House committee approves RIO budget amendment; members fund searches, an internal auditor and software review

The Government Operations section of the House Appropriations Committee recalled its Oct. 22 session to consider the Retirement and Investment Office (RIO) budget and related amendment. After discussion, the committee adopted amendment 25.0161S and gave House Bill 1022 a due-pass recommendation as amended; the roll calls show both motions carried 6-0 with one member absent.

“Historically, from what I’ve seen at RIO, the only time we’ve ever used or dipped into those funds is for recruitment efforts,” Rachel Kametz, interim CFO/COO for the Retirement Investment Office, told the committee while explaining a $200,000 contingencies line that has appeared in the office base budget. Committee members asked why the line is labeled “contingencies” and whether it could be retitled to clarify that the appropriation is primarily for executive search costs; fiscal staff said it could be relabeled but that a narrower description would make the funding more restrictive.

Why it matters: RIO manages large public investment pools and staff said growth in assets and complexity requires both continuity planning and stronger internal controls. Committee members pressed for clarity on three primary items: (1) the $200,000 contingency for executive searches, historically carried in the base; (2) a new internal auditor FTE to expand the office’s audit capacity; and (3) $250,000 for a consultant to study and recommend integrated fiscal/investment software.

Searches and contingencies: Kametz said the $200,000 figure is consistent with amounts historically carried in RIO’s base to pay search firms for senior positions; the office removed the line during a 3% reduction and is asking to restore it. Committee staff and witnesses said the funds are typically used for nationwide executive searches (executive director, chief financial officer, chief investment officer) and that the office must obtain state investment board approval before spending the contingency.

Internal auditing: RIO officials told the committee they have not added internal-audit FTE in “well over a decade” while assets and investment complexity have grown. The internal auditor’s duties were described as continuous compliance, process-control and firewall reviews to prevent operational conflicts between investment and fiscal teams and to support external audits.

Software modernization and timing: Interim Executive Director Jody Smith said RIO’s current accounting/investment software reaches “end of life” in September 2029 and staff are operating many processes in spreadsheets. The $250,000 consultant request would fund a market assessment and procurement planning (RFP) for a platform that could integrate fiscal and investment workflows. Committee members were warned preliminary implementation costs could be in the low millions; one comparison cited a recent Land Department accounting replacement that cost about $2,000,000.

Audits and oversight: RIO receives annual external financial audits and periodic performance audits from the state auditor’s office. Witnesses said the internal-audit position would reduce operational risk and support both internal controls and external review processes.

Votes and next steps: Representative Bosch moved adoption of amendment 25.0161S and Representative Fisher seconded; the clerk recorded a 6-0 vote with one member absent. Bosch then moved a due-pass recommendation for House Bill 1022 as amended; Representative Kempnick seconded and the motion carried 6-0 with one absent. Committee discussion concluded and members scheduled remaining agency appearances for the session’s next days.

Ending: Committee members said they will continue work during full committee sessions and pursue additional detail on RIO budget lines and implementation timing for a software replacement plan.