BILL ANALYSIS                                                                                                                                                                                                    Ó




                                                   Senate Appropriations 
                              Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 1042 (Allen)
          
          Hearing Date: 8/25/2011         Amended: 3/31/2011
          Consultant: Maureen Ortiz       Policy Vote: PE&R: 5-0
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          ____
          BILL SUMMARY:  AB 1042 authorizes the California Public 
          Employees' Retirement System (CalPERS) Board of Administration 
          to appoint and set the salary of a Chief Financial Officer.
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           
          Salary/benefits                        ---------unknown, likely 
          over $150-----------        Special*                        
          *Public Employees Retirement Fund
          _________________________________________________________________
          ____

          STAFF COMMENTS: SUSPENSE FILE.
          
          Exact costs will be dependent on the compensation package that 
          is developed and offered for the new position.  It is 
          anticipated that before determining the level of the 
          compensation package, CalPERS will do a salary survey to 
          identify comparable salaries for similar positions.   Without 
          independent salary setting authority for this new position, the 
          board would be limited to hiring a financial officer at a CEA 
          Level 4, which salary maximum is $119,268 or a CEA Level 5 which 
          would be paid no more than $126,240.

          Existing law authorizes the CalPERS board to appoint and fix the 
          compensation of an executive officer, a general counsel, a chief 
          actuary, a chief investment officer and several other investment 
          officers and portfolio managers.

          AB 1042 is intended to enable CalPERS to hire an individual with 
          private-sector investment finance experience in order to achieve 
          a higher level of transparency and tighter internal controls of 
          its financial operations.  The new Chief Financial Officer (CFO) 








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          will oversee corporate finance and coordinate other finance 
          functions throughout the system to create a single point of 
          financial accountability.  Ultimately, the intent is that the 
          CFO will make decisions that will result in positive financial 
          effects on the pension fund.

          CalPERS has recently undergone a new organizational 
          restructuring which includes a new Financial Office, and has 
          identified the CFO with responsibilities to oversee the 
          corporate finance activities and coordinate other finance 
          functions to create a single point of accountability.  The CFO 
          will be responsible for the current functions of budgeting, 
          accounting, cash management, financial planning and analysis, 
          and enterprise risk management.  Hiring a high caliber, 
          experienced individual is a critical step to achieving greater 
          transparency and tighter internal controls with CalPERS' 
          financial operations.