of the Revised Code while engaged in the performance of their duties as members and also shall receive an annual salary not to exceed sixty thousand dollars in total, payable on the following basis:

(1) Except as provided in division (D)(2) of this section, a member shall receive two thousand five hundred dollars during a month in which the member attends one or more meetings of the board and shall receive no payment during a month in which the member attends no meeting of the board.

(2) A member may receive no more than thirty thousand dollars per year to compensate the member for attending meetings of the board, regardless of the number of meetings held by the board during a year or the number of meetings in excess of twelve within a year that the member attends.

(3) Except as provided in division (D)(4) of this section, if a member serves on the workers' compensation audit committee, workers' compensation actuarial committee, or the workers' compensation investment committee, the member shall receive two thousand five hundred dollars during a month in which the member attends one or more meetings of the committee on which the member serves and shall receive no payment during any month in which the member attends no meeting of that committee.

(4) A member may receive no more than thirty thousand dollars per year to compensate the member for attending meetings of any of the committees specified in division (D)(3) of this section, regardless of the number of meetings held by a committee during a year or the number of committees on which a member serves.

The chairperson of the board shall set the meeting dates of the board as necessary to perform the duties of the board under this chapter and Chapters 4123., 4125., 4127., 4131., and 4167. of the Revised Code. The board shall meet at least twelve times a year. The administrator of workers' compensation shall provide professional and clerical assistance to the board, as the board considers appropriate.

(E) Before entering upon the duties of office, each appointed member of the board shall take an oath of office as required by sections 3.22 and 3.23 of the Revised Code and file in the office of the secretary of state the bond required under section 4121.127 of the Revised Code.

(F) The board shall:

(1) Establish the overall administrative policy for the bureau for the purposes of this chapter and Chapters 4123., 4125., 4127., 4131., and 4167. of the Revised Code;

(2) Review progress of the bureau in meeting its cost and quality objectives and in complying with this chapter and Chapters 4123., 4125., 4127., 4131., and 4167. of the Revised Code;

(3) Submit an annual report to the president of the senate, the speaker of the house of representatives, the governor, and the workers' compensation council and include all of the following in that report:

(a) An evaluation of the cost and quality objectives of the bureau;

(b) A statement of the net assets available for the provision of compensation and benefits under this chapter and Chapters 4123., 4127., and 4131. of the Revised Code as of the last day of the fiscal year;

(c) A statement of any changes that occurred in the net assets available, including employer premiums and net investment income, for the provision of compensation and benefits and payment of administrative expenses, between the first and last day of the fiscal year immediately preceding the date of the report;

(d) The following information for each of the six consecutive fiscal years occurring previous to the report:

(i) A schedule of the net assets available for compensation and benefits;

(ii) The annual cost of the payment of compensation and benefits;

(iii) Annual administrative expenses incurred;

(iv) Annual employer premiums allocated for the provision of compensation and benefits.

(e) A description of any significant changes that occurred during the six years for which the board provided the information required under division (F)(3)(d) of this section that affect the ability of the board to compare that information from year to year.

(4) Review all independent financial audits of the bureau. The administrator shall provide access to records of the bureau to facilitate the review required under this division.

(5) Study issues as requested by the administrator or the governor;

(6) Contract with all of the following:

(a) An independent actuarial firm to assist the board in making recommendations to the administrator regarding premium rates;

(b) An outside investment counsel to assist the workers' compensation investment committee in fulfilling its duties;

(c) An independent fiduciary counsel to assist the board in the performance of its duties.

(7) Approve the investment policy developed by the workers' compensation investment committee pursuant to section 4121.129 of the Revised Code if the policy satisfies the requirements specified in section 4123.442 of the Revised Code.

(8) Review and publish the investment policy no less than annually and make copies available to interested parties.

(9) Prohibit, on a prospective basis, any specific investment it finds to be contrary to the investment policy approved by the board.

(10) Vote to open each investment class and allow the administrator to invest in an investment class only if the board, by a majority vote, opens that class;

(11) After opening a class but prior to the administrator investing in that class, adopt rules establishing due diligence standards for employees of the bureau to follow when investing in that class and establish policies and procedures to review and monitor the performance and value of each investment class;

(12) Submit a report annually on the performance and value of each investment class to the governor, the president and minority leader of the senate, and the speaker and minority leader of the house of representatives.

(13) Advise and consent on all of the following:

(a) Administrative rules the administrator submits to it pursuant to division (B)(5) of section 4121.121 of the Revised Code for the classification of occupations or industries, for premium rates and contributions, for the amount to be credited to the surplus fund, for rules and systems of rating, rate revisions, and merit rating;

(b) The duties and authority conferred upon the administrator pursuant to section 4121.37 of the Revised Code;

(c) Rules the administrator adopts for the health partnership program and the qualified health plan system, as provided in sections 4121.44, 4121.441, and 4121.442 of the Revised Code;

(d) Rules the administrator submits to it pursuant to Chapter 4167. of the Revised Code regarding the public employment risk reduction program and the protection of public health care workers from exposure incidents.

As used in this division, "public health care worker" and "exposure incident" have the same meanings as in section 4167.25 of the Revised Code.

(14)(11) Perform all duties required under this chapter and Chapters 4123., 4125., 4127., 4131., and 4167. of the Revised Code;

(15)(12) Meet with the governor on an annual basis to discuss the administrator's performance of the duties specified in this chapter and Chapters 4123., 4125., 4127., 4131., and 4167. of the Revised Code;

(16)(13) Develop and participate in a bureau of workers' compensation board of directors education program that consists of all of the following:

(a) An orientation component for newly appointed members;

(b) A continuing education component for board members who have served for at least one year;

(c) A curriculum that includes education about each of the following topics:

(i) Board member duties and responsibilities;

(ii) Compensation and benefits paid pursuant to this chapter and Chapters 4123., 4127., and 4131. of the Revised Code;

(iii) Ethics;

(iv) Governance processes and procedures;

(v) Actuarial soundness;

(vi) Investments;

(vii) Any other subject matter the board believes is reasonably related to the duties of a board member.

(17)(14) Submit the program developed pursuant to division (F)(16)(13) of this section to the workers' compensation council for approval;

(18)(15) Hold all sessions, classes, and other events for the program developed pursuant to division (F)(16)(13) of this section in this state.

(G) The board may do both of the following:

(1) Vote to close any investment class;

(2) Create create any committees in addition to the workers' compensation audit committee, the workers' compensation actuarial committee, and the workers' compensation investment committee that the board determines are necessary to assist the board in performing its duties.

(H) The office of a member of the board who is convicted of or pleads guilty to a felony, a theft offense as defined in section 2913.01 of the Revised Code, or a violation of section 102.02, 102.03, 102.04, 2921.02, 2921.11, 2921.13, 2921.31, 2921.41, 2921.42, 2921.43, or 2921.44 of the Revised Code shall be deemed vacant. The vacancy shall be filled in the same manner as the original appointment. A person who has pleaded guilty to or been convicted of an offense of that nature is ineligible to be a member of the board. A member who receives a bill of indictment for any of the offenses specified in this section shall be automatically suspended from the board pending resolution of the criminal matter.

(I) For the purposes of division (G)(1) of section 121.22 of the Revised Code, the meeting between the governor and the board to review the administrator's performance as required under division (F)(15)(12) of this section shall be considered a meeting regarding the employment of the administrator.

Sec. 4121.79.  (A) The director of the workers' compensation council shall prepare and submit to the council, for its approval, a biennial budget that includes an itemized estimate of the amounts necessary to pay the expenses of the council during the succeeding biennium. The director may request and the council may approve, anytime during that biennium, additional amounts to cover costs for audits or other necessary expenses that were not included in that budget. After the budget is approved, the director of the council shall separate from the budget the portion covering the costs of compensation and benefits for the employees of the council and submit only that portion to the director of budget and management as the council's budget request for purposes of section 126.02 of the Revised Code.

(B) The council shall establish policies and procedures for purchasing goods and services on a competitive basis and maintaining tangible personal property. The policies and procedures shall be designed to safeguard the use of funds received by the council. An audit performed under Chapter 117. of the Revised Code shall include a determination of the council's compliance with those policies and procedures.

The council is not subject to the requirements specified in Chapter 123. or 125. of the Revised Code and those chapters do not apply to the council. However, the council may request the department of administrative services, and the department may agree, to perform for the council any of the services the department is authorized to perform under those chapters. The council may enter into an agreement with the director of administrative services for the performance of those requested services.

(C) There is hereby created the workers' compensation council fund, which shall be in the custody of the treasurer of state but shall not be a part of the state treasury. The fund shall consist of all moneys transferred into it by the administrator of workers' compensation pursuant to section 4123.342 of the Revised Code. The council shall use the fund to pay the expenses incurred by the council. Except as otherwise provided in division (D) of this section, the treasurer of state shall disburse moneys from the fund upon instruments authorized by the council and signed by the director.

The council is the trustee of the workers' compensation council fund. At the request of the director of the council, the treasurer of state shall select and contract with one or more investment managers to invest all money credited to the fund that is not currently needed for carrying out the functions of the council. The treasurer of state shall contract with an investment manager for whom the administrator requested a criminal records check pursuant to section 4123.444 of the Revised Code and who has not been convicted of or pleaded guilty to a financial or investment crime as defined in that section. The eligible list of investments shall be the same as those specified in the investment policy for the state insurance fund bureau of workers' compensation custodial funds approved by the bureau of workers' compensation board of directors pursuant to section 4121.12 of the Revised Code. All investments are subject to the same limitations and requirements as specified for the state insurance fund bureau of workers' compensation custodial funds under sections 4121.12, 4121.126, 4121.127, 4123.44, and 4123.442, 4123.443, and 4123.444 of the Revised Code. All investment earnings of the fund shall be credited to the fund.

(D) There is hereby created in the state treasury the workers' compensation council remuneration fund. The treasurer of state periodically shall pay into that fund, from the workers' compensation council fund created in division (C) of this section, amounts requested by the director of the council to pay the compensation and benefits of the employees of the council. Amounts credited to the remuneration fund shall be used by the director of the council solely to pay the compensation and benefits of all employees of the council. All investment earnings of the remuneration fund shall be credited to that fund.

Sec. 4123.01.  As used in this chapter:

(A)(1) "Employee" means:

(a) Every person in the service of the state, or of any county, municipal corporation, township, or school district therein, including regular members of lawfully constituted police and fire departments of municipal corporations and townships, whether paid or volunteer, and wherever serving within the state or on temporary assignment outside thereof, and executive officers of boards of education, under any appointment or contract of hire, express or implied, oral or written, including any elected official of the state, or of any county, municipal corporation, or township, or members of boards of education.

As used in division (A)(1)(a) of this section, the term "employee" includes the following persons when responding to an inherently dangerous situation that calls for an immediate response on the part of the person, regardless of whether the person is within the limits of the jurisdiction of the person's regular employment or voluntary service when responding, on the condition that the person responds to the situation as the person otherwise would if the person were on duty in the person's jurisdiction:

(i) Off-duty peace officers. As used in division (A)(1)(a)(i) of this section, "peace officer" has the same meaning as in section 2935.01 of the Revised Code.

(ii) Off-duty firefighters, whether paid or volunteer, of a lawfully constituted fire department.

(iii) Off-duty first responders, emergency medical technicians-basic, emergency medical technicians-intermediate, or emergency medical technicians-paramedic, whether paid or volunteer, of an ambulance service organization or emergency medical service organization pursuant to Chapter 4765. of the Revised Code.

(b) Every person in the service of any person, firm, or private corporation, including any public service corporation, that (i) employs one or more persons regularly in the same business or in or about the same establishment under any contract of hire, express or implied, oral or written, including aliens and minors, household workers who earn one hundred sixty dollars or more in cash in any calendar quarter from a single household and casual workers who earn one hundred sixty dollars or more in cash in any calendar quarter from a single employer, or (ii) is bound by any such contract of hire or by any other written contract, to pay into the state insurance fund the premiums provided by this chapter.

(c) Every person who performs labor or provides services pursuant to a construction contract, as defined in section 4123.79 of the Revised Code, if at least ten of the following criteria apply:

(i) The person is required to comply with instructions from the other contracting party regarding the manner or method of performing services;

(ii) The person is required by the other contracting party to have particular training;

(iii) The person's services are integrated into the regular functioning of the other contracting party;

(iv) The person is required to perform the work personally;

(v) The person is hired, supervised, or paid by the other contracting party;

(vi) A continuing relationship exists between the person and the other contracting party that contemplates continuing or recurring work even if the work is not full time;

(vii) The person's hours of work are established by the other contracting party;

(viii) The person is required to devote full time to the business of the other contracting party;

(ix) The person is required to perform the work on the premises of the other contracting party;

(x) The person is required to follow the order of work set by the other contracting party;

(xi) The person is required to make oral or written reports of progress to the other contracting party;

(xii) The person is paid for services on a regular basis such as hourly, weekly, or monthly;

(xiii) The person's expenses are paid for by the other contracting party;

(xiv) The person's tools and materials are furnished by the other contracting party;

(xv) The person is provided with the facilities used to perform services;

(xvi) The person does not realize a profit or suffer a loss as a result of the services provided;

(xvii) The person is not performing services for a number of employers at the same time;

(xviii) The person does not make the same services available to the general public;

(xix) The other contracting party has a right to discharge the person;

(xx) The person has the right to end the relationship with the other contracting party without incurring liability pursuant to an employment contract or agreement.

Every person in the service of any independent contractor or subcontractor who has failed to pay into the state insurance fund the amount of premium determined and fixed by the administrator of workers' compensation for the person's employment or occupation or if a self-insuring employer has failed to pay compensation and benefits directly to the employer's injured and to the dependents of the employer's killed employees as required by section 4123.35 of the Revised Code, shall be considered as the employee of the person who has entered into a contract, whether written or verbal, with such independent contractor unless such employees or their legal representatives or beneficiaries elect, after injury or death, to regard such independent contractor as the employer.

(d) Every person to whom all of the following apply:

(i) The person is a resident of a state other than this state and is covered by that other state's workers' compensation law;

(ii) The person performs labor or provides services for that person's employer while temporarily within this state;

(iii) The laws of that other state do not include the provisions described in division (H)(4) of section 4123.54 of the Revised Code.

(2) "Employee" does not mean:

(a) A duly ordained, commissioned, or licensed minister or assistant or associate minister of a church in the exercise of ministry;

(b) Any officer of a family farm corporation;

(c) An individual incorporated as a corporation; or

(d) An individual who otherwise is an employee of an employer but who signs the waiver and affidavit specified in section 4123.15 of the Revised Code on the condition that the administrator has granted a waiver and exception to the individual's employer under section 4123.15 of the Revised Code.

Any employer may elect to include as an "employee" within this chapter, any person excluded from the definition of "employee" pursuant to division (A)(2) of this section. If an employer is a partnership, sole proprietorship, individual incorporated as a corporation, or family farm corporation, such employer may elect to include as an "employee" within this chapter, any member of such partnership, the owner of the sole proprietorship, the individual incorporated as a corporation, or the officers of the family farm corporation. In the event of an election, the employer shall serve upon the bureau of workers' compensation written notice naming the persons to be covered, include such employee's remuneration for premium purposes in all future payroll reports, and no person excluded from the definition of "employee" pursuant to division (A)(2) of this section, proprietor, individual incorporated as a corporation, or partner shall be deemed an employee within this division until the employer has served such notice.

For informational purposes only, the bureau shall prescribe such language as it considers appropriate, on such of its forms as it considers appropriate, to advise employers of their right to elect to include as an "employee" within this chapter a sole proprietor, any member of a partnership, an individual incorporated as a corporation, the officers of a family farm corporation, or a person excluded from the definition of "employee" under division (A)(2) of this section, that they should check any health and disability insurance policy, or other form of health and disability plan or contract, presently covering them, or the purchase of which they may be considering, to determine whether such policy, plan, or contract excludes benefits for illness or injury that they might have elected to have covered by workers' compensation.

(B) "Employer" means:

(1) The state, including state hospitals, each county, municipal corporation, township, school district, and hospital owned by a political subdivision or subdivisions other than the state;

(2) Every person, firm, professional employer organization as defined in section 4125.01 of the Revised Code, and private corporation, including any public service corporation, that (a) has in service one or more employees or shared employees regularly in the same business or in or about the same establishment under any contract of hire, express or implied, oral or written, or (b) is bound by any such contract of hire or by any other written contract, to pay into the insurance fund the premiums provided by this chapter.

All such employers are subject to this chapter. Any member of a firm or association, who regularly performs manual labor in or about a mine, factory, or other establishment, including a household establishment, shall be considered an employee in determining whether such person, firm, or private corporation, or public service corporation, has in its service, one or more employees and the employer shall report the income derived from such labor to the bureau as part of the payroll of such employer, and such member shall thereupon be entitled to all the benefits of an employee.

(C) "Injury" includes any injury, whether caused by external accidental means or accidental in character and result, received in the course of, and arising out of, the injured employee's employment. "Injury" does not include:

(1) Psychiatric conditions except where the claimant's psychiatric conditions have arisen from an injury or occupational disease sustained by that claimant or where the claimant's psychiatric conditions have arisen from sexual conduct in which the claimant was forced by threat of physical harm to engage or participate;

(2) Injury or disability caused primarily by the natural deterioration of tissue, an organ, or part of the body;

(3) Injury or disability incurred in voluntary participation in an employer-sponsored recreation or fitness activity if the employee signs a waiver of the employee's right to compensation or benefits under this chapter prior to engaging in the recreation or fitness activity;

(4) A condition that pre-existed an injury unless that pre-existing condition is substantially aggravated by the injury. Such a substantial aggravation must be documented by objective diagnostic findings, objective clinical findings, or objective test results. Subjective complaints may be evidence of such a substantial aggravation. However, subjective complaints without objective diagnostic findings, objective clinical findings, or objective test results are insufficient to substantiate a substantial aggravation.

(D) "Child" includes a posthumous child and a child legally adopted prior to the injury.

(E) "Family farm corporation" means a corporation founded for the purpose of farming agricultural land in which the majority of the voting stock is held by and the majority of the stockholders are persons or the spouse of persons related to each other within the fourth degree of kinship, according to the rules of the civil law, and at least one of the related persons is residing on or actively operating the farm, and none of whose stockholders are a corporation. A family farm corporation does not cease to qualify under this division where, by reason of any devise, bequest, or the operation of the laws of descent or distribution, the ownership of shares of voting stock is transferred to another person, as long as that person is within the degree of kinship stipulated in this division.

(F) "Occupational disease" means a disease contracted in the course of employment, which by its causes and the characteristics of its manifestation or the condition of the employment results in a hazard which distinguishes the employment in character from employment generally, and the employment creates a risk of contracting the disease in greater degree and in a different manner from the public in general.

(G) "Self-insuring employer" means an employer who is granted the privilege of paying compensation and benefits directly under section 4123.35 of the Revised Code, including a board of county commissioners for the sole purpose of constructing a sports facility as defined in section 307.696 of the Revised Code, provided that the electors of the county in which the sports facility is to be built have approved construction of a sports facility by ballot election no later than November 6, 1997.

(H) "Public employer" means an employer as defined in division (B)(1) of this section.

(I) "Sexual conduct" means vaginal intercourse between a male and female; anal intercourse, fellatio, and cunnilingus between persons regardless of gender; and, without privilege to do so, the insertion, however slight, of any part of the body or any instrument, apparatus, or other object into the vaginal or anal cavity of another. Penetration, however slight, is sufficient to complete vaginal or anal intercourse.

(J) "Other-states' insurer" means an insurance company that is authorized to provide workers' compensation insurance coverage in any of the states that permit employers to obtain insurance for workers' compensation claims through insurance companies.

(K) "Other-states' coverage" means insurance coverage purchased by an employer for workers' compensation claims that arise in a state or states other than this state and that are filed by the employees of the employer or those employee's dependents, as applicable, in that other state or those other states.

(L) "Bureau of workers' compensation custodial funds" means the state insurance fund created in section 4123.30 of the Revised Code, the premium payment security fund created in section 4123.34 of the Revised Code, the self-insuring employer guaranty fund created in section 4123.351 of the Revised Code, the disabled worker relief fund created in section 4123.412 of the Revised Code, the public work-relief employees' compensation fund created in section 4127.05 of the Revised Code, the coal-workers pneumoconiosis fund created in section 4131.03 of the Revised Code, and the marine industry fund created in section 4131.13 of the Revised Code.

Sec. 4123.34.  It shall be the duty of the bureau of workers' compensation board of directors and the administrator of workers' compensation to safeguard and maintain the solvency of the state insurance fund and all other funds specified in this chapter and Chapters 4121., 4127., and 4131. of the Revised Code. The administrator, in the exercise of the powers and discretion conferred upon the administrator in section 4123.29 of the Revised Code, shall fix and maintain, with the advice and consent of the board, for each class of occupation or industry, the lowest possible rates of premium consistent with the maintenance of a solvent state insurance fund and the creation and maintenance of a reasonable surplus, after the payment of legitimate claims for injury, occupational disease, and death that the administrator authorizes to be paid from the state insurance fund for the benefit of injured, diseased, and the dependents of killed employees. In establishing rates, the administrator shall take into account the necessity of ensuring sufficient money is set aside in the premium payment security fund to cover any defaults in premium obligations. The administrator shall observe all of the following requirements in fixing the rates of premium for the risks of occupations or industries:

(A) The administrator shall keep an accurate account of the money paid in premiums by each of the several classes of occupations or industries, and the losses on account of injuries, occupational disease, and death of employees thereof, and also keep an account of the money received from each individual employer and the amount of losses incurred against the state insurance fund on account of injuries, occupational disease, and death of the employees of the employer.

(B) Ten per cent of the money paid into the state insurance fund shall be set aside for the creation of a surplus until the surplus amounts to the sum of one hundred thousand dollars, after which time, whenever necessary in the judgment of the administrator to guarantee a solvent state insurance fund, a sum not exceeding five per cent of all the money paid into the state insurance fund shall be credited to the surplus fund. In addition to all statutory authority under this chapter and Chapter 4121. of the Revised Code, the administrator has discretionary and contingency authority to make charges to surplus. The administrator shall account for all charges, whether statutory, discretionary, or contingency, that the administrator may make to surplus. A revision of basic rates shall be made annually on the first day of July.

Notwithstanding any provision of the law to the contrary, one hundred eighty days after the effective date on which self-insuring employers first may elect under division (D) of section 4121.66 of the Revised Code to directly pay for rehabilitation expenses, the administrator shall calculate the deficit, if any, in the portion of surplus fund that is used for reimbursement to self-insuring employers for all expenses other than handicapped reimbursement under section 4123.343 of the Revised Code. The administrator, from time to time, may determine whether the surplus fund has such a deficit and may assess all self-insuring employers who participated in the portion of the surplus fund during the accrual of the deficit and who during that time period have not made the election under division (D) of section 4121.66 of the Revised Code the amount the administrator determines necessary to reduce the deficit.

Revisions of basic rates shall be in accordance with the oldest four of the last five calendar years of the combined accident and occupational disease experience of the administrator in the administration of this chapter, as shown by the accounts kept as provided in this section, excluding the experience of employers that are no longer active if the administrator determines that the inclusion of those employers would have a significant negative impact on the remainder of the employers in a particular manual classification; and the administrator shall adopt rules, with the advice and consent of the board, governing rate revisions, the object of which shall be to make an equitable distribution of losses among the several classes of occupation or industry, which rules shall be general in their application.

(C) The administrator may apply that form of rating system that the administrator finds is best calculated to merit rate or individually rate the risk more equitably, predicated upon the basis of its individual industrial accident and occupational disease experience, and may encourage and stimulate accident prevention. The administrator shall develop fixed and equitable rules controlling the rating system, which rules shall conserve to each risk the basic principles of workers' compensation insurance.

(D) The administrator, from the money paid into the state insurance fund, shall set aside into an account of the state insurance fund titled a premium payment security fund sufficient money to pay for any premiums due from an employer and uncollected that are in excess of the employer's premium security deposit.

The fund shall be in the custody of the treasurer of state. The administrator may invest the surplus and reserve belonging to the fund in accordance with section 4123.44 of the Revised Code. All investment earnings of the fund shall be deposited in the fund. Disbursements from the fund shall be made by the bureau of workers' compensation upon order of the administrator to the state insurance fund. The use of the moneys held by the premium payment security fund is restricted to reimbursement to the state insurance fund of premiums due and uncollected in excess of an employer's premium security deposit. The moneys constituting the premium payment security fund shall be maintained without regard to or reliance upon any other fund. This section does not prevent the deposit or investment of the premium payment security fund with any other fund created by this chapter, but the premium payment security fund is separate and distinct for every other purpose and a strict accounting thereof shall be maintained.

(E) The administrator may grant discounts on premium rates for employers who meet either of the following requirements:

(1) Have not incurred a compensable injury for one year or more and who maintain an employee safety committee or similar organization or make periodic safety inspections of the workplace.

(2) Successfully complete a loss prevention program prescribed by the superintendent of the division of safety and hygiene and conducted by the division or by any other person approved by the superintendent.

(F)(1) In determining the premium rates for the construction industry the administrator shall calculate the employers' premiums based upon the actual remuneration construction industry employees receive from construction industry employers, provided that the amount of remuneration the administrator uses in calculating the premiums shall not exceed an average weekly wage equal to one hundred fifty per cent of the statewide average weekly wage as defined in division (C) of section 4123.62 of the Revised Code.

(2) Division (F)(1) of this section shall not be construed as affecting the manner in which benefits to a claimant are awarded under this chapter.

(3) As used in division (F) of this section, "construction industry" includes any activity performed in connection with the erection, alteration, repair, replacement, renovation, installation, or demolition of any building, structure, highway, or bridge.

Sec. 4123.351.  (A) The administrator of workers' compensation shall require every self-insuring employer to pay a contribution, calculated under this section, to the self-insuring employers' guaranty fund established pursuant to this section. The fund shall provide for payment of compensation and benefits to employees of the self-insuring employer in order to cover any default in payment by that employer.

(B) The bureau of workers' compensation shall operate the self-insuring employers' guaranty fund for self-insuring employers. The administrator annually shall establish the contributions due from self-insuring employers for the fund at rates as low as possible but such as will assure sufficient moneys to guarantee the payment of any claims against the fund. The bureau's operation of the fund is not subject to sections 3929.10 to 3929.18 of the Revised Code or to regulation by the superintendent of insurance.

(C) If a self-insuring employer defaults, the bureau shall recover the amounts paid as a result of the default from the self-insuring employers' guaranty fund. If a self-insuring employer defaults and is in compliance with this section for the payment of contributions to the fund, such self-insuring employer is entitled to the immunity conferred by section 4123.74 of the Revised Code for any claim arising during any period the employer is in compliance with this section.

(D)(1) There is hereby established a self-insuring employers' guaranty fund, which shall be in the custody of the treasurer of state and which shall be separate from the other funds established and administered pursuant to this chapter. The fund shall consist of contributions and other payments made by self-insuring employers under this section. All investment earnings of the fund shall be credited to the fund. The bureau shall make disbursements from the fund pursuant to this section.

(2) The administrator has the same powers to may invest any of the surplus or and reserve belonging to the fund as are delegated to the administrator under in accordance with section 4123.44 of the Revised Code with respect to the state insurance fund. The administrator shall apply interest earned solely to the reduction of assessments for contributions from self-insuring employers and to the payments required due to defaults.

(3) If the bureau of workers' compensation board of directors determines that reinsurance of the risks of the fund is necessary to assure solvency of the fund, the board may:

(a) Enter into contracts for the purchase of reinsurance coverage of the risks of the fund with any company or agency authorized by law to issue contracts of reinsurance;

(b) Require the administrator to pay the cost of reinsurance from the fund;

(c) Include the costs of reinsurance as a liability and estimated liability of the fund.

(E) The administrator, with the advice and consent of the board, may adopt rules pursuant to Chapter 119. of the Revised Code for the implementation of this section, including a rule, notwithstanding division (C) of this section, requiring self-insuring employers to provide security in addition to the contribution to the self-insuring employers' guaranty fund required by this section. The additional security required by the rule, as the administrator determines appropriate, shall be sufficient and adequate to provide for financial assurance to meet the obligations of self-insuring employers under this chapter and Chapter 4121. of the Revised Code.

(F) The purchase of coverage under this section by self-insuring employers is valid notwithstanding the prohibitions contained in division (A) of section 4123.82 of the Revised Code and is in addition to the indemnity contracts that self-insuring employers may purchase pursuant to division (B) of section 4123.82 of the Revised Code.

(G) The administrator, on behalf of the self-insuring employers' guaranty fund, has the rights of reimbursement and subrogation and shall collect from a defaulting self-insuring employer or other liable person all amounts the administrator has paid or reasonably expects to pay from the fund on account of the defaulting self-insuring employer.

(H) The assessments for contributions, the administration of the self-insuring employers' guaranty fund, the investment of the money in the fund, and the payment of liabilities incurred by the fund do not create any liability upon the state.

Except for a gross abuse of discretion, neither the board, nor the individual members thereof, nor the administrator shall incur any obligation or liability respecting the assessments for contributions, the administration of the self-insuring employers' guaranty fund, the investment of the fund, or the payment of liabilities therefrom.

Sec. 4123.412.  For the relief of persons who are permanently and totally disabled as the result of injury or disease sustained in the course of their employment and who are receiving workers' compensation which is payable to them by virtue of and under the laws of this state in amounts, the total of which, when combined with disability benefits received pursuant to the Social Security Act is less than three hundred forty-two dollars per month adjusted annually as provided in division (B) of section 4123.62 of the Revised Code, there is hereby created a separate fund to be known as the disabled workers' relief fund, which fund shall consist of the sums that are from time to time appropriated by the general assembly and made available to the order of the bureau of workers' compensation to carry out the objects and purposes of sections 4123.412 to 4123.418 of the Revised Code. The fund shall be in the custody of the treasurer of the state. The administrator may invest the surplus and reserve belonging to the fund in accordance with section 4123.44 of the Revised Code. Disbursements from the fund shall be made by the bureau to those persons entitled to participate therein and in amounts to each participant as is provided in section 4123.414 of the Revised Code. All investment earnings of the fund shall be credited to the fund.

Sec. 4123.44.  The members of the bureau of workers' compensation board of directors, the administrator of workers' compensation, and the bureau of workers' compensation chief investment officer are the trustees of the state insurance fund bureau of workers' compensation custodial funds. The administrator, in accordance with sections 4121.126 and 4121.127 of the Revised Code and the investment policy approved by the board pursuant to section 4121.12 of the Revised Code, and in consultation with the bureau of workers' compensation chief investment officer, may invest any of the surplus or reserve belonging to each of the state insurance fund bureau of workers' compensation custodial funds in the classes of investments specified in section 4123.443 of the Revised Code. The administrator and the bureau of workers' compensation chief investment officer shall not deviate from the investment policy approved by the board without the approval of the workers' compensation investment committee and the board.

The administrator shall not invest in any type of investment specified in divisions (B)(1) to (10) of section 4123.442 of the Revised Code.

The administrator and other fiduciaries shall discharge their duties with respect to the funds 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, and by diversifying the investments of the assets of the funds so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

To facilitate investment of the funds, the administrator may establish a partnership, trust, limited liability company, corporation, including a corporation exempt from taxation under the Internal Revenue Code, 100 Stat. 2085, 26 U.S.C. 1, as amended, or any other legal entity authorized to transact business in this state.

When reporting on the performance of investments, the administrator shall comply with the performance presentation standards established by the association for investment management and research.

All investments shall be purchased at current market prices and the evidences of title to the investments shall be placed in the custody of the treasurer of state, who is hereby designated as custodian, or in the custody of the treasurer of state's authorized agent. Evidences of title of the investments so purchased may be deposited by the treasurer of state for safekeeping with an authorized agent selected by the treasurer of state who is a qualified trustee under section 135.18 of the Revised Code. The treasurer of state or the agent shall collect the principal, dividends, distributions, and interest as they become due and payable and place them when collected into the state insurance appropriate bureau of workers' compensation custodial fund.

The treasurer of state shall pay for investments purchased by the administrator on receipt of written or electronic instructions from the administrator or the administrator's designated agent authorizing the purchase, and pending receipt of the evidence of title of the investment by the treasurer of state or the treasurer of state's authorized agent. The administrator may sell investments held by the administrator, and the treasurer of state or the treasurer of state's authorized agent shall accept payment from the purchaser and deliver evidence of title of the investment to the purchaser, on receipt of written or electronic instructions from the administrator or the administrator's designated agent authorizing the sale, and pending receipt of the moneys for the investments. The amount received shall be placed in the state insurance appropriate bureau of workers' compensation custodial fund. The administrator and the treasurer of state may enter into agreements to establish procedures for the purchase and sale of investments under this division and the custody of the investments.

No purchase or sale of any investment shall be made under this section, except as authorized by the administrator.

Any statement of financial position distributed by the administrator shall include the fair value, as of the statement date, of all investments held by the administrator under this section.

When in the judgment of the administrator it is necessary to provide available funds for the payment of compensation or benefits under this chapter, the administrator may borrow money from any available source and pledge as security a sufficient amount of bonds or other securities in which the state insurance fund is invested. The aggregate unpaid amount of loans existing at any one time for money so borrowed shall not exceed ten million dollars. The bonds or other securities so pledged as security for such loans to the administrator shall be the sole security for the payment of the principal and interest of any such loan. The administrator shall not be personally liable for the payment of the principal or the interest of any such loan. No such loan shall be made for a longer period of time than one year. Such loans may be renewed but no one renewal shall be for a period in excess of one year. Such loans shall bear such rate of interest as the administrator determines and in negotiating the loans, the administrator shall endeavor to secure as favorable interest rates and terms as circumstances will permit.

The treasurer of state may deliver to the person or governmental agency making such loan, the bonds or other securities which are to be pledged by the administrator as security for such loan, upon receipt by the treasurer of state of an order of the administrator authorizing such loan. Upon payment of any such loan by the administrator, the bonds or other securities pledged as security therefor shall be returned to the treasurer of state as custodian of such bonds.

The administrator may pledge with the treasurer of state such amount of bonds or other securities in which the state insurance fund is invested as is reasonably necessary as security for any certificates issued, or paid out, by the treasurer of state upon any warrants drawn by the administrator.

The administrator, subject to the approval of the board, may secure investment information services, consulting services, and or other like services to facilitate investment of the surplus and reserve belonging to each of the state insurance fund bureau of workers' compensation custodial funds and, subject to the approval of the board, may enter into a contract with an investment manager to have that manager invest the assets of those funds. The administrator shall pay the expense of securing such services from the state insurance fund.

Sec. 4123.442. When developing the investment policy for the investment of the assets of the bureau of workers' compensation custodial funds specified in this chapter and Chapters 4121., 4127., and 4131. of the Revised Code, the workers' compensation investment committee shall do all of the following:

(A) Specify the asset allocation targets and ranges, risk factors, asset class benchmarks, time horizons, total return objectives, and performance evaluation guidelines;

(B) Prohibit investing the assets of those funds, directly or indirectly, in vehicles that target any of the following:

(1) Coins;

(2) Artwork;

(3) Horses;

(4) Jewelry or gems;

(5) Stamps;

(6) Antiques;

(7) Artifacts;

(8) Collectibles;

(9) Memorabilia;

(10) Similar unregulated investments that are not commonly part of an institutional portfolio, that lack liquidity, and that lack readily determinable valuation.

(C) Specify that the administrator of workers' compensation may invest in an investment class only if the bureau of workers' compensation board of directors, by a majority vote, opens that class Use only the classes of investments specified in section 4123.443 of the Revised Code;

(D) Prohibit investing the assets of those funds in any class of investments the board, by majority vote, closed, or any specific investment in which the board prohibits the administrator from investing;

(E) Not specify in the investment policy that the administrator or employees of the bureau of workers' compensation are prohibited from conducting business with an investment management or consulting firm, any investment management or consulting professional associated with that firm, any third party solicitor associated with that firm, or any political action committee controlled by that firm or controlled by an investment management or consulting professional of that firm based on criteria that are more restrictive than the restrictions described in divisions (Y) and (Z) of section 3517.13 of the Revised Code.

Sec. 4123.443. (A) The administrator of workers' compensation, in accordance with section 4123.44 of the Revised Code, may invest the surplus and reserve of each of the bureau of workers' compensation custodial funds in any of the following classes of investments:

(1) Bonds and mortgages on unencumbered real estate within this or any other state worth twenty-five per cent more than the sum loaned thereon, exclusive of buildings, unless such buildings are insured by some company authorized to do business in this state;

(2) Bonds, notes, debentures, and other such obligations secured by mortgages insured by the federal housing administrator or the secretary of agriculture of the United States under Title I of "The Bankhead-Jones Farm Tenant Act" as amended;

(3) Loans to veterans guaranteed in whole or in part by the United States pursuant to Title III of the "Servicemen's Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as amended, provided such guaranteed loans are liens upon real estate;

(4) Legally authorized and executed bonds, notes, warrants, and securities that are the direct obligation of or are guaranteed as to both principal and interest by Canada, that are the direct obligation of or are guaranteed as to both principal and interest by any province of Canada, that are the direct obligation of or are guaranteed as to both principal and interest by any municipal corporation of Canada having a population of one hundred thousand or more by the latest official census, and that are not in default as to principal or interest;

(5) Obligations issued, assumed, or guaranteed by the international finance corporation or by the international bank for reconstruction and development, the Asian development bank, the inter-American development bank, the African development bank, or similar development bank in which the president, as authorized by congress and on behalf of the United States, has accepted membership.

(6) Bonds or other evidences of indebtedness, not in default as to principal or interest, that are valid obligations issued, assumed, or guaranteed by the United States or for which the faith of the United States is pledged to provide payment of the interest and principal, by any state thereof, by the Commonwealth of Puerto Rico, by any territory or insular possession of the United States, or by the District of Columbia, or for which the faith of the state or the District of Columbia is pledged to provide payment of the interest and principal;

(7) Bonds or other evidences of indebtedness, not in default as to principal or interest, that are valid obligations issued, assumed, or guaranteed by any county, municipal corporation, district, or political subdivision, or by any civil division or public instrumentality of such governmental units, if by statutory or other legal requirements such obligations are payable, as to both principal and interest, from taxes levied upon all taxable property within the jurisdiction of such governmental unit and if they are direct obligations of such a governmental unit, that unit has not defaulted for a period of more than one hundred twenty days in the payment of interest upon, or for a period of more than one year in the payment of principal of, any of its bonds, notes, warrants, securities, or other interest-bearing obligations, during the ten years immediately preceding the acquisition of such bonds, notes, warrants, securities, or other interest-bearing obligations;

(8) Bonds or other obligations issued by or for account of any governmental unit specified in division (A)(7) of this section having a population of five thousand or more by the latest official federal or state census that are payable as to both principal and interest from revenues or earnings from the whole or any part of a publicly owned utility, provided that by statute or other applicable legal requirements, rates from the service or operation of such utility must be fixed, maintained, and collected at all times so as to produce sufficient revenues or earnings to pay both principal and interest of such bonds or obligations as they become due;

(9) Any bonds or obligations issued or guaranteed by the United States, any state, the District of Columbia, the Commonwealth of Puerto Rico, any county, municipal corporation, district, political subdivision, civil division, commission, board, authority, agency, or other instrumentality of one or more of them, if all of the following apply:

(a) There is a specific pledge of revenues, earnings, or other adequate security;

(b) No prior or parity obligation of the same issuer, payable from revenues or earnings from the same source, has been in default as to principal or interest during the five years next preceding the date of such investment, but such issuer need not have been in existence for that period, and obligations acquired under this division may be newly issued;

(c) There is adequate provision for payment of expenses of operation and maintenance and the principal and interest on all obligations when due.

(10) Any bonds issued by or for federal land banks and any debentures issued by or for federal intermediate credit banks under the act of congress known as the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12 U.S.C. 641 and amendment thereto;

(11) Any debentures issued by or for banks for cooperatives under the act of congress known as the "Farm Credit Act of 1933," 48 Stat. 257, 12 U.S.C. 131 and amendments thereto;

(12) Bonds issued under the "Home Owners' Loan Act of 1933," 48 Stat. 128, 12 U.S.C. 1461;

(13) The stock of a national bank located in this state, organized under an act of congress entitled "An act to provide a national currency, secured by the pledge of United States stocks, and to provide for the circulation and redemption thereof," approved February 25, 1863, and acts amendatory thereof and supplementary thereto;

(14) First mortgage bonds of railroads upon which default in the payment of the interest coupons has not been made within three years prior to the purchase thereof by the administrator;

(15) Legally authorized and executed bonds, notes, warrants, and other interest-bearing securities of any school district, water district, road district; or any special district of any state or of the District of Columbia, if both of the following apply:

(a) Such school district, water district, road district, or special district has been created by legislative action and is empowered to levy taxes on all taxable property in such district for the payment of such bonds, notes, warrants, and other interest-bearing securities.

(b) Such school district, water district, road district, or special district has not defaulted for a period of more than one hundred twenty days in the payment of interest upon, or for a period of more than one year in the payment of principal of, its bonds, notes, warrants, and other interest-bearing securities, during the ten years immediately preceding the acquisition of such bonds, notes, warrants, and other interest-bearing securities.

(16) Any securities described in section 77r-1 of the "Secondary Mortgage Market Enhancement Act of 1984," 98 Stat. 1689, 15 U.S.C. 77r-1, subject to all of the limitations prescribed in divisions (B)(6) to (9) of this section for investments not guaranteed by the full faith and credit of the United States.

(17) Notwithstanding division (A)(16) of this section, any of the following securities:

(a) Securities offered and sold pursuant to 15 U.S.C. section 77d(5);

(b) Mortgage related securities described in 15 U.S.C. section 78c(a)(41);

(c) Securities issued or guaranteed by the federal home loan mortgage corporation or the federal national mortgage association.

(18) Bonds or other evidences of indebtedness, bearing or accruing interest, issued, assumed, or guaranteed by any solvent corporation, trust, partnership, or similar business entity organized and existing under the laws of this or any other state, or of the United States, the Commonwealth of Puerto Rico, or of the District of Columbia, or of Canada or any province of Canada, upon which there is no existing interest or principal default, provided that the bonds or other evidences of indebtedness are rated by at least one of the following:

(a) Moody's service;

(b) Standard and Poor's;

(c) Fitch ratings.

(19) Stocks or limited liability company membership interests of any insurance, financial, investment, or investment management companies if the investment management companies are registered with the securities and exchange commission under the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1, as amended;

(20) Other stocks of any solvent corporation organized under the laws of this or any other state, or of the United States, the District of Columbia, Canada, or any province of Canada;

(21) Tangible personal property or interests in that property for the production of income, provided that the amount of assets of the bureau of workers' compensation custodial fund that is invested in such property or interests does not exceed two per cent of the admitted assets of that fund;

(22) In equipment trust obligations or certificates, security agreements, or other evidences of indebtedness entered into or guaranteed by any company operating wholly or partly within the United States or Canada, if that debt obligation is secured by a first lien on tangible personal property that is purchased or secured for payment thereof and that debt obligation is repayable within twenty years from the date of issue in annual, semiannual, or more frequent installments beginning not later than the first year after that date;

(23) Government money market funds and money market funds that have received the highest credit ratings for money market funds offered by either Standard and Poor's or Moody's service;

(24) Negotiable promissory notes maturing in not more than six months from the date the note is issued, secured by collateral security through the transfer of any of the classes of securities described in this section, with absolute power of sale within twenty days after default in payment at maturity;

(25) Repurchase agreements with and interest-bearing obligations of, including savings accounts and time certificates of deposit of a national bank of the United States, a commonwealth bank of Puerto Rico, a chartered bank of Canada, or a state bank, provided such bank is either a member of the federal deposit insurance corporation created pursuant to the "Banking Act of 1933," as amended, or the Canada deposit insurance corporation created pursuant to the act of parliament known as the "Canada Deposit Insurance Corporation Act," as amended;

(26) Certificates of deposit, savings share accounts, investment share accounts, stock deposits, stock certificates, or other evidences of indebtedness of a savings and loan association, provided all such evidences of indebtedness are insured pursuant to the "Financial Institutions Reform, Recovery, and Enforcement Act of 1989," 103 Stat. 183, 12 U.S.C. 1811, as amended;

(27) Bankers' acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount with the federal reserve banks, provided that the same are accepted by a bank or trust company incorporated under the laws of the United States or of this state or any other bank or trust company which is a member of the federal reserve system;

(28) Except as provided in division (A) of section 4123.444 of the Revised Code, any of the following:

(a) Bonds, notes, debentures, or other evidences of indebtedness issued, assumed, or guaranteed by a solvent corporation, trust, or partnership formed or existing under the laws of a foreign jurisdiction, provided each such foreign investment is of the same kind and quality as United States investments authorized under this section;

(b) Common or preferred stock or shares of any solvent corporation formed or existing under the laws of a foreign jurisdiction, provided each such foreign investment is of the same kind and quality as United States investments authorized under this section;

(c) Bonds or other evidences of indebtedness issued, assumed, or guaranteed by a foreign jurisdiction.

(29) Except as provided in division (B) of section 4123.444 of the Revised Code, investments denominated in foreign currency regardless of whether they are foreign investments;

(30) Any securities or other property not otherwise permitted under this section, provided that the total amount of the assets of an individual bureau of workers' compensation custodial fund that is invested in those investments does not exceed, in the aggregate, six per cent of the total admitted assets of that fund and provided that those investments are made within the limitations prescribed in division (C) of section 4123.444 of the Revised Code;

(31) Within the limitations prescribed in division (C) of section 4123.444 of the Revised Code, loans or investments in small businesses having more than half of their assets or employees in this state and venture capital firms having an office within this state, provided that, as a condition of the administrator making an investment in a venture capital firm, the firm must agree to use its best efforts to make investments, in an aggregate amount at least equal to the investment to be made by the administrator in that venture capital firm, in small businesses having their principal offices within this state and having either more than one-half of their assets within this state or more than one-half of their employees employed within this state, and provided that the amount of assets of a bureau of workers' compensation custodial fund that is invested in such investments does not exceed five per cent of the total admitted assets of that fund.

(B) For purposes of this section and section 4123.444 of the Revised Code, the admitted assets of an individual bureau of workers' compensation custodial fund shall be calculated as of the thirty-first day of December immediately preceding the date the value of the applicable fund is determined.

(C) As used in this section and section 4123.444 of the Revised Code:

(1) "Foreign currency" means a currency other than that of the United States.

(2) "Foreign jurisdiction" means a jurisdiction outside the United States, Puerto Rico, or Canada whose bonds are rated 1 by the securities valuation office of the national association of insurance commissioners.

(3) "Government money market fund" means a fund that at all times invests in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements comprised of such obligations, and that qualifies for investment without a reserve pursuant to the purposes and procedures of the securities valuation office of the national association of insurance commissioners.

(4) "Small businesses" means any corporation, partnership, proprietorship, or other entity that either does not have more than four hundred employees, or would qualify as a small business for the purpose of receiving financial assistance from small business investment companies licensed under the "Small Business Investment Act of 1958," 72 Stat. 689, 15 U.S.C. 661, as amended, and rules of the small business administration.

(5) "Venture capital firm" means any corporation, partnership, proprietorship, or other entity, the principal business of which is or will be the making of investments in small businesses.

(D) As used in division (A)(31) of this section, "investments" means any equity investment, including limited partnership interests and other equity interests in which liability is limited to the amount of the investment, but does not include general partnership interests or other interests involving general liability.

Sec. 4123.444. (A) The administrator of workers' compensation shall not invest the assets of an individual bureau of workers' compensation custodial fund in foreign investments under division (A)(28) of section 4123.443 of the Revised Code, including investments denominated in foreign currency, in a sum exceeding in the aggregate fifteen per cent of the admitted assets of that fund. The aggregate amount of the assets of a bureau of workers' compensation custodial fund that is invested in a single foreign jurisdiction shall not exceed three per cent of the admitted assets of the surplus and reserve of that fund.

(B) The administrator shall not invest the assets of an individual bureau of workers' compensation custodial fund in investments denominated in foreign currency in a sum exceeding in the aggregate ten per cent of the admitted assets of that fund. The aggregate amount of the assets of a bureau of workers' compensation custodial fund that is invested in investments denominated in a single foreign currency shall not exceed three per cent of the admitted assets of that fund.

(C) The administrator shall not, at any time, invest the assets of an individual bureau of workers' compensation custodial fund in a sum exceeding five per cent of the admitted assets of that fund in the bonds, notes, debentures, other evidences of indebtedness, and stocks of a particular corporation, trust, partnership, or similar business entity and shall not, at any time, own directly or indirectly more than twenty-five per cent of the outstanding bonds, notes, debentures, other evidences of indebtedness, and stocks of any corporation.

(D) In the event that, subsequent to being made under division (A)(31) of section 4123.443 of the Revised Code, a loan or investment is determined to have become qualified as a loan or investment under any of the divisions (A)(1) to (A)(25) of that section, the administrator may consider such loan or investment as held under those divisions and such loan or investment shall no longer be considered as having been made under division (A)(31) of that section.

(E) The administrator shall not own more than one-fourth of the capital stock of a national bank, shall not invest the assets of an individual bureau of workers' compensation custodial fund in the stocks and bonds of any railroad company or loan on any such stocks and bonds held in that fund in an amount that exceeds one-fifth of the surplus and reserve of that fund, and shall not invest the assets of an individual bureau of workers' compensation custodial fund in railroad property or loan on such property held in that fund in an amount that exceeds, in the aggregate, one-fourth of the surplus and reserve of that fund.

The amount of assets of a bureau of workers' compensation custodial fund invested in real estate in accordance with section 4123.443 of the Revised Code shall not exceed at any one time, ten per cent of the assets of the surplus and reserve of that fund. The amount of assets of a bureau of workers' compensation custodial fund invested in any one real estate investment shall not exceed at any one time, two per cent of the assets of the surplus and reserve of that fund. Nothing in this division authorizes the administrator to use an investment in real estate primarily for recreational, agricultural, or mining purposes.

Sec. 4123.444 4123.445.  (A) As used in this section and section 4123.445 4123.446 of the Revised Code:

(1) "Bureau of workers' compensation funds" means any fund specified in Chapter 4121., 4123., 4127., or 4131. of the Revised Code that the administrator of workers' compensation has the authority to invest, in accordance with the administrator's investment authority under section 4123.44 of the Revised Code.

(2) "Investment manager" means any person with whom the administrator of workers' compensation contracts pursuant to section 4123.44 of the Revised Code to facilitate the investment of assets of bureau of workers' compensation custodial funds.

(3)(2) "Business entity" means any person with whom an investment manager contracts for the investment of assets of bureau of workers' compensation custodial funds.

(4)(3) "Financial or investment crime" means any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, drug trafficking, or any criminal offense involving money or securities, as set forth in Chapters 2909., 2911., 2913., 2915., 2921., 2923., and 2925. of the Revised Code or other law of this state, or the laws of any other state or the United States that are substantially equivalent to those offenses.

(4) "Investment consultant" means any person with whom the administrator contracts pursuant to section 4123.44 of the Revised Code to obtain the person's advice and opinions in order to facilitate the investment of assets of bureau of workers' compensation custodial funds.

(B)(1) Before entering into a contract with an investment manager to invest bureau of workers' compensation custodial funds, the administrator shall do both of the following:

(a) Request from any investment manager with whom the administrator wishes to contract for those investments a list of all employees who will be investing assets of bureau of workers' compensation custodial funds. The list shall specify each employee's state of residence for the five years prior to the date of the administrator's request.

(b) Request that the superintendent of the bureau of criminal investigation and identification conduct a criminal records check in accordance with this section and section 109.579 of the Revised Code with respect to every employee the investment manager names in that list.

(2) After an investment manager enters into a contract with the administrator to invest bureau of workers' compensation custodial funds and before an investment manager enters into a contract with a business entity to facilitate those investments, the investment manager shall request from any business entity with whom the investment manager wishes to contract to make those investments a list of all employees who will be investing assets of the bureau of workers' compensation custodial funds. The list shall specify each employee's state of residence for the five years prior to the investment manager's request. The investment manager shall forward to the administrator the list received from the business entity. The administrator shall request the superintendent to conduct a criminal records check in accordance with this section and section 109.579 of the Revised Code with respect to every employee the business entity names in that list. Upon receipt of the results of the criminal records check, the administrator shall advise the investment manager whether the results were favorable or unfavorable.

(3) If, after a contract has been entered into between the administrator and an investment manager or between an investment manager and a business entity for the investment of assets of bureau of workers' compensation custodial funds, the investment manager or business entity wishes to have an employee who was not the subject of a criminal records check under division (B)(1) or (B)(2) of this section invest assets of the bureau of workers' compensation custodial funds, that employee shall be the subject of a criminal records check pursuant to this section and section 109.579 of the Revised Code prior to handling the investment of assets of those funds. The investment manager shall submit to the administrator the name of that employee along with the employee's state of residence for the five years prior to the date in which the administrator requests the criminal records check. The administrator shall request that the superintendent conduct a criminal records check on that employee pursuant to this section and section 109.579 of the Revised Code.

(4) Before entering into a contract with an investment consultant regarding the investment of bureau of workers' compensation custodial funds, the administrator shall do both of the following:

(a) Request from any investment consultant with whom the administrator wishes to contract a list of all employees who will be providing advice and opinions regarding the investment of the assets of bureau of workers' compensation custodial funds. The list shall specify each employee's state of residence for the five years prior to the date of the administrator's request.

(b) Request that the superintendent of the bureau of criminal investigation and identification conduct a criminal records check in accordance with this section and section 109.579 of the Revised Code with respect to every employee the investment consultant names in that list.

(5) If, after a contract has been entered into between the administrator and an investment consultant, the investment consultant wishes to have an employee who was not the subject of a criminal records check under division (B)(4) of this section provide advice and opinions regarding the investment of the assets of the bureau of workers' compensation custodial funds, that employee shall be the subject of a criminal records check pursuant to this section and section 109.579 of the Revised Code prior to providing advice and opinions regarding the investment of assets of those funds. The investment consultant shall submit to the administrator the name of that employee along with the employee's state of residence for the five years prior to the date in which the administrator requests the criminal records check. The administrator shall request that the superintendent conduct a criminal records check on that employee pursuant to this section and section 109.579 of the Revised Code.

(C)(1) If an employee who is the subject of a criminal records check pursuant to division (B) of this section has not been a resident of this state for the five-year period immediately prior to the time the criminal records check is requested or does not provide evidence that within that five-year period the superintendent has requested information about the employee from the federal bureau of investigation in a criminal records check, the administrator shall request that the superintendent obtain information from the federal bureau of investigation as a part of the criminal records check for the employee. If the employee has been a resident of this state for at least that five-year period, the administrator may, but is not required to, request that the superintendent request and include in the criminal records check information about that employee from the federal bureau of investigation.

(2) The administrator shall provide to an investment manager or consultant a copy of the form prescribed pursuant to division (C)(1) of section 109.579 of the Revised Code and a standard impression sheet for each employee for whom a criminal records check must be performed, to obtain fingerprint impressions as prescribed pursuant to division (C)(2) of section 109.579 of the Revised Code. The An investment manager shall obtain the completed form and impression sheet either directly from each employee or from a business entity and shall forward the completed form and sheet to the administrator, who shall forward these forms and sheets to the superintendent. An investment consultant shall obtain the completed form and impression sheet directly from each employee and shall forward the completed form and sheet to the administrator, who shall forward these forms and sheets to the superintendent.

(3) Any employee who receives a copy of the form and the impression sheet pursuant to division (C)(2) of this section and who is requested to complete the form and provide a set of fingerprint impressions shall complete the form or provide all the information necessary to complete the form and shall complete the impression sheets in the manner prescribed in division (C)(2) of section 109.579 of the Revised Code.

(D) For each criminal records check the administrator requests under this section, at the time the administrator makes a request the administrator shall pay to the superintendent the fee the superintendent prescribes pursuant to division (E) of section 109.579 of the Revised Code.

Sec. 4123.445 4123.446.  (A) The administrator of workers' compensation shall not enter into a contract with an investment manager for the investment of assets of the bureau of workers' compensation custodial funds if any employee of that investment manager who will be investing assets of bureau of workers' compensation custodial funds has been convicted of or pleaded guilty to a financial or investment crime.

(B) An investment manager who has entered into a contract with the bureau of workers' compensation for the investment of assets of bureau of workers' compensation custodial funds shall not contract with a business entity for the investment of those assets if any employee of that business manager who will be investing assets of bureau of workers' compensation custodial funds has been convicted of or pleaded guilty to a financial or investment crime.

(C) The administrator shall not enter into a contract with an investment consultant if any employee of that investment consultant who will be providing advice and opinions regarding the investment of the assets of bureau of workers' compensation custodial funds has been convicted of or pleaded guilty to a financial or investment crime.

(D) The administrator shall not enter into a contract with an investment manager or consultant who refuses to submit the list of the investment manager's or consultant's employees required under division (B) of section 4123.444 4123.445 of the Revised Code. An investment manager shall not enter into a contract with a business entity who refuses to submit the list of the business entity's employees required under division (B) of section 4123.444 4123.445 of the Revised Code.

(D)(E) If, after a contract has been awarded to an investment manager or, business entity for the investment of assets of bureau of workers' compensation funds, or an investment consultant, the investment manager or, business entity, or investment consultant discovers that an employee who is handling the investment of those assets, or an employee who is providing advice and opinions regarding the investment of those assets, as applicable, has been convicted of or pleaded guilty to a financial or investment crime, the investment manager or, business entity, or investment consultant immediately shall notify the administrator.

Sec. 4123.447.  When in the judgment of the administrator of workers' compensation it is necessary to provide available funds for the payment of compensation or benefits under this chapter or Chapter 4121., 4127., or 4131. of the Revised Code, the administrator may borrow money from any available source, deposit the money received in the bureau of workers' compensation custodial fund from which such compensation and benefits are paid, and pledge as security a sufficient amount of bonds or other securities in which the assets of that fund are invested. The aggregate unpaid amount of loans existing at any one time for money so borrowed shall not exceed ten million dollars. The bonds or other securities so pledged as security for such loans to the administrator shall be the sole security for the payment of the principal and interest of any such loan. The administrator shall not be personally liable for the payment of the principal or the interest of any such loan. No such loan shall be made for a longer period of time than one year. Such loans may be renewed but no one renewal shall be for a period in excess of one year. Such loans shall bear such rate of interest as the administrator determines and in negotiating the loans, the administrator shall endeavor to secure as favorable interest rates and terms as circumstances will permit.

The treasurer of state may deliver to the person or governmental agency making such loan, the bonds or other securities which are to be pledged by the administrator as security for such loan, upon receipt by the treasurer of state of an order of the administrator authorizing such loan. Upon payment of any such loan by the administrator, the bonds or other securities pledged as security therefor shall be returned to the treasurer of state as custodian of such bonds.

The administrator may pledge with the treasurer of state such amount of bonds or other securities in which the assets of the particular bureau of workers' compensation custodial fund are invested as is reasonably necessary as security for any certificates issued, or paid out, by the treasurer of state upon any warrants drawn by the administrator.

Sec. 4123.443 4123.448.  Rental payments by the bureau of workers' compensation or the industrial commission to or for the benefit of the state insurance fund for each building owned by the bureau that was constructed or acquired as an investment in productive real estate, shall be made pursuant to a lease agreement for a term that shall not exceed two years. Beginning July 1, 1991, the rental payments to be made under each such lease agreement shall include the amount needed to amortize the construction or acquisition costs for the building over a period not to exceed twenty-five years, and, until such costs are amortized, an amount representing return on investment to the state insurance fund determined by multiplying the unamortized acquisition or construction costs of the building by a rate that is not more than three per cent below the rate determined by the tax commissioner under division (B) of section 5703.47 of the Revised Code.

Sec. 4127.05.  The premiums, collected under this chapter shall be paid into a separate fund to be known as the "public work-relief employees' compensation fund," and all compensation, death benefits, and expenses for medical, nurse, and hospital services, medicine, and funerals, shall be paid out of the fund.

Such premiums shall be collected, the moneys of the fund disbursed and the fund maintained, without regard to or reliance upon any other fund mentioned in Chapter 4123. of the Revised Code.

This section shall not prevent the deposit or investment of the moneys of the public work-relief employees' compensation fund with the moneys of the state insurance fund provided for in Chapter 4123. of the Revised Code, but such funds shall be separate for all other purposes.

The administrator of workers' compensation may invest the surplus and reserve belonging to the fund in accordance with section 4123.44 of the Revised Code.

Sec. 4131.03.  (A) For the relief of persons who are entitled to receive benefits by virtue of the federal act, there is hereby established a coal-workers pneumoconiosis fund, which shall be separate from the funds established and administered pursuant to Chapter 4123. of the Revised Code. The fund shall consist of premiums and other payments thereto by subscribers who elect to subscribe to the fund to insure the payment of benefits required by the federal act.

(B)(1) The coal-workers pneumoconiosis fund shall be in the custody of the treasurer of state. The bureau of workers' compensation shall make disbursements from the fund to those persons entitled to payment therefrom and in the amounts required pursuant to sections 4131.01 to 4131.06 of the Revised Code. All investment earnings of the fund shall be credited to the fund.

(2) The administrator of workers' compensation may transfer a portion of the investment earnings credited to the coal-workers pneumoconiosis fund to the mine safety fund created in section 1561.24 of the Revised Code for the purposes specified in that section. The administrator, with the advice and consent of the bureau of workers' compensation board of directors, shall adopt rules governing the transfer in order to ensure the solvency of the coal-workers pneumoconiosis fund. For that purpose, the rules may establish tests based on measures of net assets, liabilities, expenses, interest, dividend income, or other factors that the administrator determines appropriate that may be applied prior to a transfer.

(C) The administrator shall have the same powers to may invest any of the surplus or and reserve belonging to the coal-workers pneumoconiosis fund as are delegated to the administrator under in accordance with section 4123.44 of the Revised Code with respect to the state insurance fund.

(D) If the administrator determines that reinsurance of the risks of the coal-workers pneumoconiosis fund is necessary to assure solvency of the fund, the administrator may:

(1) Enter into contracts for the purchase of reinsurance coverage of the risks of the fund with any company or agency authorized by law to issue contracts of reinsurance;

(2) Pay the cost of reinsurance from the fund;

(3) Include the costs of reinsurance as a liability and estimated liability of the fund.

Sec. 4131.13.  (A) For the relief of persons who are entitled to receive benefits by virtue of the federal act, there is hereby established a marine industry fund, which shall be separate from the funds established and administered pursuant to Chapter 4123. of the Revised Code. The marine industry fund shall consist of premiums and other payments thereto by marine industry employers who apply to the bureau of workers' compensation for permission to subscribe to the fund to insure the payment of benefits required by the federal act.

By rule, the administrator of workers' compensation shall establish criteria for the acceptance or rejection of applications by marine industry employers who apply to subscribe to the fund.

(B) The marine industry fund shall be in the custody of the treasurer of state. The bureau shall make disbursements from the fund to those persons entitled to payment therefrom and in the amounts required pursuant to the federal act. The auditor of state annually shall complete a fiscal audit of the fund. All investment earnings of the fund shall be credited to the fund.

(C) The administrator shall have the same powers to may invest any of the surplus or and reserve belonging to the marine industry fund as are delegated to him under in accordance with section 4123.44 of the Revised Code with respect to the state insurance fund.

(D) If the bureau of workers' compensation board of directors determines that reinsurance of the risks of the marine industry fund is necessary to assure solvency of the fund, the board may:

(1) Enter into contracts for the purchase of reinsurance coverage of the risks of the fund with any company or agency authorized by law to issue contracts of reinsurance;

(2) Require the administrator to pay the cost of reinsurance from the fund;

(3) Include the costs of reinsurance as a liability and estimated liability of the fund.

(E) For the purpose of maintaining the solvency of the marine industry fund, the administrator may borrow money from the state insurance fund as is necessary. Money borrowed from the state insurance fund shall be repaid from the marine industry fund together with an appropriate interest rate not to exceed the average yield of fixed income investments of the state insurance fund for the six-month period ended on the last day of the month preceding the month in which the money is borrowed. Loans made pursuant to this division are a proper investment of the surplus or reserve of the state insurance fund.

(F) In no event shall any of the assets of any of the funds created and administered pursuant to Chapter 4123. of the Revised Code be disbursed in payment of any cost or obligation of or insured by the marine industry fund. This division shall not be construed to prohibit as a proper investment loans made from the state insurance fund to the marine industry fund pursuant to division (E) of this section.

Section 2. That existing sections 109.579, 4121.12, 4121.79, 4123.01, 4123.34, 4123.351, 4123.412, 4123.44, 4123.442, 4123.443, 4123.444, 4123.445, 4127.05, 4131.03, and 4131.13 of the Revised Code are hereby repealed.

Section 3. The Bureau of Workers' Compensation Board of Directors shall approve an investment policy that meets the requirements of sections 4121.12 and 4123.442 of the Revised Code, as amended by this act, no later than ninety days after the effective date of this act. The investment policy in existence on the effective date of this act shall remain in effect until the Board approves the new investment policy.

Section 4. This act applies to investments made on or after the effective date of the investment policy approved by the Bureau of Workers' Compensation Board of Directors pursuant to Section 3 of this act.