BILL ANALYSIS
AB 609
Page 1
ASSEMBLY THIRD READING
AB 609 (Conway)
As Amended April 30, 2009
Majority vote
PUBLIC EMPLOYEES 6-0
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|Ayes:|Hernandez, Furutani, | | |
| |Beall, Conway, Nestande, | | |
| |Torrico | | |
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| | | | |
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SUMMARY : Declares the Legislature's intent to examine the
advisability of linking, in statute, the administrative budgets
of retirement systems being operated under the County Employees'
Retirement Law of 1937 ('37 Act) to the value of the assets of
the retirement system.
EXISTING LAW provides, generally, that the annual budget for
administrative expenses of a '37 Act retirement system may not
exceed eighteen hundredths of 1% (0.18%) of the total assets of
the retirement system.
Additionally, as provided for by AB 1124 (Karnette), Chapter
327, Statutes of 2007, '37 Act allows counties, until January 1,
2013, to increase the budget for administration of the
retirement system in years when they incur expenses for
software, hardware, and computer technology consulting services,
providing the annual expenditure does not exceed the greater of:
1)Eighteen hundredths of 1% (0.18%) of the total assets of the
retirement system plus $1 million; or,
2)Twenty-three hundredths of 1% (0.23%) of the total assets of
the retirement system.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, because the cost of
administration of a '37 Act retirement system is based on the
assets of the retirement system, the current significant decline
in the market value of those assets will result in reduced
AB 609
Page 2
operating budgets, potentially in the range of 30% to 50%.
The author states, "The costs of administration are driven by
staff activities with regard to processing employees into
retirement, disability retirement process, retiree payroll,
supporting accounting responsibilities and IT systems; these day
to day functions make up the bulk of the administrative costs of
system operations. Regardless of investment market cycles, the
responsibility to assist the system's clients remains relatively
constant."
The Assembly Public Employees, Retirement and Social Security
Committee is informed that the author would like to move this
bill forward as a vehicle for possible legislative action to
better enable '37 Act systems to function properly regardless of
market cycles while also taking into account the differing sizes
of the twenty '37 Act systems in California.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0000567