A. In addition to the investment authority pursuant to section 35-313, the state treasurer may invest and reinvest pension prefunding plan monies in equity securities pursuant to section 35-314 for pension prefunding plan investment accounts.

B. All pension prefunding plan monies shall be accounted for separately from all other funds. Monies may not be taken from one investment account for deposit in any other investment account.

C. All monies in pension prefunding plan investment accounts shall be invested in safe interest-bearing securities and prudent equity securities consistent with the requirements of section 35-314.

D. The earnings, interest, dividends and realized capital gains and losses from the investment of each investment account shall be credited to that investment account.

E. Pension prefunding plan monies are for the purpose of allowing employers that provide a defined benefit pension plan to their employees to prefund the employer’s required defined benefit pension payments.

F. Pension prefunding plan monies are an integral part of this state and of the political subdivisions of this state and perform an essential governmental function. Investments of pension prefunding plan monies are intended to be structured and administered in a manner that results in the tax-exempt status of the pension prefunding plan’s income. The state board of investment may adopt rules, policies and procedures as the board deems necessary to ensure that the prefunding plan’s income is not subject to federal income tax.

G. The governing body of an employer may authorize and request the state treasurer to invest pension prefunding plan monies in a pension prefunding plan investment account and set forth the terms of the distributions from such investment account for the employer pursuant to this section.

H. Pension prefunding plan investment accounts established pursuant to this section or any other section in this title and the pension prefunding plan monies in such accounts are separate and apart from the Arizona employers’ pension prefunding plan established by Title 38, Chapter 5, Article 7.1 and the assets, receipts, earnings and income of that plan.

I. For the purposes of this section:

1. "Defined benefit pension" means:

(a) The Arizona state retirement system established by Title 38, Chapter 5, articles 2 and 2.1.

(b) The elected officials’ retirement plan established by Title 38, Chapter 5, Article 3.

(c) The public safety personnel retirement system established by Title 38, Chapter 5, Article 4.

(d) The corrections officer retirement plan established by Title 38, Chapter 5, Article 6.

(e) Any defined benefit pension plan established by the governing body of any political subdivision of this state for its employees.

2. "Employer" means an employer as defined in section 38-711, 38-801, 38-842 or 38-881 or any governing body of a political subdivision of this state that has established a defined benefit pension plan for its employees.

3. "Tax-exempt status of pension prefunding plan’s income" means that the prefunding plan’s income is excluded from gross income for the purposes of the assessment of federal income tax under section 115 of the internal revenue code, intergovernmental immunity or similar grounds.