BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1042
                                                                  Page  1

          Date of Hearing:   May 4, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 1042 (Allen) - As Amended:  March 31, 2011 

          Policy Committee:                              PERS Vote:4-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill expands the list of positions for which the California 
          Public Employees' Retirement System (CalPERS) has the authority 
          to set the compensation and terms and conditions of employment 
          to include the chief financial officer (CFO).  

           FISCAL EFFECT  

          Minor increased costs to CalPERS, likely to be less than $50,000 
          annually, which would depend on compensation packages developed 
          and approved by the board.  

           COMMENTS  

           1)Purpose.   According to the author, "CalPERS recently undertook 
            a comprehensive evaluation of its organizational structure and 
            identified a need for a new CFO position that reports to the 
            Chief Executive Officer.  Giving CalPERS the authority to set 
            the salary of the new CFO will enable hiring of an individual 
            with the necessary investment finance experience needed to 
            coordinate with the Chief Actuary and the Chief Investment 
            Officer."  

            According to CalPERS, the sponsor of the bill, "As recently 
            proposed under the new CalPERS organization structure, the CFO 
            will oversee corporate finance and coordinate other finance 
            functions throughout the organization to create a single point 
            of financial accountability.  Establishing such a position and 
            hiring a high caliber, experienced individual is a critical 
            step in achieving a higher level of transparency and tighter 
            internal controls in our financial operations.  It is 
            anticipated that the cost of establishing such a position with 








                                                                  AB 1042
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            a competitive salary will be offset by the anticipated savings 
            generated by a higher standard of organizational financial 
            accountability."

           2)Previous legislation.   AB 1317 (Mullin), Chapter 333, Statutes 
            of 2007, expanded the list of positions under which the 
            CalPERS and the California State Teachers' Retirement System 
            (CalSTRS) boards have authority to set compensation and terms 
            and conditions of employment to include the general counsel.  
            SB 269 (Soto), Chapter 856, Statutes of 2003, allowed the 
            CalPERS and CalSTRS boards to determine the compensation of 
            the Chief Executive Officer, Chief Actuary, Chief Investment 
            Officer and other investment and portfolio managers whose 
            positions are designated managerial


           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081