BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 203| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 203 Author: Correa (D) Amended: 3/31/11 Vote: 21 SEN. PUBLIC EMPLOYMENT & RETIREMENT COMM. : 5-0, 4/11/11 AYES: Negrete McLeod, Walters, Gaines, Padilla, Vargas SUBJECT : County retirement boards: alternate members/elections SOURCE : California Retired County Employees Association DIGEST : This bill makes various changes to the process for filling vacancies on boards of retirement and boards of investment in counties operating retirement systems under the County Employees' Retirement Law of 1937. ANALYSIS : Existing County Employees' Retirement Law of 1937 ('37 Act) sets forth the composition of the nine-member Board of Retirement for any '37 Act county retirement association, as follows: 1.The county treasurer. 2.Two general (non-safety) members elected by the general members of the system (second and third members). 3.Four members who are qualified electors not in any way connected with county government, except one may be a CONTINUED SB 203 Page 2 county supervisor, appointed by the board of supervisors (fourth, fifth, sixth and ninth members). 4.One safety member elected by the safety members of the system (seventh member). 5.One retired member elected by the retired members of the system (eighth member). 6.An alternate seventh member who is an eligible safety member of the system. 7.An alternate retired member of the system who is the alternate for the eighth member (only in San Bernardino County and other counties that adopt this option). Existing '37 Act law creates an independent Board of Investment in Los Angeles County and sets forth the nine-member composition of that board in a manner substantially similar to the composition of the boards of retirement. This bill makes technical changes to these provisions, including clarifying references to the alternate seventh member. Existing law provides that the alternate members, unless prohibited by a resolution or regulation of the board, have the same rights, privileges, responsibilities, and access to closed sessions as other specified board members, and may participate in deliberations of the boards whether or not other elected board members, including the seventh and eighth members, are present. This bill eliminates the ability of a board, by resolution or board regulation, to prohibit an alternate member from participation in deliberations and having the same rights, privileges, responsibilities, and access to closed sessions as other specified boards. Existing law provides that, in counties without an alternate retired member, the alternate seventh member may vote in place of the second, third, seventh, or eighth member if one of those members is absent, and allows the CONTINUED SB 203 Page 3 seventh member to fill a vacancy in one of those positions until a successor qualifies. In counties with an alternate retired member, the alternate retired member may only vote if the regular eighth member is absent and may only fill a vacancy left by the regular eighth member. This bill clarifies that if the county has an alternate seventh member and an alternate retired member, the alternate seventh member shall act on behalf of an absent second, third, or seventh member, and may not act on behalf of the eighth or alternate retired member unless both are absent from the board meeting. Existing law prescribes the manner of appointing an alternate retired member for the eighth member of the board of retirement. If there is a vacancy with respect to the eighth member the alternate retired member is required to fill the vacancy until a successor qualifies. This bill specifies that if there is a vacancy with respect to the eighth member, the alternate retired member will fill the vacancy for the remainder of the eighth member's term in office. Existing law provides that if a vacancy on the board occurs for any cause or on the expiration of the term of office of any member, a successor shall be chosen in the same manner as was his predecessor, except that if an election to fill a vacancy for the second, third, seventh or eighth member has been called and only one member has been duly nominated, the board of supervisors shall order that no election be held and shall direct the clerk to cast a unanimous ballot in favor of such nominated member. This bill revises and recasts provisions governing the process for filling vacancies on both the boards of retirement and boards of investment to provide the following: 1.For vacancies in the fifth, sixth, seventh, or ninth member positions, the board of supervisors is required to appoint a replacement for the duration of the current CONTINUED SB 203 Page 4 term forthwith. For vacancies in the seventh member position, candidates will be a safety member from a group which is not represented by an incumbent alternate seventh member. The successful candidate will serve for the duration of the current term. 2.For vacancies in the second, third, fourth, or eighth (if there is no alternate retired member), the board is required to cause an election to be held at the earliest possible date to fill the vacancy. These vacancies will be filled for the remainder of the current term unless only six months or less remain of that term, in which case a single election may be held to fill the remainder of the current term and the succeeding term. 3.For vacancies with respect to the alternate retired member position, the board of retirement is required to appoint a replacement alternate member in the same manner as prescribed for the initial appointment of an alternate retired member. 4.If an election has been called due to the expiration of the term of office of any member or to fill a vacancy for the second, third, seventh, eighth, or alternate seventh member of a board of retirement, or for the second, third, seventh, or eighth member positions on a board of investment, and only one candidate has been duly nominated, the board of supervisors shall order that no election be held and shall direct the clerk to cast a unanimous ballot in favor of such nominated candidate. Prior Legislation AB 2526 (Berryhill), 2007-08 Session, made various changes to the process for filling vacancies on boards of retirement and boards of investment in counties operating retirement systems under the '37 Act. (Failed passage in Senate Public Employment and Retirement Committee) SB 414 (Correa), 2009-10 Session, made various changes to the process for filling vacancies on boards of retirement and boards of investment in counties operating retirement systems under the '37 Act. Passed the Senate with a vote of 23-11 on August 19, 2010. The bill was subsequently CONTINUED SB 203 Page 5 vetoed by the Governor Schwarzenegger. In his veto message, the Governor stated" "Among other things, this bill prohibits a county retirement board from limiting the role of an alternate member's participation in board meetings and committees. It also mandates that an election to fill board vacancies be held at the earliest possible date. Both of these provisions are unnecessarily limiting of the flexibility of these local entities." FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 4/13/11) California Retired County Employees Association (source) ARGUMENTS IN SUPPORT : According to the sponsor, the California Retired County Employees Association, "Nothing in statute requires the board of supervisors or county board of retirement, as applicable, to expeditiously fill vacancies on the board of retirement. This can affect the board's ability to obtain a quorum for official meetings. It can also deny the various stakeholders of the retirement system proper representation on the board." The sponsor also notes that alternate board members have the same fiduciary responsibility and liability as regular board members. Therefore, it is necessary that no potential limitation to their activities exist. In order to carry out their responsibilities they must be involved in, and have access to, every aspect of the board's business so that when called upon to vote, they possess all of the same information as regular board members. Finally, the bill reduces the costs of elections by allowing one election to fill both the remaining term of a vacant position and the succeeding term when the remaining term is of six months or less. CONTINUED SB 203 Page 6 CPM:cm 4/13/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED