BILL NUMBER: AB 1379	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 7, 2011
	PASSED THE ASSEMBLY  SEPTEMBER 8, 2011
	AMENDED IN SENATE  SEPTEMBER 1, 2011
	AMENDED IN SENATE  AUGUST 30, 2011
	AMENDED IN SENATE  AUGUST 15, 2011
	AMENDED IN SENATE  JUNE 23, 2011
	AMENDED IN SENATE  JUNE 21, 2011
	AMENDED IN ASSEMBLY  MAY 27, 2011
	AMENDED IN ASSEMBLY  MARCH 14, 2011

INTRODUCED BY   Assembly Member Bradford
   (Principal coauthor: Assembly Member V. Manuel Pérez)

                        FEBRUARY 18, 2011

   An act to add and repeal Sections 7504.3 and 13997.4 of the
Government Code, relating to economic development.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1379, Bradford. Economic development: public pension funds.
   (1) Existing law creates various public pension systems and
requires that all state and local public retirement systems secure
the services of an enrolled actuary, not less than triennially, to
perform a valuation of those systems. Existing law requires all state
and local public retirement systems to submit audited financial
statements to the Controller who is required to compile and publish a
report annually on the financial condition of the systems.
   This bill, until January 1, 2017, would require a state or local
pension system with assets over $4,000,000,000 to provide a report to
the Controller on California investments, as defined, and California
emerging market investments, as defined, that it obtains on and
after July 1, 2012, and holds in its portfolio, and would permit a
system to modify the definition to ensure consistency with adopted
investment policies and limit reporting costs. The bill would also
permit the report to include an estimate of the number of jobs
created and retained as a result of the system's investment activity.

   (2) Existing law creates the California Economic Development Fund
for the purpose of receiving federal, state, local, and private
economic development funds, and receiving repayment of loans or grant
proceeds and interest on those loans or grants. Existing law
establishes certain definitions in this regard and defines economic
development as including policies and programs expressly directed at
improving the business climate in business finance, marketing,
neighborhood development, small business development, business
retention and expansion, technology transfer, and real estate
redevelopment.
   This bill would require, for the 2011-12 and 2012-13 fiscal years,
that the Board of Administration of the Public Employees' Retirement
System together with the Teacher's Retirement Board of the State
Teachers' Retirement System to share with other public pension
systems streamlined and cost-effective methods for identifying
investments within their portfolios that meet the definitions of
California investment and California emerging market investment. The
bill, until January 1, 2017, would authorize the Controller to
compile and publish specified investment information supplied by
state and local pension systems on the Controller's Internet Web
site, as provided.
   (3) This bill would also make a statement of legislative findings
and would declare the intent of the Legislature that retirement
boards with sufficiently diversified portfolios, consistent with
their plenary authority and their fiduciary responsibilities, adopt
specified investment policies that meet their own unique investment
objectives.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  (a) The Legislature finds and declares the following:
   (1) Public pension fund investments represent billions of dollars
of financing for California communities, and the state could adopt
and implement more effective economic development policies with
better information on fund investments in California and in its
emerging markets.
   (2) Historically, economic growth in California has outpaced the
economic growth rate of the nation as a whole, and the state has led
the nation in export-related jobs, business startups, and innovation.
However, since the subprime home mortgage crisis in 2007, California
communities have struggled. With the increasing rates of home
foreclosure and the tightening of the credit markets, many businesses
have found their existing lines of credit inaccessible. Significant
drops in consumer spending have led to workforce reductions and
business bankruptcies.
   (3) For much of 2009, the number of unemployed workers rose by
40,000 to 60,000 per month, and the year ended with 2.25 million
unemployed California workers. While California may be emerging from
the recession, unemployment is expected to remain high through 2011.
Without specific intervention to support job creation and business
expansion, many regions of California will be very slow to recover.
   (4) As California moves forward from this recession, it is
important that the state support the recovery and expansion of
industries that provide quality jobs, enhance regional and global
supply chains, and strengthen the state's competitiveness.
   (5) Modern investment theory includes a set of concepts aimed at
building a most efficient portfolio of different types of assets that
yields the highest return for a given level of investor risk.
Diversification is one of the key elements in building a portfolio,
including diversification by asset class and by geography. Given that
the United States is the largest economy in the world and that
California is the largest economy in the United States, a certain
portion of any fully diversified investment portfolio includes
investments in California. Therefore, there is a clear alignment of
interest between medium to large institutional investors and the
economic recovery of California.
   (6) Increasing investments in minority-owned businesses and within
minority communities is vital to the future economic health of the
nation and its business community. Investment in historically
disadvantaged communities by public pension systems adds value for
the members of those systems and increases access to financial
capital for historically underserved markets and groups of people.
   (7) Investments in emerging domestic markets can provide
appropriate risk-adjusted returns to institutional investors
including public pension funds. In 2000, the boards of administration
for the Public Employees' Retirement System and the State Teachers'
Retirement System each adopted a 2-percent goal for economically
targeted investments. These investments are intended to create value
for the members of those retirement systems while facilitating
improved access to financial capital in historically underserved
markets.
   (b) It is the intent of the Legislature, consistent with the
plenary authority and fiduciary responsibilities of the retirement
boards of public pension or retirement systems under Section 17 of
Article XVI of the California Constitution, that those retirement
boards that have sufficiently diversified portfolios adopt California
emerging market investment policies that meet their own unique
investment objectives.
  SEC. 2.  Section 7504.3 is added to the Government Code, to read:
   7504.3.  (a) In addition to its annual audited financial statement
submitted to the Controller pursuant to subdivision (c) of Section
7504, each state or local public retirement system with assets of
over four billion dollars ($4,000,000,000) shall include a report on
California investments, as defined in paragraph (1) of subdivision
(c) of Section 13997.4, and California emerging market investments,
as defined in paragraph (2) of subdivision (a) of Section 13997.4,
that it obtains on and after July 1, 2012, and holds in its
portfolio. Investments by asset class shall be reported by fair
market value and percentage of the total portfolio. The report may
also include an estimate of the number of jobs created and retained
as a result of the system's investment activity. The information
reported by the public pension systems shall not exceed the scope of
information required by the California Public Records Act.
   (b) A state or local public retirement system may elect to satisfy
the reporting requirements of this section by reporting on its total
portfolio rather than only those investments made after July 1,
2012, if information is provided and identified consistently with the
definitions in subdivision (a) of Section 13997.4.
   (c) Nothing in this section shall require a retirement board to
take action that is not consistent with its plenary authority and
fiduciary responsibilities as described in Section 17 of Article XVI
of the California Constitution.
   (d) This section shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
  SEC. 3.  Section 13997.4 is added to the Government Code, to read:
   13997.4.  (a) For the purposes of this section:
   (1) "California investment" means an investment that assists in
the improvement of state and regional economies. In the case of
fund-to-fund investments or opportunistic investments, "California
investment" may include moneys that are directed under an agreement
with the asset manager to be primarily invested in California.
"California investment" includes, but is not limited to:
   (A) A publicly held company with a headquarters or significant
operations in California.
   (B) A privately held company that is headquartered in California.
   (C) Real estate in California or loans on real estate located in
California.
   (2) "California emerging market investment" means an investment
that produces competitive risk-adjusted rates of return while
facilitating the improvement of traditionally underserved markets,
including urban and rural areas undergoing, or in need of,
revitalization where assets conducive to business development are
located.
   (b) A retirement board is permitted to modify the definitions and
parameters established in this section for the reporting purposes
required by Section 7504.3, in order to ensure consistency with its
adopted investment policies and to limit its reporting costs. These
definitions and parameters, along with the methodologies used to
formulate the report, shall be described in its report.
    (c) For the 2011-12 and 2012-13 fiscal years, the Board of
Administration of the Public Employees' Retirement System together
with the Teacher's Retirement Board of the State Teachers' Retirement
System shall share with other public pension systems streamlined and
cost-effective methods for identifying investments within their
portfolios that meet the definitions of California investment and
California emerging market investment.
   (d) The Controller may compile and publish the information that
state and local pension systems are required to provide pursuant to
Section 7504.3 within, or linked to, the report issued pursuant to
Section 7504 and made available on the Controller's Internet Web
site. If the Controller decides to compile and publish the
information provided by the pension systems, the information shall be
published on the Controller's Internet Web site within 12 months of
the receipt of the information, and in no case later than 18 months
after the end of the fiscal year upon which the information is based.

   (e) This section shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.