(a) The chairs of excellence endowment fund is created.

(b) This fund shall operate as an irrevocable trust fund within the state treasury and shall be administered by the state treasurer. The terms of the trust instrument shall be approved by the attorney general and reporter.

(c) There is created a board of trustees for the chairs of excellence endowment fund composed of the following seven (7) members:

(1) The governor;

(2) The state treasurer;

(3) The comptroller of the treasury;

(4) The secretary of state;

(5) The commissioner of finance and administration;

(6) The president of the University of Tennessee system; and

(7)

(A) The president of one (1) of the following state universities:

(i) Austin Peay State University;

(ii) East Tennessee State University;

(iii) Middle Tennessee State University;

(iv) Tennessee State University;

(v) Tennessee Technological University; or

(vi) The University of Memphis.

(B) Each state university president listed in subdivisions (c)(7)(A)(i)-(vi) must serve a three-year term, in alphabetical order by state university, starting with the president of Austin Peay State University with a term beginning on July 1, 2017, and ending on June 30, 2020.

(d) The trustees shall set the investment policy for the trust in accordance with the laws, guidelines and policies that govern investments by the Tennessee consolidated retirement system. The state treasurer shall be responsible for investment of trust funds in accordance with the policy established by the trustees.

(e) The trust shall include funds appropriated for the purpose of funding the trust, matching funds contributed by public universities and the earnings on the funds. Matching funds contributed by public universities may include funds from private sources made on behalf of the respective universities. Appropriations made to the trust shall be divided equally between the general accounts of the University of Tennessee and the state universities listed in subdivision (c)(7)(A), unless otherwise directed by law. The general account for the state universities shall be a pooled account for all of the state universities listed in subdivision (c)(7)(A).

(f) The corpus of the trust shall not be expended for any purpose. Income from the trust shall be expended for the sole purpose of funding the chairs of excellence program; provided, that investment expenses may also be deducted from income of the trust. For purposes of this part, the corpus of the trust means the funds appropriated by the state for the purpose of funding the trust and the matching funds contributed by public universities and by private sources on behalf of the respective universities. Income from the trust means all earnings from the trust's investment portfolios from whatever source derived, including, but not limited to, interest, dividends, realized capital gains or losses and any income previously applied to the corpus of the trust. No funds may be expended for a chair until all requirements of § 49-7-502 have been met.

(g)

(1) The trust shall be divided into two (2) general accounts:

(A) One (1) for the University of Tennessee; and

(B) One (1) pooled account on behalf of the state universities listed in subdivision (c)(7)(A).

(2) Each general account shall be divided into subaccounts for each chair established under § 49-7-502.

(3) Corpus shall be allocated to each subaccount in an amount sufficient to fund the chair. All income on the corpus allocated shall be paid to the subaccount.

(4) Income on the remaining corpus in each general account that has not been allocated shall be maintained in a special reserve at the general account level.

(5) Income in excess of the required funding for a subaccount shall be maintained in a special reserve at the subaccount level.

(6) Regardless of the allocation of funds, all moneys in the trust fund may be commingled for investment with other trust funds and other funds subject to investment by the state treasurer.

(h) The trustees shall each serve in an ex officio capacity and the state treasurer shall serve as chair of the board. Each trustee may designate a member of their respective staff to attend the board's meetings and to exercise the trustee's right to vote in the trustee's absence. The designations must be made in writing to the board chair.